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Nearly $7 billion invested, $868 million in dividends paid since 1997 IPO
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Vol. 6 No. 4
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(800) 248-9340
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October 2005
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Total Capital Resources of Approximately $6.7 Billion
American Capital Raises $1.3 Billion
First Nine Months 2005 New Investments Total Over $2.1 Billion, Up 73%
From First Nine Months 2004
European Capital London Office Open
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Table of Contents
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NEW INVESTMENTS
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Infiltrator Systems, Inc.
$29,000,000 to support the acquisition of Infiltrator Systems, Inc., leading manufacturer of plastic chambers used in underground wastewater management systems
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Kirby Lester, LLC
$26,000,000 in one stop debt financing to support the acquisition of Kirby Lester, LLC, leading developer and manufacturer of pill counting machines for retail and chain pharmacies in the United States and Canada
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Soil Safe Holdings, Inc.
$147,000,000 in the One Stop Buyout™ of Soil Safe Holdings, Inc., a provider of environmental services that include the treatment, disposal and re-use of lightly contaminated soil for real estate, infrastructure development and industrial customers in the Mid-Atlantic region.
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Vector Products, Inc.
$35,000,000 in Vector Products, Inc., leading designer, developer, producer and marketer of portable power products
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Evans Analytical Group, LLC
$34,000,000 in the buyout of Evans Analytical Group, LLC, world's largest independent provider of microanalytical surface analysis and materials characterization services
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Bushnell Performance Optics
$117,000,000 to support an acquisition by Bushnell Performance Optics, leading designer and marketer of a diversified portfolio of branded, high-performance sport optics and premium eyewear products targeting outdoor and sport enthusiasts
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Gibson Guitar Corp.
Up to $52,500,000 in financing facilities to Gibson Guitar Corp., well-known designer, manufacturer, marketer and distributor of electric and acoustic guitars, bass guitars, banjos and mandolins, pianos, drums, keyboards, electronically synthesized instruments and a variety of instrument-related products and accessories
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TechBooks, Inc.
$45,000,000 in the recapitalization of TechBooks, Inc., leading electronic content outsourcing firm
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Direct Mail Holding, LLC
$24,000,000 to support an investment in Direct Mail Holding, LLC , leading provider of direct mail production and data management services to the nonprofit fundraising, financial, publishing and consumer products markets
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Fosbel Holdings, Ltd.
$111,000,000 in the One Stop Buyout™ of Fosbel Holdings, Ltd., global leader in providing refractory maintenance and repair services to operators of heavy industrial ovens and furnaces in the coke and glass production industries
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BPWest, Inc.
$21,000,000 in the buyout of BPWest, Inc., parent company of Anchor Drilling Fluids USA, Inc., leading provider of drilling fluid products and services for oil and gas drilling
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Compusearch Software Systems, Inc.
Undisclosed one stop debt financing to support the acquisition of Compusearch Software Systems, Inc., leading provider of e-procurement solutions and services
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American Capital Raises $1.3 Billion
October $1 Billion Securitization; Issuance of $830 Million Investment Grade Notes
September Issuance of $75 Million in Unsecured Debt
September Equity Offering Totaling $278 Million
August Issuance of $126 Million in Unsecured Debt
Fitch Rates American Capital Senior Debt 'BBB-'; Positive Outlook
European Capital London Office Open
European Capital Closes €750 million ($900 million) of Equity Commitments
American Capital Named One of Fortune's 100 Fastest Growing Companies
American Capital Has Paid a Total of $868 Million in Dividends and Paid Dividends of
$18.29 Per Share Since Its August 1997 IPO at $15.00 Per Share
First Nine Months 2005 New Investments Total Over $2.1 Billion, Up 73%
From First Nine Months 2004
Exit Events
American Capital Receives Total Proceeds of $212 Million From 8 Exits and Prepayments
Chronic Care Solutions, Inc.
HMS Healthcare, Inc.
MP TotalCare, Inc.
Patriot Medical Technologies, Inc.
Undisclosed
Weston Solutions, Inc.
