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$1.4 billion invested,
$243 million in dividends paid since 1997 IPO
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Vol. 3 No. 4
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(800) 248-9340
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October 2002
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68% GROWTH IN NEW INVESTMENTS, FIRST NINE MONTHS 2002 OVER 2001
AMERICAN CAPITAL ISSUES $211 MILLION OF ASSET BACKED SECURITIES
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Table of Contents
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68% Growth in New Investments, First Nine Months 2002 over 2001
American Capital Issues $211 Million of Asset Backed Securities
Third Quarter New Portfolio Investments
$27 Million in Special Events Industry Leader
$18 Million in Leading Machine Tool Products Manufacturer
$33 Million in Dominant Manufacturer and Distributor of Tack Strips for Carpet Installations
$13 Million in Bank Security Products Industry Leader
$36 Million in Dominant Beverage Dispenser Manufacturer
Portfolio Companies
$15 Million to Finance the Combination of The Inca Group and
Kingway Material Handling Company Inc.
Patriot Medical Purchased by Sodexho; ACAS Maintains Loans and Equity Interest
Weston Solutions Prepays $10 Million in Junior Subordinated Notes,
$2.4 Million in Capital Gains
Chart: Growth in American Capital Portfolio Companies
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68% Growth in New Investments, First Nine Months 2002 over 2001
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New Investments
($Millions)
Total Invested Since August 1997 IPO: $1.4 Billion
New investments for the first nine months of 2002 were $393 million, a 68% increase over the same period in 2001.
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American Capital Issues $211 Million of Asset Backed Securities
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In August, ACAS Business Loan Trust 20022, a wholly owned subsidiary of American Capital, issued $157.9 million of investment grade securities backed by $210.5 million of senior and subordinated business loans originated by American Capital. Wachovia Securities acted as the structuring and placement agent.
American Capital and subsidiaries have raised $1.288 billion in debt and equity capital since American Capitals August 1997 IPO. Combined with principal repayments, this has allowed American Capital to make $1.344 billion of investments.
The private placement is American Capitals third term securitization. The first was a December 2000 issuance of $153.9 million of asset backed securities. The second, in March of this year, was an issuance of $196.4 million of asset backed securities. None of the securitizations have experienced a charge-off or ratings downgrade and all are booked as debt on American Capitals balance sheet.
The note offering to investors consists of a $105.3 million A class and a $52.6 million B class. A $52.6 million unrated C class of notes was not offered to investors. The A and B class notes were rated by three rating agencies as follows:
| Class Of Note |
Fitch |
Moody's |
S&P |
| A |
AAA |
Aaa |
AAA |
| B |
A+ |
A2 |
A |
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Click here for the complete press release.
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$27 Million in Special Events Industry Leader
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 In September, American Capital invested $27 million in Academy Events Services LLC, one of the largest tent manufacturers, and a leading tent and accessories lessor for the special events equipment rental market. American Capitals investment took the form of a revolving loan facility, senior term loans, a senior subordinated loan with warrants, and preferred and common stock. Cambridge Capital Partners is the equity sponsor, and management also invested in the equity. The transaction combined the assets of Academy Tent & Canvas Inc. and Event Technical Services Inc.
The predecessor companies, founded in 1981 and 1983, have established reputations for quality and service within the growing $7 billion special events equipment rental market. The company has provided tents to events that are American institutions: the Rose Bowl, the Academy Awards, the US Open, the Kentucky Derby, the Super Bowl and the Bell South Classic, as well as the 2002 Winter Olympics, where the company was sole tent and flooring provider. Headquarted in Vernon, CA, the company employs 260 in four facilities located in California and Kentucky, in addition to event specific temporary employees.
Click here for more information about Academy.
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$18 Million in Manufacturer of World Renowned Machine Tool Products
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In September we invested $18 million in BPT Holdings Inc. and its subsidiaries (Bridgeport International). American Capitals investment provided financing for Bridgeport Internationals purchase of the common stock of Bridgeport Machines Ltd. (Bridgeport UK), located in Leicester, England, plus certain assets including intellectual property of Bridgeport Machines Inc. (Bridgeport US) in a transaction approved by the U.S. Bankruptcy Court in Wilmington, Delaware.
The Bridgeport brand name is an icon of American manufacturing and is one of the most well known global brand names in the machine tool industry. We expect Bridgeport International to continue its leadership in the industry as a result of this reorganization, said American Capital COO Ira Wagner.
American Capital also announced in September that Bridgeport International entered into a letter of intent with Hardinge Inc. (Nasdaq: HDNG) of Elmira, NY to form an alliance whereby Hardinge will assume responsibility in North America for the manufacture and distribution of Bridgeport knee mills, related parts and service support functions, and other products previously produced by Bridgeport US.
Contact Tom Gregory, Principal and Managing Director, or call (312) 681-7400.
For the complete press release, click here.
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$33 Million in Dominant Manufacturer and Distributor of Flooring Supplies
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In August we invested $32.8 million to recapitalize Halex Corporation, the leading manufacturer and distributor of carpet tackstrips, plywood underlayment and other flooring installation supplies. The investment took the form of senior subordinated notes and preferred stock. Antares Capital Corporation provided a senior term loan and revolving credit facility and also purchased preferred stock. Halexs founders own a significant interest in the recapitalized company and are continuing in their current roles.
Halex, founded to manufacture carpet tack strip in 1990, now produces and sources a range of carpet installation supplies, purchasing and selling through global networks. The company employs over 150 people in its Pomona, CA facility and has seen sales steadily and significantly increase.
