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Nearly $10 billion invested, $1.2 billion in dividends paid since 1997 IPO
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Vol. 7 No. 3
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(800) 248-9340
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July 2006
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First Half 2006 New Investments Total Approximately $2.3 Billion,
Up 74% From First Half 2005
American Capital Issued $900 Million Unsecured Credit Facility
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Table of Contents
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NEW INVESTMENTS
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Syndicated One Stop Debt Investments |
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Nivel Parts & Manufacturing Co.
$44 million add-on investment in the recapitalization of and acquisition by Nivel Parts & Manufacturing Co., a leading designer and distributor
of a broad range of aftermarket golf car replacement parts and accessories |
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Tanenbaum-Harber Co., Inc. and Thesco Benefits, LLC
$35 million investment in a holding company established for the recapitalization of Tanenbaum-Harber Co., Inc. and Thesco Benefits,
LLC, insurance brokerage firms
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Unitranche Debt Investments |
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CIBT Holdings, Inc.
$74 million investment in CIBT Holdings, Inc., the world's largest expeditor of short-term visas, passports and other documents for business and leisure travel
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Schoor DePalma, Inc.
$151 million add-on investment to support an acquisition by Schoor DePalma, Inc., the leading diversified provider of
design and engineering services
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Other Investments |
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Contec, LLC
Investment in the buyout of Contec, LLC, the leading repairer of cable set-top-boxes in North America
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FreeConference.com, Inc.
Investment in the One Stop Buyout™ of FreeConference.com, Inc., the leading provider of free telephone conference calling services |
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The Hygenic Corporation
$24.5 million add-on investment to support an acquisition by The Hygenic Corporation, the leading manufacturer of branded and private label healthcare and fitness products
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United Food Group
Investment in the One Stop Buyout™ of United Food Group, LLC, a value-added processor of fresh, frozen and fully-cooked beef products
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Barton Cotton, Inc.
Investment in the One Stop Buyout™ of Barton Cotton, Inc., the leading provider of integrated direct marketing fundraising services to non-profit organizations
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American Capital Issued $900 Million Unsecured Credit Facility
American Capital Declares and Pays Q2 2006 $0.82 Dividend
Corporate News
American Capital Launches Financial Services Group
American Capital Announces Promotions
Charts
Growth in Investments, First Half 2002 - 2006
Dividends
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American Capital Declares and Pays $0.82 Q2 2006 Dividend |
In May, American Capital declared a second quarter 2006 regular dividend of $0.82 per share, which was paid on July 5, 2006. This dividend was a 9% increase over the second quarter 2005 regular dividend of $0.75 per share. American Capital has paid a total of approximately $1.2 billion in dividends and paid dividends of $20.73 per share since its August 1997 IPO at $15.00 per share.
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American Capital Issued $900 Million Unsecured Credit Facility
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In June, American Capital announced that Wachovia Capital Markets, LLC as sole bookrunner and as joint lead-arranger and BB&T Capital Markets as joint lead-arranger arranged a $900 million unsecured revolving credit facility for American Capital with a syndicate of lenders and Wachovia Bank, NA as administrative agent.
American Capital has raised $4.6 billion of debt capital since 1999. The majority of lenders in American Capital's prior unsecured facility have increased their commitments, and the Company now has a total of 24 lenders in its unsecured facility. In addition, the Company increased the facility commitment size from $310 million to $900 million and also improved the pricing.
For the complete press release click here.
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Growth in Investments, First Half 2002 - 2006 |
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$44 Million Add-On Investment in Recapitalization of and Acquisition for Nivel Parts & Manufacturing Co. |
  In April, American Capital funded a $44 million facility for its portfolio company Nivel Parts & Manufacturing Co., a leading designer and distributor of a broad range of aftermarket golf car replacement parts and accessories. The proceeds recapitalized Nivel and supported the acquisition of Huntington Investment Corporation, doing business as Intercoastal Manufacturing Company or IMC. IMC is also a designer and distributor of golf car replacement parts and accessories. American Capital's investment takes the form of a senior term loan and senior subordinated debt. American Capital is also providing a revolving credit facility. Sentinel Capital Partners is the majority owner of Nivel.