Corporate News
American Capital Launches Commercial Mortgage Asset Management Group
American Capital Announces Expansion of Investment Activities in Energy Sector
Charts
Dividends
Growth in Total Investments, First Nine Months 2001-2005
American Capital Dividend Yield Relative to Bonds
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American Capital Completes Up to $1 Billion Loan Securitization; Issuance of $830 Million Investment Grade Notes
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In October, ACAS Business Loan Trust 2005-1, a wholly owned, consolidated affiliate of American Capital, issued $830 million of investment grade notes backed by up to $1 billion of senior and subordinated business loans originated or acquired by American Capital. The initial gross proceeds from the issuance of offered notes were $702 million, with the balance of the offered notes to be funded as additional loans purchased by the Trust over the next several months. The blended pricing of the offered notes, excluding fees, is LIBOR plus 36 basis points.
The private placement note offering to investors consists of the following offered notes:
| Class Of Note |
Amount
($Millions) |
Rating
S&P/Moody's/Fitch |
Spread Over LIBOR
(Basis Points) |
Expected Weighted Average Life |
| A-1 |
435 |
AAA/Aaa/AAA |
25 |
4.5 years |
| A-2A |
150 |
AAA/Aaa/AAA |
20 |
4.2 years |
| A-2B |
50 |
AAA/Aaa/AAA |
35 |
5.6 years |
| B |
50 |
AA/Aa2/AA |
40 |
6.0 years |
| C |
145 |
A/A2/A |
85 |
6.4 years |
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In addition to the offered notes above, American Capital retained all $90 million of the Class D notes, rated "BBB" by Fitch, and all $80 million of the Class E notes, which were not rated.
The securities referred to herein have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This announcement does not constitute an offer to sell or the solicitation of any offer to buy any of the securities. This announcement appears as a matter of record only.
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September Issuance of $75 Million in Unsecured Debt
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In September, American Capital sold $75 million of long-term unsecured fifteen-year notes in a private placement. The notes have a fixed interest rate of 6.92% through the interest payment date in October, 2015 and at the rate of LIBOR plus 2.65% thereafter and mature on October 30, 2020. Net proceeds from the sale of the notes will be used to repay outstanding indebtedness under American Capital's revolving credit facilities and for general corporate purposes.
The securities referred to herein have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This announcement does not constitute an offer to sell or the solicitation of any offer to buy any of the securities. This announcement appears as a matter of record only.
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September Equity Offering Totaling $278 Million
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On September 20, 2005, American Capital and an affiliate of J.P. Morgan Securities, Inc. and an affiliate of UBS Securities LLC (the "Counter-Parties") sold 7.5 million shares of American Capital's common stock at $37.11 per share to the public, resulting in total gross proceeds of $278 million. American Capital offered directly 2 million of the shares and received $71 million in immediate net proceeds. The remaining 5.5 million shares, with a sale value of $196 million, were offered by the Counter-Parties in connection with agreements to purchase common stock from American Capital at a future date (the "Forward Sale Agreements"). American Capital also granted the underwriters an option to purchase an additional 1,125,000 shares of American Capital's common stock at the public offering price, less the underwriting discount, to cover over-allotments.
American Capital expects to use substantially all of the net proceeds from the direct sale of shares and from the subsequent sale of shares pursuant to the Forward Sale Agreements to reduce borrowings under the Company's existing revolving credit facilities and to fund investments. The repayments under the revolving credit facilities will create availability under the facilities, which will generally be used for funding future American Capital investments and general corporate purposes.
This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
For the complete press release click here.
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August Issuance of $126 Million in Unsecured Debt
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In August, American Capital issued $126 million of long-term unsecured five-year notes in a private placement. The notes have a fixed interest rate of 6.14%. Net proceeds from the sale of the notes were used to repay outstanding indebtedness under American Capital's revolving credit facilities and for general corporate purposes.
Fitch Ratings rated these notes BBB-. The Rating Outlook was declared positive.
For the complete Fitch Ratings press release click here.
