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Over $1.7 billion invested, $305 million in dividends paid since 1997 IPO.
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Vol. 4 No. 2
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(800) 248-9340
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April 2003
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TOTAL Q1 2003 NEW INVESTMENTS $178 MILLION, 63% OVER Q1 2002
$258 Million Total Proceeds in Q1 2003 Equity Offerings
Capital Resources Now Over $1.7 Billion
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Table of Contents
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Total Q1 2003 New Investments $178 Million, 63% Over Q1 2002
$258 Million Total Proceeds in Q1 2003 Equity Offerings; Capital Resources Now Over $1.7 Billion
American Capital Declares Dividend of $0.67 per Share; 14% Increase Over Q1 2002
2003 New Portfolio Investments
$49 Million in Leading Full-Service Logistics Provider
$9.3 Million in Leading Siding Manufacturer
$40 Million in National Retail Financial Services Provider
$50 Million in Worldwide Electronic Funds Transfer Firm
$10 Million in Premier Manufacturer of Stairs and Columns
$24.3 Million in World Leading Manufacturer of Animal Feed and Oilseed Equipment
$33.5 Million in Global Manufacturer & Marketer of Automated Restroom Equipment
See a list of American Capital's Equity Investment Partners.
Four Q1 2003 Exits and Prepayments Earn $3.9 Million in Capital Gains
19% Compounded Annual Return on $300 Million of Cumulative Exits and Prepayments
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Total Q1 2003 New Investments $178 Million, Up 63% Over Q1 2002
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American Capital
Q1 New Investments, 1999-2003
($Millions)
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$258 Million Total Proceeds in Q1 2003 Equity Offerings
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In March, the Company raised approximately $151 million in total proceeds in the second equity offering of the year. Managing underwriters for the offering were Salomon Smith Barney, Wachovia Securities and Legg Mason Wood Walker, Incorporated.
The March offering was the second of two offerings in the first quarter. The first offering was in January and raised approximately $107 million in total proceeds. Managing underwriters for the offering were A.G. Edwards & Sons, Inc., BB&T Capital Markets, a division of Scott & Stringfellow, Inc., Legg Mason Wood Walker, Incorporated and U.S. Bancorp Piper Jaffray, Inc. Together, the January and March offerings raised approximately $258 million in total proceeds.
The net proceeds of these offerings were applied to reduce the borrowings under American Capital's existing revolving credit facility. This creates availability under this facility, which will generally be available for funding future American Capital investments.
For more information about our most recent offering click here.
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American Capital Declares Dividend of $0.67 per Share; 14% Increase Over Q1 2002
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In January, the Board of Directors declared a first quarter 2003 dividend of $0.67 per share, payable on March 31, 2003 to record holders as of March 12, 2003. This dividend is a 14% increase over the first quarter 2002 regular dividend of $0.59 per share. American Capital has paid or declared a total of $11.00 in dividends since its August 1997 IPO, totaling $305 million.
For more information about American Capital's dividends click here.
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$49 Million in Leading Full-Service Logistics Provider
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 In April, American Capital invested $49 million in FMI International, Inc., a leading third party logistics provider to the U.S. apparel industry, in support of a recapitalization led by KRG Capital Partners LLC. In addition, Credit Agricole Indosuez provided $20 million of financing and FMI management invested in the transaction, retaining significant ownership in the company.
Founded in 1979, FMI offers a fully integrated line of logistics services, including freight forwarding, transloading, warehousing, distribution, and local and long distance ground transportation to the U.S. import apparel industry. Along the entire transport route, FMI offers a comprehensive inventory tracking system that enables customers to locate their merchandise at any point on the supply chain. FMI is one of the few companies in the industry with expertise in garment-on-hanger shipping, a shipping method in which delicate apparel remains hung on slick rails throughout its transport, avoiding the weight and pressure of other garments that could adversely affect their appearance. FMI's major customers include Jones Apparel Group, Liz Claiborne, Polo Ralph Lauren, and Federated Department Stores. Headquartered in Carteret, NJ, FMI employs over 500 employees and has experienced annual growth of over 19% per year since 1999. Pictured above is an example of FMI's fully integrated line of services, ensuring the seamless transport of apparel from international manufacturing locations to U.S. retail distribution centers.
Click here for more information about FMI.
Contact Darin Winn, Principal and Managing Director, or call (214) 273-6630.
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$9.3 Million in Leading Siding Manufacturer
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 In April, American Capital invested $9.3 million in Nailite International Inc., a niche manufacturer of molded polypropylene siding for the remodeling and new construction housing markets. American Capital's investment took the form of senior subordinated debt with warrants and supported the acquisition of Nailite by Graham Partners. A syndicate led by National City Bank provided the revolving credit facility and a senior term loan. Nailite management also invested in the transaction.
Founded in 1978, Nailite International Inc. was the first company in the siding business to develop an injection molded siding product that replicates the appearance of the traditional siding materials of natural cedar, brick and stone, thereby offering homeowners the low cost and minimal maintenance benefits of artificial siding without having to sacrifice aesthetics. The company's products are used in the remodeling and construction of homes and serve top national and regional distributors. Nailite offers its customers a wide product offering with proprietary designs, colors and shadings that are difficult to replicate by competitors. Nailite has seen sales more than double since 1997 with annual sales growth of over 20%. The company is based in Miami, FL and has over 140 employees.
