American Capital (ACAS), which had made plans to spinoff two new BDCs in October 2014, will now only spinoff one BDC as American Capital Income. The new entity will own almost all of American Capital’s (ACAS) existing investment assets. American Capital will remain in the asset management business.
“We have revised our spin-off plans in recognition of our success in growing our Sponsor Finance originations to $689 million in 2014, a 167% increase over 2013, plus changes in the regulatory environment for banks that are reducing their capacity to fund leveraged loans and the announcement by GE Capital that it will sell or otherwise exit its sponsor finance business,” said Malon Wilkus, Chairman and Chief Executive Officer. “By concentrating capital in one larger BDC and utilizing our established Sponsor Finance business, American Capital Income will be able to lead and syndicate upper middle market unitranche and second lien sponsor finance transactions, underwriting up to $300 million, while generally holding up to $150 million. This should allow American Capital Income to originate substantially more sponsor finance volume than American Capital has in its past, while enhancing credit by lending to larger and more established businesses. With unitranche loans, we would expect American Capital Income to syndicate a first out position, while retaining a last out position, thereby providing an opportunity to realize higher returns. Growth of American Capital Income’s NOI yield will be dependent on the pace at which it can deploy and lever its capital into higher yielding assets, with the objective of achieving a market rate NOI yield.”
The Company continues to expect to file proxy and registration statements regarding the transaction with the Securities and Exchange Commission in the third calendar quarter of 2015