Click here for more information about Halex.
Contact Frank Do, Principal, or call (818) 676-1222.
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$13 Million in Bank Security Products Industry Leader
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 In July we invested $13 million in 3SI Security Systems to fund the purchase by 3SI of ICI Security Systems, the leading provider of security solutions utilizing tear-gas and dye-based staining to protect currency from bank robbers. ICI Security Systems was a subsidiary of Imperial Chemical Industries plc. The investment took the form of a senior subordinated note with warrants. Lincolnshire Management Inc. is the equity sponsor. GE Capital provided $20 million in senior revolving term loan facilities. ICI Security Systems management invested in the common equity.
3SIs global headquarters are located in Exton, PA, with production facilities in Byron, GA. Its European headquarters are located in Zaventem, Belgium. The business employs 135 people and has recorded revenue and record earnings growth for each of the past 13 consecutive years. Its customers include The Royal Bank of Scotland, Bank of America, Washington Mutual, Suntrust Bank, Canadian Imperial Bank, Deutsche Post, Credit Lyonnais and Banco Popolare di Verona.
Click here for more information about 3SI.
Contact Jeri J. Harman, Principal and Managing Director, or call (818) 676-1222.
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$36 Million in Dominant Beverage Dispenser Manufacturer
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 In July, a company controlled by American Capital completed the buyout of Automatic Bar Controls Inc., the dominant manufacturer and supplier of hand-held beverage dispensers for the food service industry. In a one-stop shop financing transaction, the company invested $35.5 million in the form of a senior term loan, senior and junior subordinated notes and common equity. LaSalle Bank financed a revolving loan facility. ABC management rolled over the majority of its equity ownership.
ABCs signature product is the Wunder-Bar hand-held beverage-dispensing gun. The company has also developed and sells a wide range of food dispensing systems for condiments, heated cheese, oils, salad dressings, refrigerated and non-refrigerated toppings and pizza sauces. ABC has received a number of awards for outstanding customer service and product quality from such customers as The Coca-Cola Company, Pizza Hut, Inc. and Allen & Wright, makers of A&W Root Beer. The Vacaville, CA-based company, founded in 1971, employs approximately 150 people at its state of the art facility.
Click here for more information about ABC.
Contact Roland Cline, Principal and Managing Director , or call (415) 591-2280.
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$15 Million in Combination Financing for The Inca Group
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 In September, we invested approximately $15 million to fund the combination of our portfolio company Inca Metal Products with the Kingway Material Handling Company Inc. Kingway, a leading designer and manufacturer of storage, handling and order selection systems for the material handling industry, was sold by Reunion Industries Inc. American Capitals investment took the form of subordinated notes with warrants and equity. This is the second strategic transaction that American Capital has financed for Inca. Both Kingway and Inca management invested in the transaction, and Fleet Capital was the senior lender.
American Capital initially invested in Inca in September 1999, which acquired Clymer Enterprises in June 2000. Inca is a leading manufacturer of steel products for the construction, distribution and manufacturing industries. Existing facilities, operating near Dallas, TX and Lima, OH, produce steel storage racks, shelving products, mechanical and structural steel tubes, agricultural equipment and provide toll processing services for customers. The Kingway combination adds a rack manufacturing and engineering facility in Acworth, GA and a computer assisted picking system, or CAPS, facility in Exeter, NH. Employment for the combined companies is approximately 550. Customers include Walmart, K-Mart, Staples and LOreal.
Click here for more information about Inca.
Contact Gordon O’Brien, Principal and Managing Director, or call (301) 951-6122.
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Patriot Medical Control Purchased by Sodexho; ACAS Maintains Debt and Equity Interest
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In September, Sodexho Alliance S.A. (NYSE: SDX), the leading provider of food and facilities management in the U.S. and Canada, with $4.9 billion in annual sales, purchased a majority interest in American Capital portfolio company Patriot Medical Technologies Inc. We originally invested $6.7 million in Patriot in 1999, and still hold loans totaling $5.2 million and retain an equity interest in Patriot.
We are very pleased with Sodexhos investment in Patriot. Through this investment, Sodexho has advanced its commitment to the clinical maintenance and repair business. This should result in Patriot gaining substantial new business opportunities, with the possibility of Patriot growing considerably faster than it would otherwise, said American Capital Principal, Gordon OBrien.
Click here for more information about Patriot.
Contact Gordon O’Brien, Principal and Managing Director, or call (301) 951-6122.
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Weston Solutions Prepays $10 Million in Junior Subordinated Notes
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In September, our portfolio company Weston Solutions Inc. prepaid $10 million in junior subordinated notes. American Capital earned a 59 percent annualized return on the note, including a realized gain of $2.4 million. WESTON is a leading environmental remediation, redevelopment and management and compliance firm, delivering comprehensive solutions to complex problems for industry and government worldwide.
American Capital invested $30 million in a going-private acquisition of Weston Solutions in June 2001. That initial investment took the form of $17 million in senior subordinated notes, $10 million in junior subordinated notes and $3 million in preferred equity and common stock. American Capital also received detachable warrants to purchase up to 27.6 percent of Westons common stock as part of the investment in the subordinated debt. The refinancing of the junior subordinated notes was made possible by the companys ahead-of-plan performance.
Click here for more information about Weston.
Contact David Ehrenfest Steinglass, Principal and Managing Director, or call (301) 951-6122.
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Growth in Number of American Capital Portfolio Companies
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Growth in Number of American Capital Portfolio Companies
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This newsletter 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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