Click here for more information about Nailite.
Contact Kenneth Jones, Principal, or call (610) 238-0210.
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$40 Million in Leading National Retail Financial Services Provider
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 In March, American Capital invested $40 million in ACE Cash Express, Inc. (Nasdaq: AACE), one of the nation's largest owners, operators and franchisors of retail financial services stores. American Capital's investment took the form of senior secured subordinated notes, with proceeds used to refinance a portion of ACE's existing debt. A bank group led by Wells Fargo Bank Texas, JP Morgan Chase Bank, Bank of America and US Bank remains as the company's revolving credit facility provider. New lenders in the company's revolving credit facility include US Bank and Southwest Bank of Texas.
ACE Cash Express, Inc. is headquartered in Irving, TX and is the largest owner, operator and franchiser of check-cashing stores in the United States. ACE also maintains automatic check-cashing machines, which provide financial services without the need for a service associate, at 22 company-owned store locations and, during the tax season, at more than 240 H&R Block retail offices. ACE offers a broad range of check-cashing and other consumer financial services and is one of the largest providers of MoneyGram wire transfer transactions. In addition, ACE offers money orders, bill payment services, and prepaid local and long distance telecommunication services. Small, short-term consumer loans are also available to customers at various ACE company-owned stores.
Click here for more information about ACE Cash Express.
Contact Jeff MacDowell, Principal or call (214) 273-6633.
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$50 Million in Leading Electronic Funds Transfer Firm
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In March, American Capital invested $50 million in Vigo Remittance Corporation, a leading worldwide electronic funds transfer service firm. American Capital's investment took the form of senior debt and senior subordinated debt with warrants, and supported the acquisition and future growth of Vigo by Great Hill Partners alongside a seasoned management team.
Founded in 1985, Sunrise, FL-based Vigo Remittance Corporation is among the world's largest money transmitting firms. The company operates in 33 countries around the world, with a primary focus on Latin America and the Caribbean. Similar to its worldwide competitors, Vigo collects money in cash from customers through an extensive, heavily focused international agent network, typically grocery stores, convenience stores/bodegas or travel agencies. The funds are paid out to recipients via multiple correspondent relationships that include banks, post offices and retailers.
Click here for more information about Remittance Corporation.
Contact Robert Klein, Principal or call (212) 213-2009.
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$10 Million in Premier Manufacturer of Stairs and Columns
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 In March, American Capital invested $10 million in Visador Holdings Corporation. Visador is a holding company for Coffman Stairs, a leading U.S. manufacturer of stair components, and Crown Column and Millwork, a major manufacturer of synthetic and wood columns used in residential construction. American Capital's investment took the form of senior subordinated debt with warrants. Carousel Capital was the lead equity investor, with additional equity coming from Visador management. Harris Bank provided the senior credit facility.
Visador Holdings Corporation, headquartered in Marion, VA, was founded in 1951 and later merged with Coffman Stairs, a manufacturer of wooden stair parts since 1874. Headquartered in Marion, VA, Coffman is a leading manufacturer of stair parts for single-family homes. Coffman's breadth of product offering includes over 9,000 SKUs, including ten stair parts styles in nine different wood species. These stair products manufactured include treads and risers, balusters, newels, rails, fittings and accessories.
Crown, headquartered in Gadsden, AL, was founded in 2000 by Visador's CEO, Lowry Hobbs. Crown manufactures synthetic and wood columns, turned posts, and related products used for support and aesthetics in residential construction.
Click here for more information about Visador Holdings.
Contact Jeff MacDowell, Principal or call (214) 273-6633.
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$24.3 Million in World Leading Manufacturer of Animal Feed and Oilseed Equipment
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 In February, American Capital invested $24.3 million in support of the recapitalization of CPM Acquisition Corp., doing business as California Pellet Mill, the world's leading supplier of process machinery for the animal feed and oilseed processing industries. American Capital's investment took the form of a senior term loan and senior subordinated note with warrants. US Bank NA and Harris Bank provided a senior term loan and a revolving credit facility. The Compass Group International LLC, which acquired the company in 2001, was the equity sponsor.
With world headquarters in Waterloo, IA, California Pellet Mill introduced the first commercially successful pellet mill for the production of animal feeds in 1931. The company now manufactures a complete line of machinery for the animal feed and oilseed extraction industries, including pellet mills, flaking equipment, spare parts, dies and shells under three recognized brand names - CPM, Roskamp and Champion. With over 300 employees and eight locations in North America, Europe, and Asia, California Pellet Mill has grown to be the largest pellet mill company in the world. The company's customers include Perdue, Tyson Foods, Archer Daniels Midland and Cargill.
Click here for more information about California Pellet Mill.
Contact Kenneth Jones, Principal, or call (610) 238-0210.