The securities referred to herein have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This announcement does not constitute an offer to sell or the solicitation of any offer to buy any of the securities. This announcement appears as a matter of record only.
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European Capital London Office Open
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 In October, European Capital Financial Services Limited announced the opening of its London office. European Capital Financial Services is an affiliate of American Capital Strategies Ltd. Leading European Capital in London are Simon Henderson, Managing Director with responsibility for U.K. buyouts, and Nathalie Faure Beaulieu, Managing Director and Head of Pan European Mezzanine. The office has opened with five employees and is the second European Capital Financial Services office. The European Capital Financial Services Paris office opened in April, 2005. The two offices are expected to have a total of over 20 employees by year end.
European Capital Financial Services and its parent, European Capital Financial Services (Guernsey) Limited, will provide investment management and other services to European Capital, S.A. SICAR, which will invest in and sponsor management and employee buyouts, invest in private equity buyouts and provide capital directly to private and mid-sized public companies. European Capital intends to invest from €5 million ($6 million) to €125 million ($150 million) per transaction in equity, mezzanine debt and senior debt to fund growth, acquisitions and recapitalizations.
For the complete press release click here.
For more information about European Capital, go to www.EuropeanCapital.com.
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European Capital Closes €750 million ($900 million) of Equity Commitments
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In October, European Capital Limited announced that it had closed on the offering of €750 million ($900 million) of equity commitments. An aggregate of €229 million ($275 million) of equity commitments were provided by third party institutional investors with the balance provided by American Capital. These equity commitments were privately placed. European Capital Limited expects to draw down the equity commitments over an approximately two year period to fund its investments and operations in the ordinary course of business.
The equity interests in European Capital Limited described above have not been and will not be registered under the United States Securities Act of 1933, as amended, or the laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Consent under the Control of Borrowing (Bailiwick of Guernsey) Ordinance, 1959 as amended, has been obtained by European Capital Limited. Neither the Guernsey Financial Services Commission nor the States of Guernsey Policy Council takes any responsibility for the financial soundness of European Capital Limited or for the correctness of any of the statements made or opinions expressed with regard to it.
For more information about European Capital, go to www.EuropeanCapital.com.
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American Capital Named One of Fortune's 100 Fastest Growing Companies
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Fortune has included American Capital in the magazine's list of the 100 Fastest-Growing Companies. The list appears in the September 5th issue of Fortune and on Fortune's web site, at http://www.fortune.com/fortune/fastest.
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American Capital Has Paid a Total of $868 Million in Dividends and Paid Dividends of $18.29 Per Share Since Its August 1997 IPO at $15.00 Per Share
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In August, American Capital declared a third quarter 2005 regular dividend of $0.78 per share to record holders as of August 26, 2005, paid on October 3, 2005. This dividend is an 8% increase over the third quarter 2004 regular dividend of $0.72 per share.
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First Nine Months 2005 New Investments Total Over $2.1 Billion, Up 73% From First Nine Months 2004 |
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$29 Million in Infiltrator Systems, Inc.
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 In September, American Capital invested $29 million in Infiltrator Systems, Inc., a leading manufacturer of plastic chambers used in underground wastewater management systems. American Capital's investment took the form of senior subordinated debt and supported Graham Partners' acquisition of Infiltrator. A syndicate led by Merrill Lynch Capital provided senior financing, including a revolving credit facility, a capex facility and senior term loans. A group led by Graham Partners and Infiltrator management invested in the equity.
 Founded in 1986 and headquartered in Old Saybrook, CT, Infiltrator Systems manufactures plastic chambers used mainly in North American septic leachfield systems, an underground structural framework for wastewater management. The Company's plastic chambers are also used in North American stormwater systems. Infiltrator's large, arch-shaped plastic chambers link to form a leachfield, which serves as both a storage tank for wastewater and a medium through which it can be disposed. Since its invention of a plastic chamber substitute, Infiltrator has led an ongoing conversion from traditional stone and pipe leachfield systems in the septic market to plastic chamber systems. The Company has an established distribution network of nearly 600 distributors covering every U.S. state and Canadian province and includes septic tank manufacturers and distributors, waterworks and plumbing supply distributors and septic distributors. In addition to its headquarters, Infiltrator has two operating facilities in Kentucky and Utah and employs over 400. The Company's sales have grown every year since its inception.