American Capital first invested in Nivel in February 2004, supporting Sentinel's acquisition. Founded in 1968, Jacksonville, FL headquartered Nivel is a one-stop shop for golf car replacement parts, offering the broadest selection of parts for all major manufacturers' cars. Nivel carries over 3,000 SKUs, including accessories, battery parts, bearings, seals, o-rings, brake parts, chargers, motor and engine parts, gaskets, solenoids, springs, switches and tires. The Company distributes golf car parts exclusively to over 1,800 independent and franchise golf car dealers throughout the U.S. and internationally. In addition to its distribution business, Nivel publishes Golf Car News, a bi-monthly industry magazine targeted at golf car dealers.
Established in 1975, Beaverton, OR headquartered IMC is a designer and distributor of golf car aftermarket parts and accessories, with a focus on golf car accessories. Through its division Pac Rim, IMC also designs and distributes the industry's broadest range of automotive wheel accessories.
For more information about Nivel, click here.
Contact Adam Spence, Principal, at (212) 213-2009.
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$35 Million in Tanenbaum-Harber Co., Inc. and Thesco Benefits, LLC |
 
In April, American Capital invested $35 million in a holding company established for the recapitalization of Tanenbaum-Harber Co., Inc., an insurance brokerage and risk management consulting firm, and Thesco Benefits, LLC, an employee benefits brokerage specialist. American Capital's investment took the form of a senior term loan, senior subordinated debt and redeemable preferred and common equity. American Capital is also providing a revolving credit facility. Olympus Partners is the equity sponsor and the majority owner of the Company. The management teams of the combined company also invested in the equity of the combined entity.
Founded in 1860, Tanenbaum-Harber is an intermediary that places and negotiates insurance contracts for both commercial and personal clients. The Company offers a wide spectrum of insurance policies, including property & casualty, workers compensation, construction-related, environmental and life. Headquartered in New York, NY, the Company is one of the largest regional insurance brokerage and risk management services firms within the greater New York, New Jersey and Connecticut tri-state area.
Thesco Benefits, also headquartered in New York, NY, is one of the leading employee benefits brokerage specialists in the tri-state area. The Company assists clients in the design and purchase of a variety of different benefits, including group medical, dental, vision and life insurance, accidental death and dismemberment insurance, disability insurance and long term care coverage.
Collectively, Tanenbaum-Harber and Thesco Benefits operate four offices in the New York area with over 140 employees.
For more information about Tanenbaum-Harber and Thesco Benefits, click here.
Contact Sean Eagle, Principal, at (301) 951-6122.
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$74 Million in CIBT Holdings, Inc. |
 
In May, American Capital invested $59 million to support the acquisition of CIBT Holdings, Inc. by Audax Group. CIBT is the world's largest expeditor of short-term visas, passports and other documents for business and leisure travel. American Capital's investment took the form of unitranche term debt. In addition, American Capital committed $15 million to a revolving line of credit and an acquisition facility, both of which were undrawn at close. Audax and CIBT management invested in equity.
CIBT, founded in 1989, now operates in eight major U.S. cities as well as internationally. It is the largest travel document expeditor in the U.S. and in the U.K., which are, respectively, the largest and third largest outbound travel markets worldwide. CIBT expedites the procurement of visas, passports, international driver's licenses and other specialized documents. In 2005, the Company processed documents for a large and diverse customer base including most Fortune 500 companies, major travel management companies, cruise lines and large government agencies. CIBT is based in McLean, VA.
For more information about CIBT Holdings, click here.
Contact Sean Eagle, Principal, at (301) 951-6122.
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$151 Million Add-On Investment to Support an Acquisition by Schoor DePalma |
 In May, American Capital invested up to $151 million in its portfolio company Schoor DePalma Inc. to support Schoor DePalma's acquisition of CMX Inc. and to recapitalize the combined entity. Schoor DePalma is a leading diversified provider of design and engineering services. CMX is a leading provider of engineering and consulting services in the southwestern United States. American Capital's investment took the form of a revolving credit facility and a unitranche debt facility. Trivest Partners L.P. is the majority owner of Schoor DePalma.
 American Capital first invested in Schoor DePalma in August 2004. Founded in 1968, Manalapan, NJ headquartered Schoor DePalma is a single-source provider of design and engineering services to the commercial and government sectors. The Company provides a wide range of services through its 13 divisions: real estate, environmental, facilities, traffic and planning, municipal services, water resources, transportation, construction engineering services and telecommunications. Services include those related to all phases of commercial, corporate and residential development. The Company's customers include municipalities, boards, agencies, authorities, bi-state authorities and companies in various industries such as real estate development, insurance, banking, utilities, telecommunications, healthcare and construction. Schoor DePalma has 17 regional offices in New Jersey, New York, Pennsylvania, Maryland, Florida and Arizona.
