NEWS

Brian Graff, Principal (212) 213-2009
Robert Klein, Principal (212) 213-2009
Brian Maney, Director, Corporate Communications (301) 951-6122

By Maureen Flanagan

Specialty Brands of America ("SBA") is a leading specialty grocery packaged goods company. Its top selling brands of pure maple syrup and sugar-free table syrup, sold under the Spring Tree®, Cary's® and MacDonalds^TM brands, are found in almost all U.S. grocery stores as well as in leading breakfast restaurant chains.

The company, based in Westbury, NY, has grown rapidly since its founding in 1991 through acquisitions, organic growth and a highly successful outsourced manufacturing and production strategy. With its dominant maple syrup brands and well-known niche products, SBA is well positioned for market opportunities and continued growth.

In a $68 million transaction, American Capital Strategies (Nasdaq: ACAS) acquired SBA on December 31, 2003. SBA was purchased from Commonwealth Venture Funding Group, LLC, a private equity investment in Massachusetts, and PPM America, a subsidiary of London-based Prudential Portfolio Managers, Ltd.

To close the transaction, American Capital provided a complete financing package that included a revolving credit facility, senior term debt, senior and junior subordinated debt, redeemable preferred stock and common equity.

"Under American Capital ownership, SBA is in an excellent position to continue its acquisition and integration strategy while leveraging its leading brands to introduce new products and product line extensions," said the company's founder and CEO Dominique Bastien.

SBA entered the maple syrup market in December 1996 with the acquisition of Borden Inc.'s syrup business. This gave the company the Cary's® and MacDonald's^TM brands, two top sellers in their respective markets. Cary's® (pictured at left) is the oldest brand of real maple syrup in the U.S. and the first to produce a sugar-free table product syrup, introduced in the 1970s. Marketed primarily to diabetics and consumers seeking to minimize sugars for medically directed reasons, Cary's® is the only sugar-free table syrup that sponsors the American Diabetes Association. For almost 50 years, MacDonald's^TM has been the best selling and most recognized brand of pure maple syrup in California and the Northwest.

The company's position in the maple syrup market was expanded through the 1999 purchase of Spring Tree Corporation. Spring Tree® (pictured at right) has become the leader in the pure maple syrup segment with 30% market share. In the sugar-free segment, Spring Tree's low calorie, sugar-free syrup further broadens the company's syrup line to appeal to the fast-growing category of health conscious consumers. Together, Cary's® and Spring Tree® sugar-free syrup brands have captured a dominant 52% market share.

SBA also sells Original Trenton Crackers®, a line of specialty oyster crackers, wine crackers, and breadcrumbs with 150 years of brand history. This product line is well established in the Philadelphia area and is featured at wine tastings at more than 150 wineries. The company's New York Flatbreads®, a low-fat crispbread, is well known in the New York area, the Mid-Atlantic states, and Florida and is sold nationwide in retail stores and upscale restaurants. The company's Dixie Fry Coating Mix®, distributed in California, is a 60-year-old regional specialty breading mix used for baking meat, fish, and poultry. Canoleo®, acquired as part of the Spring Tree transaction in 1999, is one of the few all-natural margarines made of 100% canola oil.

SBA sells its branded products through all of the major channels including traditional grocery, military commissaries, super centers, and natural foods supermarkets. It sells bulk quantities of pure maple syrup to food service, retail, and food manufacturing customers and provides private label pure maple syrup to major grocery chains.

"Through the company's scaleable, variable cost platform, SBA provides substantial leverage and cost advantages relative to competing brands," said Brian Graff, American Capital Managing Director.

SBA joins American Capital's portfolio of more than 85 middle-market companies. Since 1997, American Capital has invested more than $2.2 billion in the middle-market, building a diverse portfolio that includes a strong representation in the grocery products sector. Investments in this sector in 2003 included nSpired Natural Foods, Inc., Nancy's Specialty Foods, BC Natural Foods LLC and Bumble Bee Seafoods, Inc. For more information about American Capital's portfolio click here.

SBA's pure maple and sugar-free table syrup operate in $60 million and $30 million markets respectively within the overall $585 million table syrup category. In the year ending April 2003, the pure maple segment showed growth of 7.5% year over year and the sugar free table syrup market was up 20.6%. Meanwhile, table syrup as a whole grew at a rate of 2%. Though more expensive, consumers continue to prefer the flavor of pure maple syrup, even during the economic downturn during the last two years. In the sugar-free segment, health conscious consumers continue to discover a syrup that delivers one quarter the calorie count of "light" syrups without sacrificing flavor. As its markets continue to grow, SBA expects to capitalize on these trends and market to the growing numbers of mainstream consumers.

A chief competitive strength is the high quality of its customer relationships. The company also offers retailers marketing solutions aimed at increasing sales through promotions, varying packaging sizes and a variety of price points.

By demonstrating the ability to generate high profit for retailers, SBA has grown distribution with new customers, expanding shelf space and additional product lines. The company has also captured significant private label business from major national grocery chains.

SBA expects to continue its expansion through acquisitions and using its extensive distribution network to sell new products as well as additional product lines. It will continue to optimize its business model to deliver the high profit margins its customers have come to expect.

Leveraging its leading brands, customer relationships, and strong distribution network, SBA is looking sweeter than ever.