BETHESDA, Md., June 28 /PRNewswire-FirstCall/ -- American
Capital Ltd. (Nasdaq: ACAS) (the "Company") announced that
effective today, it has restructured its unsecured revolving line
of credit facility and has accepted and is closing private exchange
offers for its public and private notes, reducing its debt by
$1.03 billion. The Company will
hold a call to discuss the terms of the transaction on Monday, June 28, 2010 at 3:00 PM EDT.
The transaction covers substantially all of the Company's
$2.4 billion of outstanding
unsecured indebtedness and involves conversion of the line of
credit into a term loan facility and the exchange or repayment of
outstanding public and private notes. Under the terms of the
transaction, lenders and noteholders had the option of receiving
either cash or new secured debt, in each case in the full principal
amount of their pre-transaction debt. Lenders and noteholders
holding $1.03 billion of debt
selected or otherwise received 100% cash for their debt, while
lenders and noteholders holding $1.31
billion of debt, 56% of pre-transaction debt, elected to
receive new secured loans or notes of various series.
Effective upon closing the transaction, the Company has
$1.31 billion of secured debt,
$11 million of unsecured debt and
$1.61 billion of securitized debt and
holds approximately $240 million of
unrestricted cash and marketable securities on its balance sheet.
American Capital also announced today that its wholly owned
affiliate European Capital Limited has completed a restructuring
and partial retirement of its debt.
"I am extremely pleased that we have completed the refinancing
of American Capital's debt, which delevers our balance sheet by
more than $1 billion," stated Malon
Wilkus, Chairman and Chief Executive Officer.
"Together with the European Capital debt restructuring, this
transaction should enhance shareholder value and provide us with a
capital structure to continue to finance and grow our portfolio
companies and to originate new investments. The merger and
acquisition environment is beginning to perk up, with a growing
number of attractive investment opportunities, while the banking
industry continues to be highly restrictive in providing middle
market growth and transaction financing. As one of the
largest sources of middle market and mezzanine finance, we intend
to pursue the best opportunities in this attractive
environment."
Participants electing notes had the option to select either
fixed rate or floating rate notes. The interest rate on the
new secured loans and floating rate notes, which represent 21% of
the new secured debt, is LIBOR plus an interest rate margin of 650
basis points, with a 2% LIBOR floor. When the outstanding
balance of the new secured debt is below $1.0 billion, the interest rate margin will
decline to 550 basis points. Fixed rate notes, which
represent 79% of the new secured debt, will bear interest at a rate
of 8.96%, declining to 7.96% when the principal amount of the new
secured debt is below $1.0 billion.
Secured notes received by former holders of the unsecured public
notes, which total $528 million, have no scheduled
amortization before their December 31, 2013 maturity, and are
entitled to certain prepayment fees if redeemed prior to
August 1, 2012. Secured loans and notes received by
other creditors, which total $779 million and also mature on
December 31, 2013, are subject to
scheduled amortization and amortization from a portion of the
proceeds of asset dispositions, excess cash flow and certain
capital raising activities, although there is no scheduled
amortization on the amortizing debt until December 31, 2012.
However, the Company is entitled to retain the first
$580 million that would be otherwise payable from pledged
asset dispositions, excess cash flow and capital raising activities
for new investments or other general corporate purposes.
After the $580 million threshold is reached, the Company is
required to pay 50% of realized proceeds from dispositions of
pledged assets and annual excess cash flow, which is reduced to 25%
when the outstanding balance of the new secured debt is less than
$950 million. Also, most proceeds
from future debt raises and, after June 2012, 50% of proceeds
of equity raises must be used to retire the new secured debt, after
the $580 million threshold is reached. If, for example,
the $580 million credit were applied solely to Company
dispositions of pledged assets (i.e., no other prepayment events
had occurred), the Company would retain 100% of the first
$1.16 billion from such
dispositions, assuming the 50% sharing provision were in
effect.
The scheduled principal amortizations on the amortizing debt are
as follows:
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Date
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Minimum
Amortization
|
Amortization to Avoid
Higher Interest Rates(1)
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|
December 31,
2011
|
$
0
|
$
70,427,006
|
|
June 30,
2012
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$
0
|
$
100,000,000
|
|
December 31,
2012
|
$
120,427,006(2)
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$
300,000,000
|
|
June 30,
2013
|
$
500,000,000(3)
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$
350,000,000
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|
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|
(1) Annual interest rates will increase by 50 basis
points for each additional amortization that is not met until such
payments are made.
(2) Reflects utilization of permitted principal
amortization deferral of $200,000,000.
(3) Reflects payment of scheduled amortization amount
of $300,000,000 and payment of deferred amortization of
$200,000,000.
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The new debt is secured by liens on substantially all of the
Company's assets. At closing, a 2% fee, or $26 million,
was paid on the $1.31 billion of new
secured debt. A 1% extension fee will be paid on the
outstanding balance as of December 30,
2011 and December 31, 2012. Approximately
$11 million in principal amount of the Company's unsecured
public notes did not participate in the transaction and will remain
outstanding on an unsecured basis and without financial covenants,
as a result of amendments adopted through a consent solicitation
conducted simultaneously with the exchange offers.
Weil, Gotshal & Manges LLP served as principal external
legal counsel to the Company. Miller Buckfire & Co., LLC,
served as financial advisor to the Company.
The Company will hold a call to discuss the restructuring on
Monday, June 28, 2010 at 3:00 PM EDT. Shareholders, prospective
shareholders and analysts may listen to the shareholder call via a
live webcast, free of charge, at www.AmericanCapital.com or by
dialing (877) 569-8701 (U.S. domestic) or +1 (574) 941-7382
(international). Please provide the operator with the
conference ID number 84840387. If you do not plan on asking a
question on the call and have access to the internet, please take
advantage of the webcast.
A slide presentation will accompany the shareholder call and
will be available at www.AmericanCapital.com. Select the
Restructuring Update Presentation link to download and print the
presentation in advance of the shareholder call.
An archived audio of the call combined with the slide
presentation will be made available on our website after the call
on June 28. In addition, there
will be a phone recording available from 4:30 pm EDT June 28,
2010 until 11:59 pm EDT
July 12, 2010. If you are
interested in hearing the recording of the presentation, please
access the webcast for free on our website or dial (800) 642-1687
(U.S. domestic) or +1 (706) 645-9291 (international). The
access code for both domestic and international callers is
84840387.
For further information, please contact Investor Relations at
(301) 951-5917 or IR@AmericanCapital.com.
ABOUT AMERICAN CAPITAL
American Capital is a publicly traded private equity firm and
global asset manager. American Capital, both directly and through
its asset management business, originates, underwrites and manages
investments in middle market private equity, leveraged finance,
real estate and structured products. Founded in 1986,
American Capital has $14 billion in
capital resources under management and eight offices in the U.S.,
Europe and Asia. American Capital and its
affiliates will consider investment opportunities from $5 million to $100 million. For further
information, please refer to www.AmericanCapital.com.
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.
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Contact:
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Investors - (301) 951-5917
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SOURCE American Capital Ltd.