Bethesda, MD - May 21, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that ACAS Business Loan Trust 2003-1, a wholly-owned affiliate of American Capital, has issued $239 million of investment grade securities backed by $308 million of senior and subordinated business loans originated by American Capital. Wachovia Securities acted as the structuring and placement agent and initial purchaser of the securities. BB&T Capital Markets was co-manager.
American Capital and subsidiaries have raised $258 million in equity and $239 million debt in 2003, for a total of $497 million. The Company has raised approximately $1.8 billion in debt and equity capital since its August 1997 IPO. During this same period, American Capital invested $1.8 billion in middle market companies.
The private placement is American Capital's fourth term securitization. The first was a December 2000 issuance of $154 million of asset backed securities. The second and third, in March and August 2002, were issuances of $196 million and $211 million of asset backed securities. None of the securitizations have experienced a charge-off or ratings downgrade and all are booked as debt on American Capital's balance sheet. Investments in 60 current American Capital portfolio companies, of 74 total, are now financed through term securitizations.
The note offering to investors consists of $185 million Class A notes, $31 million Class B notes and $23 million Class C notes. The C class notes consist of a $17 million tranche of floating rate notes and a $6 million tranche of fixed rate notes. American Capital retained $69 million of Class D notes. The A, B and C class notes were rated by three rating agencies as follows:
| Class of Note |
S&P |
Moody's |
Fitch |
|
| A |
AAA |
Aaa |
AAA |
| B |
AA |
Aa1 |
AA |
| C |
A |
A1 |
A+ |
|
The Class A notes were priced at LIBOR plus 55 basis points; the Class B notes were priced at LIBOR plus 120 basis points. The floating rate tranche of the Class C notes was priced at LIBOR plus 225 basis points, and the fixed rate tranche was priced at a 5.14%. The total borrowing cost, including interest rate swaps and fees, is 5.0%.
"This is American Capital's fourth term securitization, making us by far the leading issuers of middle market collateralized loan obligations (CLOs)," said American Capital CFO John Erickson. "The improved structure of the securitization is an indicator of both the performance of the assets in previous securitizations as well as the credit quality of the portfolio today. In this securitization, for example, 60% of the securitization is rated AAA. In our previous securitizations, no more than 50% was rated AAA. The total advance rate is 77.5%, compared to an advance rate of 75% in our previous securitizations. We are also pleased that the all-in-cost of 5.0% is our lowest borrowing cost to date and the investor market continues to grow for these CLO notes. The pool of noteholders has expanded from nine investors in our 2000 securitization to 39 today, with 11 new investors participating in this transaction."
"Our access to both debt and equity capital continues to distinguish us from most of our competitors, and is a striking vote of confidence in American Capital's execution of our business plan," said Chairman, President and CEO Malon Wilkus. "Our pool of debt and equity investors continues to expand, with the added scrutiny of our debt investors contributing to American Capital's overall transparency."
As of April 30, 2003, American Capital shareholders had enjoyed a total return of 160% since the Company's IPO - an annualized return of 18%. This assumes reinvestment of $11.00 in dividends paid per share during this period. On April 24, 2003, American Capital declared a $0.68 per share dividend to be paid June 30, 2003 to record shareholders as of June 12, 2003. American Capital has paid or declared a total of $11.68 per share in dividends since its August 1997 IPO at $15 per share.
American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.8 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.
Companies interested in learning more about American Capital's flexible financing and ability to provide senior debt, subordinated debt and equity should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.
This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
The securities referred to herein have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This announcement does not constitute an offer to sell or the solicitation of any offer to buy any of the securities. This announcement appears as a matter of record only.