For more information about Infiltrator Systems click here.
Contact Ken Jones, Principal, at (610) 238-0210.
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$26 Million in Kirby Lester, LLC
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 In September, American Capital invested $26 million in Kirby Lester, LLC, a leading developer and manufacturer of pill counting machines for retail and chain pharmacies in the United States and Canada. American Capital's one stop debt financing solution took the form of a senior term loan, senior subordinated debt and participating preferred equity. American Capital is also providing a revolving credit facility. The investment supported the acquisition of Kirby Lester by private investors, Kirby Lester management and Garry Zage, a seasoned industry executive who will become Kirby Lester's President and CEO. The private investors and Zage invested in the Company's equity. American Capital now owns 30% of Kirby Lester, on a fully diluted basis.
 Established in 1971, Stamford, CT-based Kirby Lester assembles and sells a variety of industry leading table top pill counters to serve every prescription-filling need, from medium and small scale repacking to complete dispensing solutions. The Company's products funnel pills from their original bottles and quickly count them by infrared light or by weight. Kirby Lester's products serve a diversified customer base of independent, mass merchant, hospital and mail order pharmacies as well as pharmaceutical distributors.
For more information about Kirby Lester click here.
Contact Ian Larkin, Managing Director, at (312) 681-7400.
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$147 Million in Soil Safe Holdings, Inc.
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In September, American Capital invested $147 million in the One Stop Buyout™ of Soil Safe Holdings, Inc. from The Halifax Group. Soil Safe is a provider of environmental services that include the treatment, disposal and re-use of lightly contaminated soil for real estate, infrastructure development and industrial customers in the Mid-Atlantic region. American Capital's investment took the form of senior term loans, senior and junior subordinated debt and convertible preferred equity. American Capital is also providing a revolving credit facility. The transaction also included Soil Safe's purchase of real estate in Brandywine, MD and Soil Safe's acquisition of the California-based assets of TPS Technologies Inc., a thermal desorption treatment facility that serves the southern California market. Soil Safe management is investing in equity. American Capital owns 79% of Soil Safe, on a fully diluted basis.
Founded in 1989 and headquartered in Columbia, MD, Soil Safe provides soil treatment and disposal services, which are critical to any construction project that involves the excavation of lightly contaminated soil, which must be treated at permitted facilities prior to non-landfill disposal. The Company predominantly treats soil contaminated with low levels of petroleum hydrocarbons, chemical compounds that are almost all made entirely from hydrogen and carbon and originate from crude oil. Soil Safe's treatment process involves solidification, a process that physically binds or encapulates contaminants within a stabilized mass of inert, impermeable material, thereby reducing the likelihood of future leaching while making the soil structurally stable for future construction and road building. The Company serves a base of over 300 customers, including general contractors primarily involved in office construction, excavators, environmental consultants and oil companies in the Mid-Atlantic region. In addition to its headquarters, Soil Safe has operating facilities in New Jersey, Maryland and now with the TPS acquisition, in California. In 2004, Soil Safe completed approximately 1,300 different projects.
For more information about Soil Safe click here.
Contact David Ehrenfest Steinglass, Managing Director, at (301) 951-6122.
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$35 Million in Vector Products, Inc.
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 In September, American Capital invested $35 million in the senior term B debt of Vector Products Inc. The proceeds of the investment will be used to expand Vector's research and development activities as well as for a shareholder distribution. Vector is a leading designer, developer, producer and marketer of portable power products for consumers in the automotive, marine, home and consumer electronics markets. Wachovia Bank N.A. is providing a revolving line of credit. Vector management is maintaining its equity investment in the Company.
