AMERICAN CAPITAL, LTD. Reports Operating Results (10-Q)
American Capital, Ltd. has a market cap of $2.52 billion; its shares were traded at around $7.52 with a P/E ratio of 16.4 and P/S ratio of 3.6. ACAS is in the portfolios of John Paulson of Paulson & Co., Steven Cohen of SAC Capital Advisors, Murray Stahl of Horizon Asset Management, Jeremy Grantham of GMO LLC.
Highlight of Business Operations: We are a publicly traded private equity firm and a global asset manager. Our $5.6 billion on-balance sheet investment portfolio consists of investments in senior debt, subordinated debt and equity in controlled and non-controlled private and public companies and structured product investments (Structured Products), including commercial mortgage backed securities (CMBS), commercial collateralized loan obligation (CLO) securities and collateralized debt obligation (CDO) securities. We are also an alternative asset manager with approximately $12 billion of third-party capital resources under management across four third-party private and public funds that we manage.
In June 2010, we successfully completed a refinancing of our $2.3 billion of outstanding unsecured borrowings. Under the terms of the refinancing, lenders and noteholders had the option of receiving either cash or new secured debt, in each case in the full principal amount of their pre-transaction debt. Lenders and noteholders holding $1,030 million of debt selected or otherwise received 100% cash for their debt, while lenders and noteholders holding $1,307 million of debt, or 56% of pre-transaction debt, elected to receive new secured loans or notes of various series. As a result, we repaid $1,030 million of our unsecured obligations and issued $1,307 million of fixed and floating rate secured loans or notes which will mature in December 2013 in exchange for the remaining obligations. We also granted a lien on substantially all of our existing and hereafter acquired unencumbered assets as collateral for the newly issued loans and notes. See Note 4 to our consolidated interim financial statements included in this Form 10-Q for additional disclosures regarding the exchange transaction.
We provide investment capital to middle market companies, which we generally consider to be companies with sales between $10 million and $750 million. We primarily invest in senior debt, subordinated debt and equity in the buyouts of private companies sponsored by us, the buyouts of private companies sponsored by other private equity firms and provide capital directly to early stage and mature private and small public companies. Currently, we will invest up to $100 million in a single middle market transaction in North America. We also have investments in Structured Products and alternative asset funds managed by us. For summary financial information by geographic area, see Note 3 to our consolidated interim financial statements in this Form 10-Q.
The amounts of our new investments include both funded commitments and unfunded commitments as of the investment date. Included in the add-on financing for recapitalizations of $80 million for the nine months ended September 30, 2010 was a $75 million bridge loan issued to European Capital Limited (European Capital), the proceeds of which were utilized to repay in full and terminate European Capitals unsecured multicurrency revolving facility. European Capital made payments of $60 million in April 2010 and $15 million in July 2010 to repay the bridge loan and the facility was terminated.
We are a global alternative asset manager of third-party funds. Our third-party alternative asset management business is conducted through our wholly-owned portfolio company, American Capital, LLC. We refer to the asset management business throughout this report to include the asset management activities conducted by American Capital, LLC. In addition to managing American Capitals assets and providing management services to portfolio companies of American Capital, we also manage European Capital, American Capital Agency Corp. (AGNC), American Capital Equity I, LLC (ACE I), American Capital Equity II, LP (ACE II) and ACAS CLO 2007-1, Ltd. (ACAS CLO-1). As of September 30, 2010, our assets under management totaled $18 billion, including $12 billion under management in the third-party funds named above, excluding European Capital since it is wholly-owned by us.
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