BETHESDA, Md., Sept. 25 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. announced today the details of its $77 million of total net realized gains from the disposition of portfolio investments in the second quarter of 2007. During the second quarter of 2007, American Capital received $984 million of proceeds from the realization of portfolio investments.
American Capital has realized $288 million in net gains over the past five years, $202 million over the past year and $87 million year-to-date through the second quarter of 2007 from the disposition of portfolio investments.
The Hygenic Corporation
In the second quarter of 2007, American Capital realized a gain of $22 million from the sale of its investment in its portfolio company The Hygenic Corporation. American Capital realized inception to date total gains of $24 million on its investment in Hygenic. Hygenic is a leading manufacturer of branded and private label healthcare and fitness products. American Capital recognized total proceeds of $47 million upon the exit, earning a 39% compounded annual rate of return on its total investment, including interest, dividends and fees earned over the life of American Capital's investment. The proceeds received by American Capital approximated the first quarter 2007 valuation of the investment.
In January 2004, American Capital invested $23 million in Hygenic to support Baird Capital Partners buyout of Hygenic. American Capital's investment took the form of senior secured subordinated notes and preferred and common equity. In May 2006, American Capital made a subsequent $24 million investment in Hygenic, to support Hygenic's acquisition of Performance Health Inc., a developer and marketer of topical analgesics to healthcare practitioners. American Capital's additional investment took the form of a second lien term loan and preferred and common equity and Hygenic subsequently syndicated $6 million of the second lien term loan. Also in May 2006, American Capital was repaid its original $10 million senior secured subordinated notes.
"Our investments in Hygenic Corporation in support of Baird Capital Partners' buyout of the firm and Hygenic' s subsequent acquisition of Performance Health Inc., have produced outstanding results. We are extremely fortunate to have worked with our excellent private equity partner and this fine management team," said American Capital Regional Managing Director Darin Winn. "These investments not only gave us the opportunity to develop a strong partnership with Baird Capital Partners, but also to demonstrate our ongoing commitment to our portfolio companies, our ability to respond flexibly and creatively when presented with challenging financing requirements and to fund across the capital structure."
For more information about the Hygenic transactions, go to http://www.acas.com/our_portfolio/companies/hygenic.html .
Case Logic Inc.
In the second quarter of 2007, American Capital realized a loss of $4 million from the sale of its portfolio company CL Holding Inc., the parent of Case Logic Inc. Case Logic is a designer and marketer of storage products and accessories for the audio, computer, photo/video, DVD, automotive and recreational markets. American Capital recognized total proceeds of $17 million upon the exit, earning a 15% compounded annual rate of return on its total investment, including interest, dividends and fees earned over the life of American Capital's investment. The proceeds received by American Capital were less than the first quarter 2007 valuation of the investment by $0.2 million, or less than 1%.
In August 2001, American Capital invested $20 million in senior subordinated debt with common stock warrants to support KRG Capital Partners acquisition of Case Logic Inc.
"Case Logic's new management team did an excellent job turning around the business," said Darin Winn, American Capital Regional Managing Director. "We are pleased to have been able to support them."
For more information about the Case Logic transaction, go to http://www.acas.com/our_portfolio/companies/case_logic.html .
Rocky Shoes & Boots Inc.
In the second quarter of 2007, American Capital received full repayment of its remaining $10 million senior secured term debt investment in Rocky Shoes & Boots Inc. . Rocky Shoes & Boots is a manufacturer of rugged outdoor and occupational footwear. American Capital earned a 15% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital's investment.
In January 2005, American Capital invested $30 million in Rocky Shoes & Boots to support its acquisition of EJ Footwear LLC, a manufacturer of boots for work applications and general outdoor use. American Capital's investment took the form of a senior secured term B loan. Subsequently in June 2006, Rocky refinanced the company and repaid $15 million of the term B loan and American Capital sold $5 million of its loan to the senior lender.
"We are pleased to have invested in Rocky Shoes & Boots and to have supported the acquisition of EJ Footwear LLC," said American Capital Principal Ken Jones.
For more information about the Rocky transaction, go to http://www.acas.com/our_portfolio/companies/rocky_boots.html .
Sanlo Holdings Inc.
In the second quarter of 2007, American Capital received full repayment of its $11 million of junior and senior subordinated debt investments in Sanlo Holdings Inc. Sanlo is a manufacturer and distributor of coated cable, cable assembly products and accessories. American Capital earned a 19% compounded annual rate of return on its debt investment, including interest and fees earned over the life of American Capital's investment. American Capital continues to hold a common stock warrant investment in Sanlo.
In July 2004, American Capital invested $11 million in Sanlo to support the Cortec Group's acquisition of Sanlo. American Capital's investment took the form of a senior and junior subordinated debt with warrants.
"In supporting Cortec's acquisition of Sanlo, a manufacturer and distributor of coated cable, cable assembly products and accessories, we demonstrated the responsiveness of our investment teams and our commitment to smaller middle market businesses," said American Capital Regional Managing Director Brian Graff.
For more information about the Sanlo transaction, go to http://www.acas.com/our_portfolio/companies/sanlo.html .
Soff-Cut Holdings Inc.
