American Capital Hits 17% Return on Sale of Specialty Brands
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American Capital Hits 17% Return on Sale of Specialty Brands

acas nf2American Capital has sold its portfolio company BCCK Holdings, parent to Specialty Brands of America, to B&G Foods.  American Capital and its affiliated funds received $93 million in equity proceeds and realized a gain of $60 million from the transaction.  American Capital first invested in Specialty Brands in December 2003.

Of the $93 million in total proceeds, American Capital received $54 million in equity proceeds, realizing a gain of $35 million and also recognized $20 million of dividend income and additional realized gains over the life of its investment.  American Capital’s compounded annual rate of return earned on its debt and equity was 17%, including interest, realized gains and fees.  American Capital received 2.2 times its equity investment, and realized a compounded annual rate of return of 19% over the life of its equity investment, including dividends and fees.

Specialty Brands of America (SBA) is a packaged foods company with a portfolio of brands in a variety of food categories.  The company’s largest brand is Bear Creek Country Kitchens, a brand of dry soups, pasta dishes and rice dishes.  Specialty Brands also offers Spring Tree, Cary’s and MacDonald’s pure maple syrups and pancake syrups, New York Flatbreads and Canoleo margarine.  Specialty Brands is based on Long Island in Westbury, NY (www.sbamerica.com).

American Capital invested $68 million in the acquisition of SBA in December 2003. American Capital’s investment took the form of a revolving credit facility, senior term debt, senior and junior subordinated debt, redeemable preferred stock and common equity.  In May 2005, American Capital invested an additional $55 million in a revolving credit facility, senior term loans, senior and junior subordinated debt and convertible preferred equity to support SBA’s acquisition of Bear Creek.

graff nf1“We are delighted with the results of our investment in SBA and proud of how the company excelled throughout our investment and solidified its leading position within the packaged foods industry,” said Brian Graff, American Capital Senior Managing Director.  “Our investment in SBA is an excellent example of American Capital’s One Stop Buyout strategy of investing in middle market companies with strong market positions and partnering with management teams to enhance performance, grow operations and create value.”

“Since our initial investment in 2003, we helped SBA achieve significant growth through acquisitions, new product launches and existing product enhancements,” said Jim Gregory, American Capital Principal, Buyouts Group.  “We are pleased to have supported SBA’s successful acquisition and integration of Bear Creek in 2005, which resulted in a new suite of nationally known food products as well as significant operational synergies.  SBA owns leading brands in the pure maple syrup, sugar free table syrup and hearty dry soups categories and we believe it is a direct fit for B&G Foods’ family of top brands.

“B&G Foods (NYSE:BGS) and its subsidiaries manufacture, sell and distribute a portfolio of branded shelf-stable foods across the United States, Canada and Puerto Rico. B&G Foods is based in Parsippany, NJ (www.bgfoods.com).

American Capital (NASDAQ: ACAS) is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $93 billion in total assets under management and has eight offices in the US, Europe and Asia.  The firm is headquartered in Bethesda (www.AmericanCapital.com).

“Our close working relationship with American Capital allowed us to significantly invest in our business to drive growth.  We worked together to expand our product offering, enhance distribution efficiencies and ultimately increase our profitability.  They understood our strategic vision for SBA and our products and together worked with us to advance SBA and as such, we are poised for even more growth under B&G Foods’ leadership,” said Dom Bastien, SBA Founder and Chief Executive Officer.

Evercore acted as exclusive financial advisor to American Capital on the transaction.

© 2014 PEPD • Private Equity’s Leading News Magazine • 5-6-14

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