 |
 |
|
Nearly $8.4 billion invested, $1 billion in dividends paid since 1997 IPO
|
|
|
Vol. 7 No. 2
|
(800) 248-9340
|
April 2006
|
|
|
|
|
American Capital Invests Approximately $700 Million in First Quarter 2006
$39 Million of Total Net Realized Gain From Exits and Prepayments
of 9 Portfolio Companies
American Capital Raises $487 Million in March Equity Offering
Total Capital Resources of Approximately $7.7 Billion
|
|
Table of Contents
|
 |
NEW INVESTMENTS
|
|
|
 |
Algoma Hardwoods, Inc.
$29 million in the buyout of The Algoma Group, a manufacturer and distributor of high-end customized architectural wood doors for the commercial and institutional building markets |
 |
Primrose Holdings, Inc.
$63 million in the buyout of Primrose Holdings, Inc., a franchisor of early childhood education and high-quality child care in the upscale demographic segment of the child care industry
|
 |
Innova Holdings, Inc.
Undisclosed investment in the One Stop Buyout™ of Innova Holdings, Inc., a manufacturer of ruggedized printed circuit boards for the oilfield services industry and other technologies designed to operate in difficult environments
|
 |
Appleseed's, Inc.
$15 million in Appleseed's, Inc., a direct marketer of women's apparel
|
|
|
 |
The Redwood Companies
$79.5 million in the One Stop Buyout™ of The Redwood Companies, a provider of drugs-of-abuse lab testing services and on-site test kits to the correctional, rehabilitation and point-of-care markets
|
 |
The Meadows of Wickenburg L.P.,
$79 million in the One Stop Buyout™ of The Meadows of Wickenburg L.P., a multi-disorder inpatient facility specializing in the treatment of a broad range of addictions
|
 |
ASAlliances Biofuels, LLC
Committed to Invest $85 million in ASAlliances Biofuels LLC, an entity developed to construct three large scale ethanol production facilities
|
|
First Quarter 2006 New Investments Total Approximately $700 Million,
Up 72% From First Quarter 2005
March Equity Offering Totaling $487 Million
American Capital Declares and Pays $0.80 Q1 2006 Dividend
Exit Events
American Capital Recognizes $39 Million of Total Net Realized Gain
From Exits and Prepayments of 9 Portfolio Companies
Corporate News
American Capital Announces Formation of Technology Group
American Capital Appoints David Ehrenfest Steinglass Senior Vice President
for Corporate Development
Charts
Growth in Q1 Investments, 2002 - 2006
Dividends
Investment Value
|
|
|
|
Q1 2006 Investments Total Approximately $700 Million, Up 72% From Q1 2005 |
Back to top
|
|
March Equity Offering Totaling $487 Million
|
American Capital recently closed a public offering of 13.8 million shares of its common stock at $35.31 per share (the "Offering Price"). Of those shares, 9.8 million shares were sold directly by American Capital for approximately $346 million in gross proceeds. The remaining 4 million shares were borrowed and sold by Citigroup Global Markets, Inc. and an affiliate of Wachovia Capital Markets, LLC (the "Counter-Parties") for approximately $141 million in gross proceeds in connection with agreements between the Counter-Parties and American Capital (the "Forward Sale Agreements"). The Forward Sale Agreements provide for the purchase by the Counter-Parties of 4 million shares of common stock from American Capital at a future date at the Offering Price per share, less certain adjustments. American Capital will receive the proceeds from the sale of common stock pursuant to the Forward Sale Agreements at a future date upon settlement.
This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
For the complete press release click here.
Back to top
|
|
American Capital Declares $0.80 Q1 2006 Dividend
|
In February, American Capital declared a first quarter 2006 regular dividend of $0.80 per share, which was paid on April 3, 2006. This dividend was a 10% increase over the first quarter 2005 regular dividend of $0.73 per share. American Capital has paid a total of $1 billion in dividends and paid dividends of $19.91 per share since its August 1997 IPO at $15.00 per share.
Back to top
|
|
$29 Million in Buyout of The Algoma Group |
 In April, American Capital invested $29 million in the buyout of The Algoma Group. The Algoma Group is a manufacturer and distributor of high-end customized architectural wood doors for the commercial and institutional building markets. American Capital's investment took the form of a senior term loan, senior subordinated debt and convertible preferred equity. American Capital is also providing a revolving credit facility. Industrial Opportunity Partners ("IOP"), a co-sponsor of the buyout, also invested in Algoma's convertible preferred and common equity.