 Based in Ft. Lauderdale, FL and with over 100 employees, Vector's targeted end user is any consumer with a home, car or boat or any worker requiring portable power. Products include battery chargers, power inverters, jump starters, rechargeable spotlights, flashlights, and lamps, thermoelectric coolers, polishers, and all hazard weather alert TV/radios. In addition to products marketed under the Rubbermaid and Black & Decker brands, the Company sells products under the Vector and Power On Board brands as well as the house label brands of its largest customers, including Husky at Home Depot. Recently, the Company introduced portable products supporting the Sony PSP and Apple's iPod music system.
For more information about Vector Products click here.
Contact Steve Martinez, Principal, at (415) 591-0120.
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$34 Million in Evans Analytical Group, LLC
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 In September, American Capital invested $34 million in Evans Analytical Group LLC ("EAG"). EAG is the world's largest independent provider of microanalytical surface analysis and materials characterization services. American Capital's investment took the form of a senior term loan, senior subordinated debt and redeemable preferred equity. American Capital is also providing a revolving credit facility.
EAG's microanalytical surface analysis and materials characterization services identify the overall atomic and physical structure of materials, including chemical composition, level and type of trace impurities and light absorption/reflection properties. EAG's services are a critical component in research and development, manufacturing and sales support functions and are used specifically in developing new processes or materials, transferring those processes to production, developing and qualifying new production tools and solving yield problems in manufacturing. EAG has a diversified customer base of more than 1,000 customers in the semiconductor, semiconductor equipment, electronics, medical and biotech industries, among others. Headquartered in Sunnyvale, California, EAG also has facilities in Minnesota, Massachusetts, New Jersey, Texas and Taiwan.
For more information about Evans Analytical click here.
Contact Myung Yi, Principal, at (301) 951-6122.
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$117 Million in Bushnell Performance Optics
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  In August, American Capital invested $117 million in the senior and junior subordinated debt of Bushnell Performance Optics, a leading designer and marketer of a diversified portfolio of branded, high-performance sport optics and premium eyewear products targeting outdoor and sport enthusiasts. American Capital's investment supported Bushnell's acquisition of Michaels of Oregon Co., a leading manufacturer and marketer of accessories for the hunting, shooting sports and law enforcement industries. The combined entity now operates as Bushnell Outdoor Products. Antares Capital Corporation led a syndicate providing a senior credit facility. Wind Point Partners is the majority owner of Bushnell.
 Based in Overland Park, KS, Bushnell was founded by David Bushnell in 1948 as a provider of high-quality, affordably priced sport optics to specialized retailers. Today, the Company sells a wide range of products, including binoculars, sunglasses, riflescopes, telescopes, laser rangefinders, night vision scopes, safety goggles and ski goggles, under its leading Bushnell, Bollé, Serengeti and Tasco brand names. Bushnell sells to an international base of more than 10,000 customers across multiple distribution channels including mass merchants, optical chains, sporting goods stores, catalog retailers and specialty optical retailers. Key customers include Wal-Mart, Cabela's, Gander Mountain, Bass Pro Shops, Dick's Sporting Goods and The Sports Authority. The acquisition of Michaels of Oregon broadens the Bushnell product offering in the hunting, shooting sports and law enforcement markets with the addition of the well-respected Uncle Mike's, Hoppe's, Butler Creek, Stoney Point, and Blackwater Gear brands. The combined company will employ more than 600 people. Pictured here is the Instant Replay digital imaging binocular, which takes digital pictures through the actual binocular lens at the same magnification and is essential gear for coaches and scouts, birders and wildlife observers, big-game hunters and armchair quarterbacks everywhere.
For more information about Bushnell click here.
Contact Todd Wilson, Principal, at (212) 213-2009.
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Up to $52.5 Million in Gibson Guitar Corp.
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 In August, American Capital provided financing facilities of up to $52.5 million to Gibson Guitar Corp., a well-known designer, manufacturer, marketer and distributor of electric and acoustic guitars, bass guitars, banjos and mandolins, pianos, drums, keyboards, electronically synthesized instruments and a variety of instrument-related products and accessories, including amplifiers, speakers, string picks and straps. American Capital's financing facilities took the form of second lien notes and a second lien committed acquisition line. Bank of America is providing a revolving credit facility and invested in senior term debt. Gibson's current owners are maintaining their 100% equity ownership.