CMX is one of the largest multidiscipline engineering firms in the state of Arizona. CMX offers a diversified range of products including civil engineering, construction management, land planning, water resources, survey and sports facility consultation to clients in both private and public sectors. Over the last five years, the Company has grown its sales by a compounded annual growth rate of 20%. The Phoenix, AZ headquartered company was founded in 1986 and has four offices in Arizona and one in Mexico.
For more information about Schoor DePalma, click here.
Contact Helen Yang, Vice President, at (212) 213-2009.
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Investment in Buyout of Contec, LLC |
In June, American Capital invested in the buyout of Contec, LLC, the leading repairer of cable set-top-boxes in North America. American Capital's investment took the form of a senior term B loan, senior and junior subordinated debt and convertible preferred and common equity. American Capital is also providing a revolving credit facility. CIT Communications, Media and Entertainment, a unit of CIT Group Inc. (NYSE: CIT), and CIBC World Markets also invested in the revolving credit facility and senior term B loan. Contec management made a significant investment in equity alongside American Capital.
Founded in 1978, Contec is based in Schenectady, NY. In 2002, Contec formed its Worldwide Digital subsidiary to acquire the repair and maintenance business of Motorola, Inc. Contec diagnoses and repairs set-top-boxes sent to it by multiple system operators both within and outside of warranty periods. In addition, it remanufactures and sells used Motorola digital set-top-boxes, is the exclusive distributor of Motorola set-top-box proprietary parts for in-warranty repair to authorized service centers, handles set-top-box recalls and field retrofits for original equipment manufacturers and designs and markets remote controls. Contec has its primary facilities in Schenectady and Matamoros, Mexico as well as additional facilities in Mexico City, Mexico, Seattle, WA and Brownsville, TX. The Company has over 2,000 employees.
For more information about Contec, click here.
Contact Jon Isaacson, Managing Director, at (301) 951-6122.
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Investment in the One Stop Buyout™ of FreeConference.com, Inc. |
 In May, American Capital invested in the One Stop Buyout™ of FreeConference.com, Inc., a leading provider of free telephone conference calling services. American Capital's investment took the form of a senior term loan, senior subordinated debt, redeemable preferred equity, convertible preferred equity and common equity. American Capital is also providing a revolving credit facility. Glickman Capital and Broadstream Capital Partners, both advisers to FreeConference.com, and FreeConference.com management also invested in the equity. American Capital now owns 84% of the Company, on a fully diluted basis.
Based in Los Angeles, CA, FreeConference.com offers two service options: free conference calling and toll-free conference. With the free service, participants conduct a conference call and pay nothing. Conference organizers pay for the toll-free service and receive additional options that allow them to record, download, transcribe and play back conferences over the phone. In 2003, the Company's website won the Business WEBBY award for best telecommunications website, the leading international award in Internet commerce.
For more information about Freeconference.com, click here.
Contact Kenneth Jones, Principal, at (610) 238-0210.
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$24.5 Million Add-On Investment to Support an Acquisition by The Hygenic Corporation |
 
In May, American Capital invested an additional $24.5 million in its portfolio company The Hygenic Corporation to support its acquisition of Performance Health, Inc., a developer and marketer of topical analgesics to healthcare practitioners. American Capital's investment took the form of a second lien term loan and preferred and common equity. American Capital's cumulative gross investments in Hygenic total $47 million. GE Antares Capital, a unit of GE Commercial Finance, and Madison Capital Funding LLC are providing a senior secured credit facility. The Company's existing investors, Baird Capital Partners and Beecken Petty O'Keefe & Company, are investing in Hygenic's equity. Baird Capital Partners is the lead investor in Hygenic.
Founded in 1992, Performance Health develops and markets topical pain relievers to chiropractic, podiatry, physical, occupational and massage therapy practitioners. The Company is headquartered in Export, PA and distributes its products primarily through healthcare and therapy professionals. Its products include BIOFREEZE®, a pain reliever used to help relieve pain from common sprains, muscle aches, injuries or arthritis, and PROSSAGE®, a warming massage ointment.
American Capital first invested in Hygenic in January 2004. Founded in 1925, Akron, OH-based Hygenic is a leading manufacturer of branded and private label healthcare and fitness products. The Company manufactures an extensive range of products under the Thera-Band®, Dyna-Band®, AquafinsTM and Parabath® brands, including resistive exercise bands and tubing, exercise balls, exercise mats and aquatic products as well as healthcare and specialty products.
