Bethesda, MD - December 31, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has invested $58 million in the buyout of its portfolio company 3SI Security Systems ("3SI") from Lincolnshire Equity Fund II. 3SI is the dominant global provider of security solutions utilizing tear-gas and dye-based staining to protect currency from theft in banks, safes, ATMs and across the pavement applications. American Capital's investment takes the form of a senior term loan, junior and senior subordinated debt and common equity, and completely refinances American Capital's original subordinated debt investment of $13 million. Also as part of the buyout, American Capital exchanged its original 6% common stock warrant investment in 3SI with a cost basis of $0.6 million for common stock of 3SI. American Capital now owns approximately 86% of 3SI on a fully diluted basis. Union Bank of California, NA provided a revolving credit facility and senior term loans.
"3SI has performed extremely well since our initial subordinated debt investment 18 months ago, and we are impressed with the leadership of the management team and the prospects for the company," said American Capital COO Ira Wagner. "They have successfully transitioned the company to a stand alone entity while maintaining strong, consistent, ahead-of-plan financial performance. Due to our close association with 3SI as a mezzanine and equity investor, we were able to negotiate and close a transaction in a timely manner in a privately negotiated transaction."
American Capital invested over $1 billion in 2003 and over $400 million in the fourth quarter of 2003.
For more information about American Capital's portfolio click here.
"This is an exciting opportunity for American Capital to continue our relationship with 3SI as it capitalizes on the growing number of bank branches and increased global demand for bank robbery and ATM protection," said American Capital Principal and Managing Director Jeri Harman. "A dominant global leader in its niche market, 3SI's products serve premier financial institutions around the world, including over 80% of the top 100 US banks. Its solid market position, proprietary technologies and highly effective currency recovery products place 3SI in an excellent position to embark on future growth opportunities."
American Capital first invested in 3SI, with global headquarters in Exton, PA, in July 2002, supporting Lincolnshire Equity Fund II's acquisition. Operating for over 30 years, 3SI employs over 150 in its two US facilities in Pennsylvania and Georgia and one European facility in Belgium. The company has recorded revenue growth for 14 consecutive years. 3SI's leading security solutions serve numerous financial institutions worldwide: 86 of the top 100 banks in the U.S. and 24 of the top 50 banks in Europe use 3SI products.
"We look forward to extending our partnership with American Capital. Since its initial investment, American Capital has proven to be the ideal investment partner, understanding and valuing 3SI's business model and future growth plans," said 3SI Security Systems CEO Thomas Oxenfeld. "American Capital's continued support will enable 3SI to actively pursue its growth strategy through product line enhancements and market expansion by entering new geographic markets and further penetrating existing ones."
For more information about 3SI's market leading currency protection solutions click here.
As of December 31, 2003, American Capital shareholders have enjoyed a total return of 246% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has declared a total of $13.12 per share in dividends since its August 1997 IPO.
American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.5 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 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.