 Orville Gibson made his first guitar in 1894. Over 100 years later, the Company now employs approximately 1,750 people and has its headquarters in Nashville, TN. Gibson produces some of the most recognized guitar models in the world, including the Les Paul, Flying V, ES-175, ES-335, Explorer, Firebird, and SG. Further, some of the most famous guitar players in history play Gibson guitars, including BB King, Jimmy Page, Slash and Joe Perry. The Company's product offering includes electric and acoustic guitars, specialty guitars and fretted instruments; string, pickups and accessories; and pianos. Through the Gibson product line the Company markets over 500 different models of premium-priced guitars and, through the Epiphone product line, over 140 different models of moderately priced guitars. The Company also markets over 50 different medium-priced models of guitars under the Kramer brand and over 75 specialty guitar models and other fretted instruments through its Steinberger, Toby, Flatiron, and Dobro brands. In addition, Gibson markets grand pianos, vertical pianos and innovative computerized player piano systems under the Baldwin, Hamilton and Wurlitzer brand names. In 2005, Gibson began marketing over 20 youth-oriented, entry-level guitar models, other instruments and accessories through Gibson Baldwin Music Education under the brands Maestro, Signature, and Genisis.
For more information about Gibson click here.
Contact Jeff MacDowell, Managing Director, at (214) 273-6633.
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$45 Million in TechBooks, Inc.
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 In August, American Capital invested $45 million in the recapitalization of TechBooks, Inc., a leading electronic content outsourcing firm. American Capital's investment took the form of senior and junior subordinated debt and convertible preferred equity. Bank of America is providing a revolving credit facility. TechBooks management is maintaining a controlling equity interest. American Capital now owns approximately 20% of TechBooks, on a fully diluted basis.
Founded in 1988, TechBooks is headquartered in Fairfax, VA and employs over 3,000. The Company maintains offices in Los Angeles, CA; Boston, MA; York, PA; the United Kingdom; Delhi, India; and Pune, India. TechBooks specializes in composition, data conversion and e-learning services across five main market verticals: educational publishing, providing services to publishers of elementary, high school and college textbooks as well as digital content services for Web, wireless and e-book versions of their textbooks; professional publishing, providing composition and data conversion services to publishers of scientific, technical and medical journals; information publishing, providing data conversion services to libraries, universities and information aggregators; financial publishing, providing data conversion, composition and graphics services to financial printers; and enterprise content services, providing e-learning services, composition, conversion and content management services to major corporations in financial services, pharmaceutical, consulting and computer industries.
For more information about TechBooks click here.
Contact David Ehrenfest Steinglass, Managing Director, at (301) 951-6122.
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$24 million in Direct Mail Holding, LLC
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  In August, American Capital invested $24 million in the senior subordinated debt of Direct Mail Holding, LLC ("DMH"), a leading provider of direct mail production and data management services to the nonprofit fundraising, financial, publishing and consumer products markets. American Capital's investment supported an investment in DMH by Stephens Group, Inc. US Bank is providing a revolving credit facility and invested in senior term debt. DMH management made a significant equity investment.
Founded in 1978 and with headquarters in Mt. Pleasant, IA, DMH operates state-of-the-art facilities in California, Iowa, Ohio, Oklahoma, Texas and Virginia and employs approximately 900. The Company offers one of the broadest product lines in the industry. In addition, DMH has the ability to design, quickly produce and mail in large quantities innovative and highly personalized mail pieces that are appealing, effective and cost-efficient. DMH's proprietary processes and application of technology enable the Company to offer products that many competitors cannot easily or cost-effectively manufacture.
For more information about Direct Mail Holding click here.
Contact Jeff MacDowell, Managing Director, at (214) 273-6633.
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$111 Million in One-Stop Buyout™ of Fosbel Holdings, Ltd.
