Bethesda, MD - September 15, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that it has received $14 million in proceeds by completely exiting its investment in CST Industries Inc., a leading manufacturer of storage tanks for industrial and agricultural uses. American Capital realized a $5 million gain, earning a 35% compounded annual rate of return on its investment in subordinated notes and 13% common stock interest, including the repayment of all interest and fees received over the life of American Capital's investment in the company. Sale proceeds recognized by American Capital exceeded the second quarter 2003 valuation of the investments by $1.4 million. Year-to-date, net realized gains announced by American Capital total $39 million.
CST was recapitalized by LaSalle Bank and Harris Bank. Senior management has maintained substantial ownership.
"Over the past six years, IPO-to-date, proceeds from exits and prepayments exceeded the associated prior quarter's valuation of the investments by $27 million in aggregate, or 7%. We continue to 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 gains," said COO Ira Wagner.
In January 2001, American Capital invested $9 million of subordinated debt and common stock to fund the acquisition of Columbian Steel Tank Company and Engineered Stored Products by CST Industries. CST designs, manufactures and installs storage tanks for municipal, industrial and agricultural markets.
Click here for more information about the CST transaction.
"We are pleased to have partnered with George K. Baum Merchant Banc and participated in the growth of a strong niche manufacturer, assisting CST in the consolidation of its industry," said American Capital Managing Director Tom Gregory. "We look forward to additional investments of this nature in the future."
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. Click here for a chart detailing American Capital capital gains and losses. Click here for a chart listing American Capital's exited portfolio companies. Twenty five percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in American Capital's four point loan grading system, with 1 being the lowest loan grade.
As of August 31, 2003, American Capital shareholders have enjoyed a total return of 175% since the Company's IPO -- an annualized return of 18%, 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.
