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The following is a summary of the second quarter 2008 exit proceeds, net realized gains (losses) and cumulative compounded annual rate of returns ("IRR") (in millions): Total Q2 Q2 Realized Cumulative Company Name Proceeds Gain (Loss) IRR BPWest, Inc. $84 $69 100% Primrose Schools $63 $16 30% Technical Concepts, LLC $12 $11 20% US Express Leasing, Inc. $38 $0 13% Safemark Acquisitions, Inc. $36 ($12) 4% DanChem Technologies, Inc. $16 ($11) 0% NPC Holdings, Inc. $11 ($11) (6%) Senior loan syndications $21 $0 Other, net $198 $1 Total $479 $63
Since its August 1997 IPO through the second quarter of 2008, American Capital has earned a 17% compounded annual return, including interest, dividends, fees and net gains, on 239 realizations of senior debt, subordinated debt and equity investments, totaling $11 billion of committed capital. These realizations represent 46% of all amounts invested since its August 1997 IPO. Proceeds from these realizations exceeded the total associated prior quarter valuation of the investments by less than 1%. American Capital earned a 30% compounded annual return on the exit of its equity investments, including dividends, fees and net gains.
American Capital and its funds under management have received $5 billion in total amortizations, prepayments and exits in the past four quarters, $3 billion year to date and $0.9 billion quarter to date. Not including funds under management, the Company has received $4 billion in total amortizations, prepayments and exits in the past four quarters, $2 billion year to date and $0.4 billion quarter to date.
BPWest, Inc.
American Capital previously announced that it recognized a gain of $69 million in the second quarter of 2008 from the sale of its portfolio company BPWest, Inc., the holding company for Anchor Drilling Fluids USA Inc., to Castle Harlan Inc. Inception to date total realized gain on the Company's investment in BPWest is $80 million. Including the investments in BPWest of American Capital's funds under management, the gain totals $123 million over the life of the investment. Including inception to date dividends, cumulative gains and dividend income realized by American Capital and its affiliates totaled more than $139 million over the life of the investment.
Anchor is the nation's largest independent provider of drilling fluids and fluid-handling services for onshore oil and gas drilling. In support of Castle Harlan's acquisition of BPWest, American Capital provided $68 million of financing in the form of senior subordinated notes and senior term loans.
American Capital formed BPWest in 2005 to acquire Anchor Drilling Fluids USA Inc., investing $21 million in BPWest in the form of a senior term loan, senior subordinated debt and preferred and common equity. In 2006, the Company invested an additional $39 million in a partial recapitalization of BPWest and to support the acquisition of two separate companies, Toby's Vacuum and Truck Services Inc. and Ozark Mud and Chemical Inc. American Capital has earned a 100% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of its investment. On its equity only investment, it has earned a 198% compounded annual rate of return, including dividends and fees earned over the life of its investment. Including the investments in BPWest of American Capital's funds under management, the combined group earned a 117% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of their investments. On the equity only investments, the combined group earned a 214% compounded annual rate of return, including dividends and fees earned over the life of their investments. The proceeds received were less than the first quarter 2008 valuation of the investment by $1.9 million, or 2%.
"We are thrilled to be announcing this transaction, as well as our continuing relationship with Anchor and their new owners," said Kevin Kuykendall, Managing Director, Energy Group. "Our relationship with Anchor has been extraordinarily profitable on a professional level, and has been equally rewarding on a personal level. Anchor's management team, led by Bob West, Phil West and Greg Davis, is of truly the highest quality, and we will continue to support management in any way possible as our relationship continues."
For the complete press release, go to http://www.acas.com/news/newsreleases/2008/pr20080505.html.
Primrose Schools
In the second quarter of 2008, American Capital realized a gain of $16 million from the sale of its portfolio company PHC Acquisitions Inc., the parent of Primrose Schools, to Roark Capital Group. Primrose is a leading franchisor of early childhood education and high-quality child care in the upscale demographic segment of the child care industry. The Company has now realized an inception to date aggregate gain on its investment in Primrose of $18 million, earning a 30% compounded annual rate of return on its investment, including interest and fees earned over the life of the investment. Together with its funds under management, the combined group realized an inception to date aggregate gain of $28 million from the exit, earning an aggregate 33% compounded annual rate of return on their investments, including interest and fees earned over the life of their investments. American Capital invested in Roark Capital's acquisition through a 5.5% common equity ownership in Primrose Holding Corporation. The proceeds received were less than the first quarter 2008 valuation of the investment by $4.7 million, or 6%.
In March 2006, American Capital originally invested $63 million in the buyout of Primrose. The investment took the form of senior and junior subordinated debt and convertible preferred and common equity.
"Over the course of our two year investment in Primrose, the company performed above expectations and increased sales," said Robert Klein, Managing Director, Buyouts Group. "We are proud of Primrose's success and believe that it is positioned for continued success under its new investment partner, Roark Capital Group."
For more information about the Primrose investment, go to http://www.ACAS.com/our_portfolio/companies/primrose.html.
Technical Concepts Holdings, LLC
In the second quarter of 2008, American Capital realized a gain of $11 million from the sale of its portfolio company Technical Concepts Holdings, LLC. Technical Concepts is 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. In February 2003, the Company originally invested $33.5 million to support Liberty Partners' acquisition of Technical Concepts. The investment took the form of senior term notes and senior and junior subordinated debt with warrants. American Capital previously received full repayment of its debt investments in the first quarter of 2006. American Capital earned a 20% compounded annual rate of return on its investment, including interest and fees earned over the life of the investment. The proceeds received were less than the first quarter 2008 valuation of the investment by $0.4 million, or 3%.