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 In August, American Capital invested $111 million in the One-Stop Buyout™ of Fosbel Holdings Ltd., the global leader in providing refractory maintenance and repair services to operators of heavy industrial ovens and furnaces in the coke and glass production industries. American Capital is providing a revolving credit facility and invested in senior term debt, senior and junior subordinated debt and equity. Fosbel management also invested significantly in the equity.
 Founded in 1981, Fosbel's service offerings are segmented across three primary customer groups - Coke, Glass and Cetek. The Coke and Glass segments provide maintenance and repair services using similar technologies to oven and furnace operators in those industries. The Cetek segment provides process and efficiency improvement services to customers in the hydrocarbon processing industries using innovative and proprietary technologies. The Company maintains relationships with hundreds of customers around the world, maintaining sales offices in Australia, Brazil, China, Germany, India, Japan, South Africa, the United Kingdom and the United States.
For more information about Fosbel click here.
Contact L. Thomas Gregory, Managing Director, at (312) 681-7400.
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$21 Million in BPWest, Inc.
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 In July, American Capital invested $21 million in BPWest, Inc., an entity formed to acquire Jordan Drilling Fluids Inc., parent company of Anchor Drilling Fluids USA Inc. Anchor is a leading provider of drilling fluid products and services for oil and gas drilling. American Capital's investment took the form of a senior term B loan, senior subordinated debt and preferred and common equity. PNC Business Credit is providing a revolving credit facility and a senior term A loan. Post close, American Capital owns approximately 69% of Anchor Drilling Fluids, on a fully diluted basis.
Founded in 1984, Anchor Drilling Fluids is a leading provider of drilling fluid products and services for oil and gas drilling in the Rockies, the Mid-Continent and the Permian Basin. Drilling fluids are utilized to control formation pressures, remove cuttings, and cool and lubricate the drillbit. Anchor's products include weight materials and clays, thinners, fluid loss control agents, oil mud products, lost circulation materials, chemicals and specialty products and corrosion control products. The Company also provides engineering, trucking and rental equipment services. Anchor is headquartered in Tulsa, OK and has operating facilities in Oklahoma, Wyoming, Colorado, Texas, Montana and Utah.
For more information about BPWest click here.
Contact Kevin Kuykendall, Principal, at (214) 273-6634.
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Undisclosed Investment in Compusearch Software Systems, Inc.
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  In July, American Capital invested in Compusearch Software Systems Inc., a leading provider of e-procurement solutions and services to the federal government. American Capital's investment took the form of senior term loans, senior subordinated debt and convertible preferred equity and supports Carlyle Venture Partners' acquisition of Compusearch. American Capital is also providing a revolving credit facility. Compusearch management also invested in the equity.
Founded in 1983, Dulles, VA-based Compusearch is the developer of PRISM, the leading software for automating all phases of government procurement. PRISM automates requisition and solicitation generation, competitive bid evaluation, award generation, contract management, management reporting, and contract closeout and archiving, and also significantly speeds up compliance with the complex bidding rules for federal contracts. Easy to use, easily integrated with other software systems, adaptable for different users and compliant with stringent Federal Acquisition Regulations, PRISM is sold to federal government civilian, intelligence and defense agencies. In addition to its software, Compusearch offers services such as customization services, consulting on the implementation and use of PRISM and training on the use of PRISM. Customers include the United States Postal Service, Federal Aviation Administration, Food and Drug Administration and the Departments of Defense, Transportation, Treasury, Agriculture, Homeland Security and Interior among others.
For more information about Compusearch click here.
Contact Jon Isaacson, Managing Director, at (301) 951-6122.
