Bethesda, MD - August 18, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that it has received $32 million exiting three portfolio companies, realizing $5.6 million in realized gains. None of these exits involved financing from American Capital. The sale proceeds recognized by American Capital from these three exits exceeded the second quarter 2003 valuation of these investments by $1.3 million. The debt of one of these portfolio companies was previously ranked as a loan grade 2 out of 4 (with 4 representing the best).
"Year-to-date, net realized gains announced by American Capital total $34 million. We anticipate additional realized gains this year as well as realized losses and believe we are on track to achieve our guidance of $10 million to $30 million of net realized capital gains," said COO Ira Wagner. "These three exits are representative of a seasoning portfolio and the rebound of M&A activity."
A&M CLEANING PRODUCTS INC.
American Capital portfolio company A&M Cleaning Products Inc. has been sold to BioLab Inc., allowing American Capital to completely exit its investments in A&M. American Capital realized a $5.2 million gain and earned a 31% compounded annual rate of return on its subordinated debt with warrants and preferred stock investments, including the repayment of all interest, dividends and fees received over the life of American Capital's aggregate investments in the company. The sale proceeds recognized by American Capital include proceeds held in escrow of approximately $0.9 million and American Capital could receive up to an additional $0.3 million in sale proceeds held in escrow over the next three years. The sale proceeds recognized by American Capital from the exit exceeded the second quarter 2003 valuation of its A&M investment by $0.3 million.
In March, 2000, American Capital invested $7 million in subordinated debt with warrants and preferred stock of A&M, a manufacturer and marketer of a fast-growing regional line of multipurpose cleaners under the brand name Greased Lightning. The American Capital investment was part of a $19 million financing package, including senior debt from Wachovia Bank (NYSE: WB). In December 2002, American Capital invested an additional $2 million in preferred stock and warrants of A&M.
Click here for more information about American Capital's investment in A&M.
"American Capital provided critical growth capital and leadership to a strong, innovative middle market company," said American Capital Principal John Thornton. "Working closely with a management team of industry veterans who were co-investors in the company, we helped A&M to move beyond existing markets. National distribution of A&M's product, Greased Lightning, attracted interest from strategic buyers, allowing us to capitalize on the value we helped create. Our original investment also made it possible for family owners to achieve liquidity while maintaining a portion of ownership and upside."
CASWELL-MASSEY HOLDINGS CORP.
In addition, American Capital has completely exited its investment in Caswell-Massey Holdings Corp. American Capital realized a $0.3 million loss and earned a 16% compounded annual rate of return on its senior and subordinated debt investments and warrants, including all interest and fees earned over the life of the investments. American Capital first invested in Caswell-Massey in 1999. The $2.7 million value of American Capital's exit exceeded the second quarter 2003 valuation of its Caswell-Massey investment by $0.3 million.
Click here for more information about American Capital's investment in Caswell-Massey.
DIGITALNET INC.
American Capital also has exited its $14.5 million first quarter 2003 investment in senior subordinated bridge notes of DigitalNet Inc., a federal IT and managed network services company. American Capital realized a $0.7 million gain and earned a 54% compounded annual rate of return on its senior subordinated brdige notes, including all interest and fees over the life of the investment. The realized gain exceeded American Capital's second quarter 2003 valuation of its DigitalNet investment by $0.7 million. American Capital retains warrants for common stock of the company.
Through the second quarter of 2003, American Capital enjoyed a 22% compounded annual return on 32 exits and repayments of senior debt, subordinated debt and equity, totaling $376 million since its August 1997 IPO.
For a chart detailing these exits click here.
As of July 31, 2003, American Capital shareholders have enjoyed a total return of 211% since the Company's IPO - an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid or declared a total of $12.37 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.
