American Capital Ltd. (NASDAQ:ACAS)’s senior secured term loan facility amendment


Dallas, Texas 09/05/2013 (Financialstrend) – American Capital Ltd. (NASDAQ:ACAS) announced at the end of August that it has amended a $600M senior-secured term loan facility. This is inclusive of $450M in outstanding loans as of 23 August. JP Morgan Securities, LLC which is a JPM unit and BMO’s banking subsidiary, BMO Capital Markets Corp jointly acted as the book runners and lead arranges for this deal.

This amendment has considerably lowered ACAS’s borrowing expenses. Apart from this, it has also helped in modifying the company’s credit-agreement by reducing the interest rate from a LIBOR +4.25% to LIBOR +3.00% and the LIBOR floor from 1.25 percent to 1.00 percent. In addition, the amendment also reduced he scheduled-amortization to $4.5M on an annual basis from the $150m that it stood at.

Global economic effect

It also cut out use of the surplus cash-flow to pay off the outstanding debt in situations where the company’s borrowing base-coverage was over 150%. This amendment has also raised the security advance-rated during the borrowing-base calculation.

The global financial crisis had a significant impact on American Capital. This limited its access to the equity capital and debt markets. The liquidity crisis and the market disruption brought down the number or acquisitions and mergers in the market as a whole. This had a negative impact on its ability to continue generating more liquidity.

The company

American Capital Ltd. (NASDAQ:ACAS) is an equity-firm as well as a global asset manager. It invests in private debt, private equity, private real-estate securities, technology investments as well as special situation investments. It mainly invests in mezzanine and senior debt and in equity for buyouts for various private companies that are sponsored by private equity funds. It provides capital to mature as well as early-stage small public and private companies. The company has a market cap of $3.78 billion.