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$33.5 Million in Global Manufacturer & Marketer of Automated Restroom Equipment
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 In February, American Capital invested $33.5 million in Technical Concepts L.L.C., a global designer and marketer of "touch-free" automated products and other related products and services for hygiene and odor control in "away from home" restrooms. American Capital's investment took the form of senior term notes and senior and junior subordinated debt with warrants. American Capital's proceeds were used to partially finance the purchase of Technical Concepts by Liberty Partners. Technical Concepts management invested in the equity.
Technical Concepts, with world headquarters in Chicago, IL, was founded in 1987 as a niche supplier of bathroom air care products. Technical Concepts has expanded its product offerings, entering the "touch-free" automated away from home restroom industry by developing automated odor control products, automated cleaning and sanitizing products and automated touch free restroom systems, including automated flush systems for urinals and toilets, automated faucets and automated soap dispensers. With a firm commitment to top quality products and excellent customer service, Technical Concepts has established and maintained relationships with customers such as Rubbermaid, Ecolab, and Sloan Valve Company.
Click here for more information about Technical Concepts.
Contact Myung Yi, Vice President, or call (301) 951-6122.
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American Capital's Equity Investment Partners
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For more information about American Capital's mezzanine investments supporting equity sponsors click here.
American Capital supports private equity sponsors with mezzanine debt, senior debt and equity investments in order to allow them to leverage their capital base. We provide cost effective capital that helps private equity groups get deals done.
American Capital has provided capital in support of successful equity sponsors such as:
| Bain Capital |
GTCR |
| Blue Capital Management |
George K. Baum Capital Partners |
| Booth Creek Management |
Graham Partners |
| Brentwood Associates |
Great Hill Partners |
| Caltius Private Equity |
KRG Capital Partners |
| Cambridge Capital Partners |
Keystone Holdings |
| Carousel Capital |
Liberty Partners |
| Celerity Partners |
Lincolnshire Management |
| Charles River Capital Partners |
Mellon Ventures |
| ClearLight Partners |
Morgenthaler |
| The Compass Group |
Sentinel Capital Partners |
| DFW Capital Partners |
Sterling Ventures |
| Dimeling, Schreiber & Park |
Stratford Capital Partners |
| Engles Urso Follmer |
TMB Industries |
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Four Q1 2003 Exits and Prepayments Earn $3.9 Million in Capital Gains;
19% Compounded Annual Return on $300 Million of Cumulative Exits and Prepayments
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Since our IPO, American Capital has realized a compounded annual return of 19% on senior debt, subordinated debt and equity in 24 exits and prepayments, including fees.
In the first quarter of 2003, we received $76 million in prepayments and exits on four portfolio companies, realizing $3.9 million in capital gains.
In January, American Capital exited its investment in senior secured debt issued by Numatics Inc., earning a 21% compounded annual return and a $130,000 capital gain. The exit was at the most recent quarterly valuation of these assets. In November 2001, American Capital invested $31 million in the senior debt of Numatics Inc., a leading manufacturer of pneumatic valves, air filters, regulators, lubricators and motion control products. Numatics used the proceeds of the loan to repay senior bank facilities.
For more information about the Numatics transaction click here.
American Capital completely exited its investment in Lubricating Specialties Company, earning a 19% compounded annual return. In December 2000, American Capital invested $22.7 million in the form of senior debt and senior subordinated debt with warrants. Lubricating Specialties Company is the largest independent manufacturer, blender and marketer of greases and lubricants on the West Coast. Lubricating Specialties prepaid $7.2 million of the senior notes during 2001 and prepaid the $15.5 million of senior subordinated debt in March 2003. American Capital earned $0.8 million of realized capital gains on its investment in the first quarter of 2003.
For more information about the Lubricating Specialties Company transaction click here.
American Capital has partially exited its investment in subordinated notes issued by Weston Solutions, Inc., earning a cumulative 32% compounded annual return. In June 2001, American Capital invested $30 million in a going-public acquisition of Weston Solutions in the form of senior and junior subordinated notes with warrants and preferred and common equity. In August 2002, Weston prepaid $10 million in junior subordinated notes and in February 2003, they prepaid $10.5 million of the remaining $17 million senior subordinated debt, both made possible by the company's ahead-of-plan performance. American Capital earned $1.4 million of realized capital gains on its investment in the first quarter of 2003. Weston is a leading environment and redevelopment firm, delivering comprehensive solutions to complex problems for industry and government worldwide. American Capital continues to own 31% of the Company.
For more information about the Weston transaction click here.
American Capital also partially exited Plastech Engineered Products, Inc, earning an excellent return. In November 2001, American Capital invested $30 million in senior subordinated in Plastech, a leading designer and manufacturer of interior and exterior automotive components and systems supplying original equipment manufacturers and tier one suppliers in the automotive industry. In February 2003, Plastech prepaid $20 million of the senior subordinated notes. American Capital earned $1.6 million of realized capital gains on its investment in the first quarter of 2003. American Capital continues to own 2% of the Company.
For more information the Plastech transaction click here.
For more information about American Capital's exits click here.
For more information on American Capital's capital gains click here.
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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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
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