BETHESDA, Md., April 12 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. announced today it has invested $63 million in the buyout of Primrose Holdings Inc., a leading franchisor of early childhood education and high-quality child care in the upscale demographic segment of the child care industry. American Capital's investment takes the form of senior and junior subordinated debt and convertible preferred and common equity. Wachovia Corporation and CIT Group Inc. are investing in a senior term loan. CIT is also providing a revolving credit facility. Post close, American Capital owns 85% of Primrose, on a fully diluted basis, with Primrose's management team owning the remainder.
"We are delighted to have completed the buyout of Primrose, an excellent early childhood education and child care service provider," said American Capital Regional Managing Director Brian Graff. "We are impressed with the Company's healthy and established franchise network, attractive growth and strong profitability. Furthermore, Primrose has enjoyed a highly stable recurring revenue base since inception and is expected to continue this success due to an expanded product offering, continued market penetration and expansion into new markets. We're pleased to support the Primrose management team and their ambitious growth plans."
American Capital has invested approximately $3.7 billion in the last twelve months, approximately $800 million year to date and $35 million quarter to date. These amounts do not include American Capital's unfunded equity commitment and debt funded to its portfolio company European Capital. For more information about American Capital's portfolio, go to http://www.americancapital.com/our_portfolio/our_portfolio.cfm.
"Primrose has established itself as the high-end franchisor of private, curriculum-based preschools, which also provides premium quality child care services with one of the best brands in the child care business. Primrose's customized service, curriculum accreditations, high test results, comprehensive annual on-site evaluations, and exhaustive hiring and training standards have made it a top choice among parents," said American Capital Principal Kenneth Jones. "The Company has developed an excellent franchise model, a proven, proprietary and copyrighted curriculum and has demonstrated the ability to grow its platform through successful brand-focused marketing, increased penetration in existing core markets and expansion into new markets."
"There are a number of key growth drivers in the highly fragmented child care industry, including favorable demographic and social trends, such as a growing child population, increasing need for child care, the demonstrated long-term effects of early childhood education on future school performance and increasing parental demand for specialized early child care," said American Capital Vice President William Dyer. "Primrose's premium brand and strong franchise network position the firm to capitalize on these trends and continue sustainable franchise growth."
Founded in 1982 and headquartered in Acworth, GA, Primrose is a franchised system of private, curriculum-based preschools providing early childhood education and high-quality child care services for children six weeks to five years old as well as specialized after-school programs for children five through 12 years old. Primrose has achieved accreditation status from the three most prominent and respected education associations in the country: The Commission on International Trans-Regional Accreditations, The Southern Association of Colleges and Schools and The North Central Association Commission on Accreditation and School Improvement. In 2005, Primrose generated $153 million in systemwide revenues with 16,000 students enrolled in 149 schools across 13 states in the Southeast, Southwest and Midwest.
"We're excited about our new relationship with American Capital. Their financial support and guidance will bode well for Primrose as we continue to provide our proven early childhood curriculum," said Primrose Holdings President and CEO Jo Kirchner. "The primary strategy of Primrose is to deliver an innovative and consistent, high-quality educational product throughout all of our franchised schools, enabling franchisees to achieve attractive returns and a balanced lifestyle. Our passion is to help young children establish a foundation that will enable them to become adults who love who they are and what they do. We're pleased that American Capital is here to support us in our mission."
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $7.7 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to early stage and mature private and small public companies and through its asset management business is a manager of debt and equity investments in private companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital invests up to $300 million per company.
As of March 31, 2006, American Capital shareholders have enjoyed a total return of 410% since the Company's IPO -- an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $1 billion in dividends and paid $19.91 dividends per share since its August 1997 IPO at $15 per share.
Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit http://www.americancapital.com/.
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 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, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
