Bethesda, MD - September 25, 2003 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that it has successfully exited its subordinated debt and warrant investment in Tube City Inc., a slag and scrap metal processing, brokering and mill services company. Tube City has been recapitalized by Blue Point Capital Partners and management, completely prepaying American Capital's investment. American Capital realized a 25% compounded annual rate of return, including the payment of all interest and fees received over the life of the investments. Sale proceeds recognized by American Capital exceeded the second quarter 2003 valuation of the investments by $1 million.
"Over the past six years, IPO-to-date, proceeds from exits and prepayments exceeded the associated prior quarter's valuation of the investments by $28 million in aggregate, or 7%. Year-to-date, net realized gains announced by American Capital total $42 million. We anticipate additional realized gains this year as well as realized losses and believe we are on track to achieve our guidance of $10 million to $30 million of net realized capital gains," said COO Ira Wagner.
Through the second quarter of 2003, American Capital enjoyed a 22% compounded annual return on 32 exits and repayments of senior debt, subordinated debt and equity, totaling $376 million since its August 1997 IPO. Click here for a chart detailing American Capital capital gains and losses. Click here for a chart listing American Capital's exited portfolio companies. Through the end of the second quarter of this year, American Capital has exited or received prepayments totaling 19% of all investments made since its 1997 IPO, six years ago. Twenty five percent of these exits and prepayments were from portfolio companies that had at one time been either a loan grade 1 or 2 in its four point loan grading system, with 1 being the lowest loan grade.
American Capital invested $18.1 million in Tube City in 1999, to support growth in the company's slag processing business. Tube City provides scrap management and slag-processing services under long-term contracts to mini-mills and integrated steel facilities throughout the United States. In addition, Tube City operates a scrap metal brokerage operation serving steel mills in the United States.
Click here for more information about American Capital's 1999 investment in Tube City.
"We are delighted to have participated in Tube City's growth over the past four years, said American Capital Principal and Managing Director David Ehrenfest Steinglass. "Our investment supported an ambitious growth plan and an experienced management team. That team has successfully led Tube City through a challenging environment in the steel industry, a time during which literally dozens of companies have filed for bankruptcy, rising to meet those challenges and taking the business to a higher level despite them."
"As a result of American Capital's creative financing, Tube City was able to grow and maintain its competitive position," said Tube City CEO I. Michael Coslov. "Their flexible approach and understanding of the business fully met our expectations, and allowed us to achieve our goals."
As of August 31, 2003, American Capital shareholders have enjoyed a total return of 175% since the Company's IPO -- an annualized return of 18%, assuming reinvestment of dividends. American Capital has paid or declared a total of $12.37 per share in dividends since its August 1997 IPO at $15 per share.
American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.8 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.
Companies interested in learning more about American Capital's flexible financing and ability to provide senior debt, subordinated debt and equity should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.
Blue Point, with offices in Charlotte, Cleveland, and Seattle, is one of the largest private equity firms in each of its target markets and principally focuses on investments in manufacturing, distribution and service businesses addressing industrial and consumer markets. Blue Point engages in management buyouts, corporate divestitures, recapitalizations of private companies, expansion and growth financings, and industry consolidations.
The principals of Blue Point have completed more than 60 investments with a total invested value of more than $500 million. Portfolio companies include Consolidated Foundries Inc., a leading supplier of high precision, high performance cast metal parts to aerospace, medical and other industrial markets, Hygenic Corporation, a leading provider of physical therapy products under the Thera-Band name, and Zero Manufacturing Inc., the leading manufacturer of deep drawn and fabricated aluminum and molded plastic cases for both industrial and high-end consumer markets worldwide.
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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