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American Capital Receives Total Proceeds of $212 Million From 8 Exits and Prepayments
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In the third quarter of 2005, American Capital received total proceeds of $212 million from exits and prepayments of 8 portfolio companies, realizing a total net loss of $1 million.
| Company Name |
Description |
Date
Funded |
American Capital
Financing (000) |
Transaction Type |
IRR |
Date
Exited |
| Undisclosed |
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Mezzanine in Private Equity Buyout |
13% |
09/05 |
| Chronic Care Solutions, Inc. |
National Direct-to-Consumer, Mail-Order Chronic Illness Supply Company Focused Primarily on Diabetic Supplies |
11/03 |
$78,000 |
Mezzanine in Private Equity Buyout |
23% |
09/05 |
| Weston Solutions, Inc. |
Environmental Remediation and Redevelopment Firm |
06/01 |
$43,000 |
Direct Investment |
63% |
09/05 |
| MP TotalCare, Inc. |
National Provider of Respiratory Medications and Diabetic Supplies |
10/03 |
$15,000 |
Mezzanine in Private Equity Buyout |
16% |
09/05 |
| Patriot Medical Technologies, Inc. |
National Provider of Clinical Services |
04/99 |
$7,600 |
Direct Investment |
12% |
09/05 |
| HMS Healthcare, Inc. |
Holding Company for Independent Non-Risk Access Preferred Provider Organizations |
07/04 |
$43,600 |
Mezzanine in Private Equity Buyout |
37% |
07/05 |
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For the complete press release click here.
For a chart showing American Capital's realized gains as of the end of second quarter of 2005, click here.
For a chart showing American Capital's exited portfolio companies, click here.
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American Capital Launches Commercial Mortgage Asset Management Group
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In October, American Capital announced that Douglas Cooper had joined the Company as Managing Director of the Commercial Mortgage Asset Management Group. Mr. Cooper was Managing Director at Allied Capital Corporation until mid-2005, where he was involved in all aspects of the company's Commercial Mortgage-Backed Securities investment program, including bond investment selection, real estate due diligence, structuring, securitization and surveillance. Mr. Cooper will be responsible for developing a team to manage and invest in commercial mortgage securitizations.
"American Capital is pleased to announce the launch of its new Commercial Mortgage Asset Management Group, to be headed by Doug Cooper, a professional with over 20 years experience in commercial real estate finance," said Chairman, President and CEO Malon Wilkus. "Commercial mortgage asset management offers the opportunity for highly predictable and steady asset management income and current cash returns on equity investments in a granular pool of assets. Consistent with American Capital's initiation of its asset management business with European Capital, the establishment of our Commercial Mortgage Asset Management Group follows significant due diligence and market research. Further, we are leveraging American Capital's strong franchise in the asset backed securities market, where we have pioneered the issuance of middle market Collateralized Loan Obligations, issuing $2.2 billion of bonds backed by $2.7 billion of commercial loans in seven CLOs. Two of these CLOs have been fully repaid; four have received ratings upgrades. We are confident of similar success in commercial mortgage investing."
For the complete release click here.
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American Capital Announces Expansion of Investment Activities in Energy Sector
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In July, American Capital announced its plans to expand its investment activities in the energy sector.
"Over the past eight years, American Capital has invested in six energy related companies totaling $126 million. Now, American Capital is targeting $500 million of investment in the energy sector over the next three years," said American Capital Chairman, President and CEO Malon Wilkus. "We believe American Capital has developed the appropriate personnel and necessary portfolio diversification to support additional, systematic investments in the energy sector, which require specialized expertise and relationships. Our low cost capital and middle market investing expertise, including our ability to provide one-stop financing by funding senior debt, subordinated debt and equity, allows us to be highly competitive for energy investing opportunities. As American Capital grows, we are pleased to expand our business into a sector that currently comprises over 8.0% of both U.S. GDP and the market capitalization of the S&P 500."
For more information about American Capital's energy investing click here.
Contact Kevin Kuykendall, Principal, at (214) 273-6634.
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American Capital Dividend Yield Relative to Bonds
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Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.
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, national and international economic conditions, and changes in the conditions of the industries in which American Capital has made investments. This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
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Two Bethesda Metro Center
14th Floor
Bethesda, MD 20814
Phone: (301) 951-6122
Fax: (301) 654-6714
Info@AmericanCapital.com
Nasdaq: ACAS
www.acas.com
(800) 248-9340
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