Founded in 1892, Algoma, WI-headquartered Algoma manufactures high-quality commercial wood doors that are made to exact architectural specifications. The Company's products include 5-ply doors, 7-ply doors, stile and rail doors and other specialty doors and components. Algoma primarily sells its finished commercial doors to contractors, subcontractors and architectural millworkers, which then supply the products to end customers for new building construction and renovation purposes. The Company's products serve a wide range of end users including hospitals, schools, offices and stadiums. Algoma has worked on projects such as the FBI headquarters, Titan Stadium, Ohio State University buildings, Disney's Fort Wilderness Hotel and Home Depot's headquarters. Algoma employs nearly 450 people in its manufacturing facilities at its headquarters and in Jefferson City, TN, as well as in its seven distribution centers.
For more information about Algoma, click here.
Contact Myung Yi, Principal, at (301) 951-6122.
Back to top
|
|
$63 Million in Buyout of Primrose Holdings, Inc. |
  In March, American Capital invested $63 million in the buyout of Primrose Holdings, Inc., a leading franchisor of early childhood education and high-quality child care in the upscale demographic segment of the child care industry. American Capital's investment took the form of senior and junior subordinated debt and convertible preferred and common equity. Wachovia Corporation (NYSE: WB) and CIT Group Inc. (NYSE: CIT) invested in a senior term loan. CIT is also providing a revolving credit facility. American Capital now owns 85% of Primrose, on a fully diluted basis, with Primrose's management team owning the remainder.
Founded in 1982 and headquartered in Acworth, GA, Primrose is a franchised system of private, curriculum-based preschools providing early childhood education and high-quality child care services for children six weeks to five years old as well as specialized after-school programs for children five through 12 years old. Primrose has achieved accreditation status from the three most prominent and respected education associations in the country: The Commission on International Trans-Regional Accreditations, The Southern Association of Colleges and Schools and The North Central Association Commission on Accreditation and School Improvement. In 2005, Primrose generated $153 million in systemwide revenues with 16,000 students enrolled in 149 schools across 13 states in the Southeast, Southwest and Midwest.
For more information about Primrose, click here.
Contact Kenneth Jones, Principal, at (610) 238-0210.
Back to top
|
|
Undisclosed Investment in One Stop Buyout™ of Innova Holdings, Inc. |
 In March, American Capital invested in the One Stop Buyout™ of Innova Holdings, Inc. and its subsidiaries Innova Electronic LP and Extel LP (collectively, "Innova"). Innova is a leading manufacturer of ruggedized printed circuit boards for the oilfield services industry and other technologies designed to operate in difficult environments. American Capital's investment took the form of senior term debt, a CAPEX facility, senior subordinated debt and preferred and common equity. American Capital is also providing a revolving credit facility. Innova's management team also invested in the equity of Innova. American Capital now owns 56% of the Company, on a fully diluted basis, with members of Innova's management team owning the balance.
Founded in 1989, Innova is a manufacturer and systems integrator of industrial electronics for oilfield original equipment manufacturers, offering full service outsourcing, including custom design of switching and high-voltage power supplies, hardware and software engineering for surface data acquisition systems, system integration and testing. In particular, the Company manufactures and assembles printed circuit boards for the downhole logging and drilling oilfield service industry. Downhole logging is a process used to detect subsurface producible hydrocarbons by measuring rock and fluid properties, wellbore characteristics and other physical properties in oil wells prior to hydrocarbon production. The Company also manufactures other extreme-environment electronics, hazardous-area computers and sunlight-viewable LCD monitors. Customers include companies in the oilfield service industry, including the Big 4 providers of directional drilling and logging services, as well as companies in the defense, medical, and other consumer and commercial applications industries. The Company is headquartered in Houston, TX and employs nearly 400 people.
For more information about Innova, click here.
Contact Kevin Kuykendall, Principal, at (214) 273-6634.
Back to top
|
|
$15 Million in Appleseed's, Inc. |
  In February, American Capital invested $15 million in the debt refinancing of Appleseed's, Inc., a leading specialty brand of private label apparel and coordinated accessories exclusively focused on serving the baby boomer female demographic. American Capital's investment took the form of secured senior subordinated debt and will be used to refinance a bridge loan held by TD Banknorth, Inc., as well as for general working capital purposes. Appleseed's management retains a significant equity interest and continues to manage the Company. Golden Gate Capital is the majority owner of Appleseed's.
