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Bethesda, MD - October 15, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that the underwriters in American Capital's previously announced common stock offering have exercised their over-allotment option and have purchased an additional 1,725,000 shares of its common stock at $31.60 per share. The transaction closed today.
With the exercise of the over-allotment option, a total of 13,225,000 shares of common stock were sold in the offering, including 11,500,000 shares sold on September 24, 2004. Of those shares, 4,225,000 were offered directly by the Company, which received a total of $128 million in immediate net proceeds from the sale.
The remaining 9,000,000 shares were borrowed from third party market sources by three counter-parties, who then sold those borrowed shares on September 24, 2004 in the public offering to retail and institutional buyers, receiving $272 million in net proceeds. The counter-parties implemented these transactions in connection with one year agreements (the "Forward Sale Agreements") whereby they must purchase from American Capital and American Capital must sell to them the 9,000,000 shares of common stock at $31.60 per share, less certain adjustments. The timing of these sales, which must occur within the next year, will generally be determined by American Capital.
Wachovia Capital Markets, LLC, Citigroup Global Markets Inc., J.P. Morgan Securities Inc., UBS Securities LLC, A.G. Edwards & Sons, Inc. and Legg Mason Wood Walker, Incorporated were the underwriters for the offering. The joint book-running managers for the offering were Wachovia Capital Markets, LLC and Citigroup Global Markets Inc. J.P. Morgan Securities Inc. served as the sole structuring agent for the Forward Sale Agreements. The Forward Sale Agreements were entered into with an affiliate of J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and an affiliate of Wachovia Capital Markets, LLC.
American Capital has used substantially all of the $128 million in immediate net proceeds from the direct sale of 4,225,000 shares of common stock to reduce the borrowings under its existing revolving credit facilities and to fund investments. American Capital expects to use substantially all of the net proceeds from the sale of its common stock pursuant to the Forward Sale Agreements, which initially are valued at approximately $272 million, for similar purposes. The repayments under the revolving credit facilities create availability under the facilities, which will generally be used for funding future American Capital investments and general corporate purposes.
This press release is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of these securities will be made only by means of a prospectus and a related prospectus supplement. Copies of the prospectus and prospectus supplement may be obtained from Wachovia Capital Markets, LLC at 7 Saint Paul Street, 1st Floor, Baltimore, MD 21202, or Citigroup Global Markets Inc., 140 58th Street, 8th Floor, Brooklyn, New York 11220 (telephone number: 718-765-6732).
As of September 30, 2004, American Capital shareholders have enjoyed a total return of 291% since the Company's IPO - an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $583 million in dividends and paid or declared $15.24 dividends per share since its August 1997 IPO at $15 per share. American Capital is a publicly traded buyout and mezzanine fund with capital resources exceeding $4.2 billion. American Capital is an investor in and sponsor of 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 should contact Mark Opel, Principal and Senior Vice President, Business Development, at (800) 248-9340, or visit our website.
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 and international economic conditions and changes in the conditions of the industries in which American Capital has made investments.
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