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Bethesda, MD - July 28, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has received prepayments of debt investments on the balance of $60 million of originally invested capital by two portfolio companies, realizing $1.4 million in gains. American Capital also announced that it has also sold its subordinated debt investment in another portfolio company, realizing a $6.8 million loss.
For a chart detailing American Capital capital gains and losses click here.
For a chart listing American Capital's exited portfolio companies click here. Through the first quarter of 2004, American Capital enjoyed a 14% compounded annual return on 59 announced exits and repayments of senior debt, subordinated debt and equity, totaling $708 million since its August 1997 IPO. In the same period, American Capital exited or received prepayments totaling 25% of all announced investments made since its 1997 IPO. Thirty-one percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in its four point loan grading system, with 1 being the lowest loan grade.
Vigo Remittance Corporation
In June 2004 American Capital was repaid the balance of its $50 million senior debt and senior subordinated debt investment in Vigo Remittance Corporation ("Vigo"), the largest privately held worldwide electronic funds transfer service firm. Vigo has refinanced the American Capital senior and senior subordinated debt through a new senior debt facilty led by Merrill Lynch Capital, as part of an institutional, five member lender group. American Capital realized a $1.3 million gain, earning a 24% compounded annual rate of return on its debt investment, including all fees, interest and principal received over the life of American Capital's investment in the company. Reflecting its continued commitment to the Company, American Capital retains its 2% common stock warrant interest in Vigo.
In March 2003 American Capital invested $50 million in the form of senior debt and senior subordinated debt with warrants, supporting the acquisition of Vigo in a management led buyout in partnership with Great Hill Partners. Vigo operates in 38 countries around the world, with a primary focus on Latin America and the Caribbean. Vigo collects money in cash from customers through an extensive, heavily focused international agent network, typically grocery stores, convenience stores, bodegas or travel agencies. The funds are paid out to recipients via multiple correspondent relationships that include banks, post offices and retailers.
For more information about the Vigo transaction click here.
"We are delighted to continue to participate in Vigo's growth and to have established a relationship with Great Hill," said American Capital Managing Director Robert Klein. "Vigo remains well positioned to make high-quality, low-price remittances more widely available as electronic transfer grows in importance to the rising population of transnational workers, their families and their home economies. The refinancing reflects Vigo's normal evolution and continued growth as a truly institutional player in a growing, but consolidating market."
Alemite Corporation
In July 2004 American Capital was repaid its $10.3 million senior subordinated debt investment in Alemite Corporation, a leading manufacturer of high-quality lubrication equipment. Alemite prepaid American Capital's subordinated debt investment in two years through internally generated funds and with additional financing from Alemite's existing senior lender. American Capital realized a $0.1 million gain, earning a 19% compounded annual rate of return on its debt investment, including all fees, interest and principal received over the life of American Capital's investment in the company. American Capital retains its warrant investment in Alemite.
American Capital's June 2002 investment in Alemite partially financed Sentinel Capital's acquisition of Alemite from Invensys plc, a publicly traded British concern. Alemite sells approximately 2,800 lubrication products, including pumps and reels, grease guns, grease fittings and automatic lubrication devices to hundreds of industrial customers as well as consumer automotive customers.
For more information about the Alemite transaction click here.
"We are pleased to have been partners with Sentinel Capital Partners and with Alemite and to have supported Alemite's outstanding performance, which has enabled them to prepay American Capital's investment," said American Capital Managing Director Brian Graff. "As an independent company, Alemite continues to expand its offering of high quality products and systems to a growing customer base. We are confident that Alemite management and employees will continue to serve their customers in the lubrication marketplace with distinction."
Fulton Bellows & Components Inc.
In June 2004 American Capital sold its $8 million senior subordinated debt investment in Fulton Bellows & Components Inc. for a nominal price. American Capital realized a $6.8 million loss. Including cash collections of fees and interest, this results in a 32% negative rate of return. At March 31, 2004, American Capital's investment in this investment was carried at a fair value of zero and has been on non-accrual. American Capital retains a revolving credit facility and senior note investment in Fulton Bellows.
In March 2000, American Capital invested in the buyout of Fulton Bellows. Fulton Bellows was a newly formed corporation that purchased several operating divisions and product lines of Robertshaw Controls Company, a subsidiary of Invensys. Subsequently, American Capital invested additional funding for working capital and to finance the acquisition of certain assets of Standard-Thomson Company. In June 2003, Fulton Bellows filed for Chapter 11 bankruptcy. In September 2003, American Capital sold its preferred stock investment in Fulton Bellows, realizing a $10.9 million loss. On July 26, the U.S. Bankruptcy Court approved a $6.3 million cash sale of Fulton to a third party investor. American Capital is entitled to the net proceeds of the sale.
As of June 30, 2004, American Capital shareholders have enjoyed a total return of 242% since the Company's IPO - an annualized return of 20%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 per share in dividends since its August 1997 IPO.
American Capital is a publicly traded buyout and mezzanine fund with capital resources over $3 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 and Senior Vice President, Business Development, 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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