Founded in 1946 and headquartered in Beverly, MA, Appleseed's is one of the leading specialty brands of private label apparel and coordinated accessories exclusively focused on serving a distinct customer profile within the baby boomer female market: a well-educated, suburban woman who is interested in wearing brands that offer reliable comfort and fit with a classic, tailored style. In addition to its Appleseed's and The Tog Shop catalogs, the Company offers apparel and accessories products through its website www.appleseeds.com and retail stores located in Massachusetts and Rhode Island.
For more information about Appleseed's, click here.
Contact Natasha Volyanskaya, Vice President, at (415) 591-0120.
Back to top
|
|
$79.5 Million in One Stop Buyout™ of the Redwood Companies |
 In February, American Capital invested $79.5 million in the One Stop Buyout™ of Redwood Toxicology Laboratory, Inc., Redwood Biotech, Inc. and PerMaxim, LLC (collectively, "The Redwood Companies" or "Redwood"). Redwood is a leading provider of drugs-of-abuse lab testing services and on-site test kits to the correctional, rehabilitation and point-of-care markets. American Capital's investment took the form of a revolving credit facility, senior term debt, senior subordinated debt and preferred and common equity. American Capital now owns 67% of the Company, on a fully diluted basis, with members of Redwood's management team owning the remaining balance.
Headquartered in Santa Rosa, CA, The Redwood Companies consist of three operating entities: Redwood Toxicology Laboratory, Redwood Biotech and PerMaxim. Redwood Toxicology Laboratory is a provider of drugs-of-abuse laboratory testing services, primarily to correctional and rehabilitation centers. Redwood Biotech markets and distributes a variety of high-quality on-site disposable drug testing kits. PerMaxim distributes its RediScreen product line of rapid test kits to the point-of-care market for the detection of drugs-of-abuse and a variety of health-related conditions, including pregnancy and infectious diseases. Redwood provides its services and products to a highly diversified customer base in the correctional, rehabilitation and point-of-care markets.
For more information about Redwood, click here.
Contact Steve Martinez, Principal, at (415) 591-0120.
Back to top
|
|
$79 Million in One Stop Buyout™ of the Meadows of Wickenburg L.P.
|
 In February, American Capital invested $79 million in the One Stop Buyout™ of The Meadows of Wickenburg L.P., a premier multi-disorder inpatient facility specializing in the treatment of a broad range of addictions. American Capital's investment took the form of senior debt, senior and junior subordinated debt and preferred and common equity. American Capital is also providing a revolving credit facility. Senior members of the management and clinical teams also invested in the equity. American Capital now owns approximately 88% of the Company, on a fully diluted basis.
Founded in 1976, The Meadows is a multi-disorder treatment facility offering treatment for psychological conditions, compulsive and addictive behaviors, and affective disorders, such as post-traumatic stress, alcoholism, drug addiction, sexual compulsivity/aversion, major depression and bipolar disorders. Located on a 10 acre campus in Wickenburg, Arizona, The Meadows consists of an inpatient facility and an extended care facility. Treatment at The Meadows is personalized to meet individual needs. A multidisciplinary team of psychiatrists, psychologists and professional counselors work cooperatively and consistently with dedication to the best interest of each patient. The Meadows' intensive treatment program is 12 step-based and enhanced by a comprehensive program (The Meadows Model) created by Pia Mellody and Pat Mellody, pioneers in the field of recovery. The Meadows also offers workshops on its campus, as well as around the country, which are conducted by its professional staff. At these workshops, alumni can progress on their road to recovery and counseling professionals can receive training on the treatment principles of The Meadows Model.
For more information about the Meadows, click here.
Contact Bowen Diehl, Principal, at (214) 273-6632.
Back to top
|
|
Committed to Invest $85 Million in ASAlliances Biofuels, LLC |
In February, American Capital committed to invest $85 million in ASAlliances Biofuels, LLC, an entity developed by Americas Strategic Alliances, LLC to construct three large-scale ethanol production facilities. American Capital's investment will take the form of senior subordinated debt and preferred equity. Laminar Direct Capital L.P., a member of the D. E. Shaw group, and US Renewables Group, LLC will also be providing senior subordinated debt and equity. Fagen, Inc. and Cargill Biofuels Investments, LLC will also invest in the equity. A syndicate led by WestLB will be providing senior secured financing to the new Company. American Capital now owns approximately 41% of ASAlliances Biofuels, on a fully diluted basis.