In the second quarter of 2007, American Capital received full repayment of its $20 million debt investments in Soff-Cut Holdings Inc. Soff-Cut is a leading designer and manufacturer of specialized concrete saws for the commercial and residential construction markets. American Capital earned a 15% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital's investment.
In August 2004, American Capital invested $27 million in Soff-Cut to support Westar Capital LLC's debt recapitalization of Soff-Cut. American Capital's investment took the form of a revolving credit facility, senior term loan and senior and junior subordinated debt.
"We are delighted to have invested in the debt refinancing of Westar Capital's portfolio company, Soff-Cut Holdings, a leader in the design and manufacture of specialized concrete saws for the commercial and residential construction markets," said American Capital Managing Director Frank Do. "Westar found our quick appreciation of its investment thesis and of Soff-Cut's business model invaluable and we had the opportunity to show the breadth of financing needs to which we can expertly respond."
For more information about the Soff-Cut transaction, go to http://www.acas.com/our_portfolio/companies/soff_cut.html .
BBB Industries LLC
In the second quarter of 2007, American Capital received full repayment of its $94 million senior term debt investments in BBB Industries LLC as a result of the sale BBB Industries to Windjammer Capital Investors. BBB Industries is a leading remanufacturer of starters and alternators for sale in the automotive aftermarket. American Capital earned a 16% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital's investment. American Capital invested $21 million in second lien term debt financing to support Windjammer's acquisition of BBB Industries.
In November 2004, American Capital invested $66 million in debt financing in BBB Industries in support of ShoreView Industries' buyout of the company. In June 2006, American Capital provided $115 million of uni-rate debt financing to BBB Industries to refinance its capital structure including the repayment of American Capital's original debt investment.
"We are pleased to have had this rewarding opportunity to work with ShoreView in supporting the growth of BBB Industries, a leading manufacturer of starters and alternators for sale in the automotive aftermarket," said American Capital Principal Kimberly Reed. "We provided debt financing to support ShoreView's buyout of the company and demonstrated our ongoing commitment to the companies in which we invest with a second round of financing 18 months later."
For more information about the BBB Industries transactions, go to http://www.acas.com/our_portfolio/companies/BBB_Industries.html
Logex Corporation
In the second quarter of 2007, American Capital realized a loss of $21 million from the sale of the assets of its portfolio company Logex Corporation. Logex is a contract carrier of industrial gases. American Capital received $3 million of the sale proceeds as a partial payment on its subordinated debt investments. American Capital could receive up to $3 million of additional sale proceeds as partial payment on its subordinated debt investments from sale proceeds held in escrow to secure indemnification obligations. American Capital has realized inception to date total losses of $30 million on its investment in Logex and continues to hold a subordinated debt investment that has unrealized depreciation of $8 million, including the estimated fair value of its remaining subordinated debt investment. American Capital has earned a negative 36% compounded annual rate of return on its total investment, including interest and fees earned over the life of American Capital's investment.
In July 2001, American Capital invested $25 million in the buyout of Logex. American Capital's investment took the form senior and junior subordinated debt with warrants and preferred equity. In May 2002, American Capital invested an additional $2 million of preferred equity in Logex.
For more information about the Logex transaction, go to http://www.acas.com/our_portfolio/companies/logex.html .
Other Company Exits and Repayments
American Capital previously announced that it recognized a gain of $51 million in the second quarter of 2007 on the exit of its portfolio company EAG Acquisition LLC and its operating subsidiary Evans Analytical Group LLC receiving proceeds of $158 million. In the second quarter of 2007, American Capital realized a gain of $19 million as a result of the partial redemption of its preferred stock investment in its portfolio company Ranpak Inc. receiving $71 million of redemption proceeds. American Capital also recognized a net realized gain of $10 million from the realization of various other portfolio investments during the second quarter of 2007.
Since its August 1997 IPO through the second quarter of 2007, American Capital has earned a 16% compounded annual return, including interest, dividends, fees and net gains, on 201 realizations of senior debt, subordinated debt and equity investments, totaling $6.6 billion of invested capital. These realizations represent 36% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these realizations exceeded the total associated prior quarter valuation of the investments by 2%. American Capital earned a 30% compound annual return on the exit of its equity investments, including dividends, fees and net gains.
For a chart showing American Capital's realized gains as of the end of Q2 2007, go to http://www.acas.com/investor_relations/realizations/realizations.html .
For a chart showing American Capital's exited portfolio companies, go to http://www.acas.com/our_portfolio/exited.html .
ABOUT AMERICAN CAPITAL
American Capital is the only alternative asset management company that is a member of the S&P 500. With $17 billion in assets under management (1), American Capital is the largest U.S. publicly traded private equity fund and one of the largest publicly traded alternative asset managers. American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital and its affiliates invest from $5 million to $800 million per company in North America and "5 million to "500 million per company in Europe.
As of August 31, 2007, American Capital shareholders have enjoyed a total return of 558% since the Company's IPO -- an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $1.7 billion in dividends and paid or declared $25.16 dividends per share since going public in August 1997 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/ or http://www.europeancapital.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 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.
(1) Assets Under Management is an estimate of internally and externally managed assets as of July 31, 2007 and does not include any fair value adjustments subsequent to June 30, 2007.