For more information about the Technical Concepts investment, go to http://www.ACAS.com/our_portfolio/companies/technical_concepts.html.
US Express Leasing, Inc.
In the second quarter of 2008, American Capital realized full repayment of $37.5 million on its senior subordinated debt facility to US Express Leasing, Inc. (USXL). USXL is an independent small-ticket equipment leasing company that provides financing for healthcare, technology, office products, graphic arts and commercial and industrial equipment. The Company earned a 13% compounded annual rate of return on its investment, including interest and fees earned over the life of the investment.
In July 2007, American Capital provided a $60 million senior subordinated debt facility to support USXL's growth and working capital needs. USXL drew $37.5 million on the facility prior to repayment.
"We are delighted to have worked with USXL's strong management team over the past year," said Bob Grunewald, Managing Director, Financial Services Group. "The team has done a great job leveraging USXL's competitive advantages and establishing itself as a premier small-ticket leasing platform. We wish them continued success."
For more information about the USXL investment, go to http://www.ACAS.com/our_portfolio/companies/us_express_leasing.html.
Safemark Acquisitions, Inc.
In the second quarter of 2008, American Capital realized a loss of $12 million from the sale of its portfolio company Safemark Acquisitions, Inc. to Milestone Partners. Safemark is a supplier of in-room safes to the hospitality industry. The Company has now realized an inception to date aggregate loss on its investment in Safemark of $13 million, earning a 4% compounded annual rate of return on its investment, including interest and fees earned over the life of the investment. Together with its funds under management, the combined group realized an inception to date aggregate loss of $15 million from the exit, earning an aggregate 2% compounded annual rate of return on their investments, including interest and fees earned over the life of their investments. The proceeds received were less than the first quarter 2008 valuation of the investment by $1.5 million, or 4%.
In June 2004, American Capital originally invested $31 million in the One Stop Buyout(TM) of Safemark. The investment took the form of a revolving credit facility, senior term loans, senior subordinated debt, junior subordinated debt with warrants and redeemable preferred and common equity.
For more information about the Safemark investment, go to http://www.ACAS.com/our_portfolio/companies/safemark.html.
DanChem Technologies, Inc.
In the second quarter of 2008, American Capital realized a loss of $11 million from the sale of its portfolio company DanChem Technologies, Inc. DanChem is a manufacturer of specialty chemicals and plastics. The Company has now realized an inception to date aggregate loss on its investment in DanChem of $14 million, earning a compounded annual rate of return of less than 1% on its investment, including interest and fees earned over the life of the investment. Together with its funds under management, the combined group realized an inception to date aggregate loss of $15 million from the exit, earning an aggregate compounded annual rate of return of less than 1% on their investments, including interest and fees earned over the life of their investments. The proceeds received were less than the first quarter 2008 valuation of the investment by $1.1 million, or 6%.
In March 2002, American Capital originally invested $29 million in the One Stop Buyout(TM) of DanChem. The investment took the form of a senior credit facility, subordinated notes with warrants and common equity.
For more information about the DanChem investment, go to http://www.ACAS.com/our_portfolio/companies/danchem.html.
NPC Holdings, Inc.
In the second quarter of 2008, American Capital realized a loss of $11 million from the sale of its portfolio company NPC Holdings, Inc. to Trelleborg Corporation. NPC is a designer and manufacturer of flexible, rubber pipe-to-manhole connectors for sanitary sewer, stormwater and drainage systems. The Company earned a negative 6% compounded annual rate of return on its investment, including interest and fees earned over the life of the investment. Together with its funds under management, the combined group realized an inception to date aggregate loss of $18 million from the exit, earning an aggregate negative 18% compounded annual rate of return on their investments, including interest and fees earned over the life of their investments. The proceeds received were less than the first quarter 2008 valuation of the investment by $0.4 million, or 4%.
In June 2005, American Capital originally invested $30 million in the One Stop Buyout(TM) of NPC. The investment took the form of a revolving credit facility, senior term loans, senior subordinated debt and equity.
For more information about the NPC investment, go to http://www.ACAS.com/our_portfolio/companies/npc.html.
For a chart showing American Capital's exited portfolio companies, go to http://www.ACAS.com/our_portfolio/exited.html.
ABOUT AMERICAN CAPITAL
American Capital, with $20 billion in capital resources under management, is the only private equity fund and the largest alternative asset management company in the S&P 500. American Capital, both directly and through its global asset management business, originates, underwrites and manages investments in private equity, leveraged finance, real estate and structured products. American Capital and its affiliates invest from $5 million to $800 million per company in North America and euro 5 million to euro 500 million per company in Europe. American Capital was founded in 1986 and currently has 12 offices in the U.S. and Europe.
As of July 31, 2008, American Capital shareholders have realized a total return of 266% since the Company's IPO -- an annualized return of 13%, assuming reinvestment of dividends. American Capital has paid a total of $2.5 billion in dividends and paid or declared $29.25 dividends per share since going public in August 1997 at $15 per share.
Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit http://www.AmericanCapital.com or http://www.EuropeanCapital.com.
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 press release contains forward-looking statements. The statements regarding expected results of American Capital 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 or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.
SOURCE American Capital, Ltd.
http://www.americancapital.com
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