ASAlliances Biofuels' three ethanol facilities will each produce 100 million gallons of fuel-grade ethanol per year and will be located in Albion, Nebraska, Linden, Indiana, and Bloomingburg, Ohio. Each plant will be designed and constructed by Fagen, the recognized leader and premier design-builder in the ethanol industry. Cargill, one of the leading corn and grain suppliers in the U.S., will provide corn and natural gas procurement services for each plant, as well as marketing and transportation services. The three facilities will be located adjacent to existing Cargill grain elevators. United BioEnergy, the leading operator of ethanol facilities in the U.S., will provide operation and maintenance management services for each plant. Ethanol is produced from corn or other starch feedstock by milling, fermentation, distillation and dehydration and is used almost exclusively as a gasoline additive and provides a number of valuable benefits as a clean burning gasoline additive. The ethanol produced by ASAlliances Biofuels' plants will ultimately be sold to crude oil refiners and gasoline blenders as either an oxygenate or fuel extender.
For more information about ASAlliances Biofuels, click here.
Contact Kevin Kuykendall, Principal, at (214) 273-6634.
Back to top
|
|
Undisclosed Investment in Combination of Cottman Transmission and AAMCO Transmissions |
In March, American Capital invested in the combination of AAMCO Transmissions, Inc. with its portfolio company Cottman Transmission Systems LLC. AAMCO and Cottman are two leading U.S. transmission repair chains. The combined entity will eventually operate under the AAMCO Transmissions name. American Capital's investment took the form of a revolving credit facility, senior term loans, senior and junior subordinated debt and preferred and common equity. Management will have significant investments in the equity. American Capital now owns 83% of the combined entity, on a fully diluted basis.
April, 2004 American Capital invested $46 million in the acquisition of Cottman Transmission, the second largest franchisor of automotive transmission repair centers in North America. Founded in 1962 and headquartered in Horsham, PA, the Company has a network of approximately 400 independent franchise centers that offer automotive diagnosis and minor and major transmission repairs, ranging from fluid flushing and replacement to transmission rebuilding services.
AAMCO is a leading franchisor and one of the most recognized brand names in the automotive repair and service industry. It is the nation's largest transmission repair specialist, comprised of over 730 franchised repair centers across 47 states, Puerto Rico and Canada. In addition to transmission repair, AAMCO has recently expanded into more comprehensive diagnostic and repair services. The combined entity will have over 1,100 repair centers.
For more information about Cottman and AAMCO, click here.
Contact Brian Graff, Regional Managing Director, or Dale Stohr, Principal, at (212) 213-2009.
Back to top
|
|
American Capital Recognizes Total Proceeds of $39 Million From Exits and Prepayments of 9 Portfolio Companies |
In the first quarter of 2005, American Capital received total proceeds of $268 million from exits and prepayments of nine portfolio companies, realizing a total net gain of $39 million.
| Q1 2006 EXITED PORTFOLIO COMPANIES |
| Company Name |
Description |
Date
Funded |
American Capital
Financing (000) |
Transaction Type |
IRR |
Date
Exited |
| Edge Products, LLC | Designer and manufacturer of performance related automotive aftermarket parts |
3/05 |
$30,000 |
Direct Investment |
32% |
3/06 |
| Vector Products, Inc. | Designer, developer, producer and marketer of portable power products |
9/05 |
$35,000 |
Direct Investment |
18% |
3/06 |
| 3SI Acquisition Holdings, Inc. | Global provider of security solutions utilizing dye-based staining solutions and wireless tracking devices to protect currency from theft in banks, ATMs, safes and transport applications |
12/03 |
$72,000 |
American Capital Buyout |
31% |
3/06 |
| NewQuest, Inc. | Independent managed care organization primarily focused on providing Medicare Advantage HMO health plans |
3/05 |
$35,000 |
Mezzanine in Private Equity Buyout |
22% |
3/06 |
| Network for Communication & Research, LLC | Provider of specialized medical educational programs, research and content for physicians and other medical personnel |
1/02 |
$22,000 |
American Capital Buyout |
48% |
2/06 |
| American Decorative Surfaces, Inc. | Manufacturer of decorative paper and vinyl surfacing materials |
5/02 |
$42,000 |
American Capital Buyout |
-49% |
2/06 |
| Alemite Holdings, L.P. | Manufacturer of high-quality lubrication equipment, including pumps and reels, grease guns, grease fittings and automatic lubrication devices |
6/02 |
$10,000 |
Mezzanine in Private Equity Buyout |
25% |
1/06 |
|
For the complete press release, click here.
For a chart showing American Capital's realized gains as of the end of third quarter of 2005, click here.
For a chart showing American Capital's exited portfolio companies, click here.
Back to top
|
|
American Capital Announces Formation of Technology Group |
In February, American Capital announced plans to expand its investment activities in the technology sector with the opening of a Boston, MA office led by Andy Fillat, Managing Director and Tony Abate, Managing Director. In April, American Capital announced further expansion of the Technology Group with the opening of an office in Palo Alto, CA led by Virginia M. Turezyn, Managing Director.
