Bethesda, MD - April 19, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has invested $46.2 million in the acquisition of Cottman Transmission Systems LLC ("Cottman"), the second largest franchisor of automotive transmission repair centers in North America, from an affiliate of Sentinel Capital Partners LLC. American Capital's investment takes the form of senior and junior subordinated debt with warrants and redeemable preferred and common equity. Antares Capital Corporation provided senior term loans. Post closing, American Capital will own 78% of Cottman on a fully diluted basis.
"Our investment in Cottman is the second ACAS buyout of 2004," said American Capital COO Ira Wagner. "American Capital did extensive due diligence, negotiated an appropriate transaction with Sentinel and then quickly proceeded to closing. Cottman joins our growing diversified portfolio of over 90 middle market companies."
American Capital has invested over $1.1 billion in the last twelve months and over $150 million year to date.
For more information about American Capital's portfolio click here.
"American Capital is investing in a leading franchisor of transmission repair centers with a strong, recognized brand name known for high quality and integrity, which has provided reputable service to customers for over 40 years," said American Capital Managing Director Brian Graff. "We were impressed with Cottman's successful business model and attractive unit economics, which attract talented franchisees focused on growing the Cottman business."
"Cottman's strong market position will allow it to capitalize on supportive industry trends driven by a growing U.S. vehicle fleet, increased fleet mileage and a longer lifespan of vehicles, as well as consolidation of a highly fragmented industry resulting from the use of complex diagnostic technologies that many smaller competitors cannot afford," added Robert Klein, Managing Director.
Cottman Transmission Systems is headquartered in Fort Washington, PA and is the second largest franchisor of automotive transmission repair centers in North America. Founded in 1962, the company has a network of approximately 380 independent franchise centers and four company-operated centers that offer automotive diagnosis and minor and major transmission repairs, ranging from fluid flushing and replacement to transmission rebuilding services. Sales have grown at over 10% a year over the last three years.
"American Capital's in-depth understanding of our business and ability to provide the right financial support made them the ideal investor," said Cottman President Todd Leff. "With the combined support of our investment partners, we can pursue our growth strategy by attracting new franchisees and helping our existing franchisees acquire multiple units to meet the growing demands of the transmission repair service market."
Sentinel Capital Partners specializes in buying and building smaller middle market companies with operating profit of between $3 million and $15 million. American Capital recently supplied the senior and subordinated debt and co-invested with Sentinel in the acquisition of Nivel Parts and Manufacturing Co., LLC. "American Capital has become a trusted financing source and partner," said David Lobel, Sentinel's Founder and Managing Partner. "It was a primary reason in our decision to select American Capital as the buyer of Cottman."
As of March 31, 2004, American Capital shareholders have enjoyed a total return of 296% since the Company's IPO -- an annualized return of 23%, assuming reinvestment of dividends. American Capital has declared a total of $13.82 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 $2.7 billion. American Capital is an investor in and sponsor of 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.
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This announcement is neither an offer to sell nor a solicitation to buy securities.
This announcement appears as a matter of record only.
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