Bethesda, MD -- American Capital Strategies, Ltd. (Nasdaq:ACAS) announced that its portfolio company Specialty Transportation Services has repaid its remaining $500,000 of subordinated debt and repurchased American Capital's 18.2% common stock and warrant position for $3,000,000. STS paid American Capital and its investment banking subsidiary additional fees of $1,015,000 in connection with the prepayment of debt and the termination of a contract. American Capital will realize capital gains of $1,844,000 as a result of the transaction; $38,000 of these gains are related to debt repayment, while $1,806,000 are related to the equity repurchase.
In July, 1999, STS prepaid $7,500,000 of its subordinated debt, resulting in a realized gain of $550,000. American Capital made its $8,000,000 investment in STS in January 1998 and received $1,507,000 in interest payments, $1,633,000 in fee income and $11,000,000 to repay the debt and repurchase the common stock and warrants. Inclusive of fees, American Capital realized a compound annual return of 44% on the investment. This is the second investment that American Capital has exited this year. The other such investment, in Four-S Baking Company, resulted in realized gains of $1.3 million.
American Capital President and Chief Operating Officer Adam Blumenthal commented, "We are pleased to have been supportive of this company when it was purchased from Jack Gray Transportation. American Capital is also delighted that the company has succeeded to the point where its equity value has increased and it is able to repurchase our stock and repay all of our subordinated debt. We expect to hear great things from STS and its CEO Gary Goldberg in the future."
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American Capital is a buyout and specialty finance company with capital resources exceeding $360 million. American Capital invests in senior debt, subordinated debt and equity in middle market companies in need of capital for growth, acquisitions, ESOP buyouts, management buyouts, liquidity and restructurings. Through www.AmericanCapitalOnline.com financing is provided to small and middle market companies in need of capital for receivable and inventory financing, working capital loans, machinery and equipment loans, real estate loans, construction financing, acquisition funding, management buyouts, ESOP financings, liquidity and restructurings.
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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.