"After considerable due diligence and market research American Capital is developing a technology team," said American Capital Chairman, President and CEO Malon Wilkus. "American Capital has invested approximately $900 million in 11 technology companies in its existing portfolio. These companies generally are mature, high performing, cash flowing companies with substantial EBITDA margins and excellent growth rates. They operate across many different industry sectors and are driven by a broad range of technologies. We anticipate that the team will expand our existing technology investment business by investing in earlier stage technology. Our low cost and permanent capital and extensive origination system with nine offices worldwide, including our ability to provide one-stop financing by funding senior debt, subordinated debt and equity, should provide us considerable competitive advantages as we expand our investments in technology."
Mr. Fillat was previously associated with Advent International Corp., a $10 billion global private equity firm, where he was a Managing Director specializing in communications and information technology related investments during his 16 years at the firm. He was the lead dealmaker for over 40 completed transactions in the U.S. and Europe, managed venture operations responsible for over 100 deals, and served on the firm's Executive Committee. He earned an SB and SM in computer science and electrical engineering from the Massachusetts Institute of Technology and an MBA from Harvard Business School.
Mr. Abate brings over 20 years of experience in the media and information technology fields. He has been a private equity investor the past 10 years, as a General Partner at Battery Ventures, one of the premier venture firms in the U.S. managing over $1.6 billion, and as Vice President at Whitney & Co., a venture and private equity partnership that dates to 1946. Before becoming an investor, Tony worked for McKinsey & Company and served as an officer in the U.S. Air Force. Mr. Abate holds a BSE in Electrical Engineering from Duke University and an MBA from Harvard Business School with honors.
Mrs. Turezyn brings over 22 years of experience in technology investing in areas that include software and services, consumer Internet and digital media. She served as Managing Director at Constellation Ventures, an affiliate of Bear Stearns Asset Management, was a Co-founder and Managing Director of Infinity Capital, LLC and its predecessor company Information Technology Ventures and served as Vice President in the Venture Capital Group at Morgan Stanley & Co., where she established a west coast presence and venture capital practice. She most recently served on the boards of Avolent, K12, FathomOnline, Orchestria, Siperian, United Devices and Webify. Her past successes include: Aspect Telecommunications, Aurum Software, E.piphany, Exodus Communications, HomeClub, Nellcor, Relational Technology/Ingres and Webline Communications.
For the February press release, click here and for the April press release, click here.
Back to top
|
|
American Capital Appoints David Ehrenfest Steinglass Senior Vice President for Corporate Development |
In January, American Capital announced that David Ehrenfest Steinglass had been appointed to the newly created post of Senior Vice President for Corporate Development, effective January 1, 2006. Mr. Ehrenfest Steinglass has been a Managing Director and co-leader of the Bethesda-based investment team of American Capital since July 2002. In his new role, he has project management responsibility for the incubation and launch of geographic- and sector-specific funds as part of American Capital's strategy to become a publicly traded manager of funds of private assets. In addition, Mr. Ehrenfest Steinglass is responsible for identifying and executing other strategic growth initiatives.
"David Steinglass has an excellent track record as one of our Managing Directors and has demonstrated a consistent ability to consummate highly complex transactions. We are excited that he has agreed to deploy those skills in support of the development of our asset management business," said Malon Wilkus, Chairman, President and CEO. "We would hope that our growing and highly predictable asset management income will contribute to diversification and increases in our valuation."
"I am excited to be part of this latest phase of American Capital's growth," said Mr. Ehrenfest Steinglass. "The asset management strategy will enable us to tap new and specialized pools of capital while replicating our investment approach in new assets classes and locations in the global economy."
Mr. Ehrenfest Steinglass joined American Capital in 1997, immediately following its initial public offering. He spent his first three years with the firm in New York City, and then moved to Bethesda, where he built an investment team of 12 professionals managing nearly $750 million in capital. He earned his bachelors degree, magna cum laude, from Harvard College and his law degree, magna cum laude, from New York University Law School.
For the complete press release, click here.
Back to top
|
|
Charts |
Back to top
|
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 newsletter 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. This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.
|
Two Bethesda Metro Center
14th Floor
Bethesda, MD 20814
Phone: (301) 951-6122
Fax: (301) 654-6714
Info@AmericanCapital.com
Nasdaq: ACAS
www.acas.com
(800) 248-9340
Back to top
|
|
|
|
|
