American Capital has hired Goldman Sachs & Co. and Credit Suisse Securities to assist the company in undertaking a strategic review of all corporate finance alternatives. The review will consider all alternatives for maximizing shareholder value, including a sale of the entire company or a sale of various business lines.
An independent committee of the American Capital board members – consisting of Neil Hahl, Kristen Manos, Kenneth Peterson and David Richards – will be responsible for overseeing the review process. The company expects to disclose the initial results of the review no later than January 31, 2016.
“The Strategic Review Committee looks forward to a full independent review with the sole goal of maximizing value for shareholders,” said Mr. Hahl, who chairs the committee. “The company’s previously announced plan to spin off to its shareholders a new business development company will also be evaluated as part of the review.
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 lower and middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $80 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).
“We have generated a 16% annualized growth rate in both our book value and price per share over the five years ended September 30, 2015,” said Malon Wilkus, Chair and Chief Executive Officer of the Company. “Nonetheless, we continue to trade at a meaningful discount to our book value, even as we progress with our plans for the spin off, which is intended to unlock shareholder value. Therefore, I am fully supportive of this strategic review, which will allow us to realize the optimal value for our shareholders.”
American Capital has also revised and expanded its current stock buyback program, which began in the third quarter of 2015, by increasing it to a range of $600 million to $1 billion from the prior range of $300 million to $600 million. The company expects to complete the upsized program by June 30, 2016.
“We consider our stock to be a terrific bargain,” added Mr. Wilkus. “Having already purchased shares representing 34% of our shares outstanding when the program started, we intend to purchase additional significant amounts as long as we continue to trade at a significant discount to our book value. During the course of our strategic review we will continue to be prudent managing our balance sheet and cost structure.”
© 2015 PEPD • Private Equity’s Leading News Magazine • 11-30-15