For more information about Hygenic, click here.
Contact Demian Kircher, Principal, at (312) 681-7400.
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Investment in One Stop Buyout™ of United Food Group, LLC |
In May, American Capital invested in the One Stop Buyout™ of United Food Group, LLC (UFG), a value-added processor of fresh, frozen and fully-cooked beef products. American Capital's investment took the form of senior term loans, senior and junior subordinated debt and preferred and common equity. American Capital is also providing a revolving credit facility. UFG management invested in equity.
United Food Group was founded in 1995. UFG produces three principal products for its retail customers: chubs, which are fresh or frozen beef packaged in a plastic casing, frozen patties and modified atmosphere packaging (MAP) or case-ready products. Its principal food service line products are fresh and frozen hamburger patties, cooked kettle such as taco meat and chili and cooked charbroiled hamburger patties. The Company has two adjacent facilities in Los Angeles, CA and nearly 500 employees. UFG's customers include major grocery stores and fast food restaurants. In 2005, the Company generated sales of approximately $450 million.
For more information about United Food Group, click here.
Contact Frank Do, Managing Director, at (310) 806-6280.
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Investment in One Stop Buyout™ of Barton Cotton, Inc. |
In April, American Capital invested in the One Stop Buyout™ of Barton Cotton, Inc. Barton Cotton is the leading provider of integrated direct marketing fundraising services to non-profit organizations (NPOs). American Capital's investment took the form of senior term loans, subordinated debt and equity. American Capital is also providing a revolving credit facility. Barton Cotton management invested in equity alongside American Capital. American Capital now owns approximately 83% of the Company, on a fully diluted basis.
Founded in 1928 as a publisher and printer of billing inserts, stationery and other materials, Barton Cotton has grown into the leading fully integrated fundraising service provider to NPOs such as religious organizations, affinity groups and membership and social services organizations. The Company develops and implements direct mail programs designed to generate funding support for NPOs primarily by sending upfront premiums such as cards, calendars, note pads and other items to solicit donations. Barton Cotton operates three divisions, including Fundraising, which provides customized direct marketing fundraising services; Royalty, which sells branded Christmas cards exclusively through direct mail and online channels to members, supporters or donors of NPOs and affinity groups; and Religious Products and Services, which sells religious stationery products through catalogue and online channels to Catholic parishes in the U.S. and Canada. Barton Cotton's customers include Veterans of Foreign Wars, the National Geographic Society, the American Humane Association and the American Lung Association. In 2005, Barton Cotton recorded net sales of approximately $110 million. The Company, based in Baltimore, MD, employes over 200 people.
For more information about Barton Cotton, click here.
Contact Brian Marshall, Vice President, at (212) 213-2009.
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American Capital Launches Financial Services Group |
In May, American Capital announced that Bob Grunewald joined the Company as Managing Director of the newly formed American Capital Financial Services Group. Mr. Grunewald was a Managing Director at Wachovia Securities until March 2006, where he founded and led the Specialty Finance Investment Banking practice. Mr. Grunewald will be responsible for developing a team to expand American Capital's investment activities in the financial services sector.
The American Capital Financial Services Group will target investments in middle market companies involved in consumer and commercial finance, insurance and asset management and companies providing products or services to these companies. This sector currently comprises over 20% of U.S. GDP.
Mr. Grunewald has over 15 years of experience in the financial services industry, completing numerous mergers and acquisitions, public and private equity raises and structured financings. Mr. Grunewald's financing, structuring and advisory experience encompasses the commercial and consumer finance industries as well as the insurance and asset management sectors. Mr. Grunewald holds a master of business administration degree from Georgia State University and a bachelor of business administration degree from the University of Notre Dame.
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American Capital Announces Promotions |
American Capital is committed to developing and rewarding our people as the Company evolves and grows, and we are pleased to announce promotions among our talented staff. Mr. Bill Dyer in Philadelphia, Mr. Stéphane Legrand in Paris and Ms. Natasha Volyanskaya in San Francisco have all been promoted to Principal. Brett Donelan in New York, Todd Friant from the Energy Group in Dallas, Doug Kelley in Dallas and Brian Martin in Los Angeles have all been promoted to Vice President. Michael Sarner in Bethesda has been promoted to Vice President, Treasury & Analysis.
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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.
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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
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