American Capital Ltd.
) announced the completion of the refinancing of its total recourse
debt. The secured debt is being refinanced by a new 4-year $600
million institutional term loan facility with a LIBOR floor of
1.25%. The proceeds, along with repayment of the existing recourse
debt, will be utilized for working capital and general corporate
American Capital also obtained a new 4-year $250 million senior
secured revolving credit facility. This credit facility includes a
3-year revolving period and has the option of expanding up to $375
million. The proceeds from the revolving credit facility will also
be utilized for working capital and general corporate purposes.
The new term loan facility is priced at LIBOR plus 4.25%, while the
revolving credit facility is priced at LIBOR plus 3.75%.
Furthermore, the term loan facility has a first lien on some
non-securitized assets of American Capital, while revolving credit
facility has a first lien on some non-securitized loan assets of
Moreover, both the loan facilities have a second lien on the
company's mostly residual non-securitized assets.
For both the transactions, J.P. Morgan Chase Bank, N.A., a unit of
JPMorgan Chase & Co.
) acted as an administrative agent as well as guarantor. Moreover,
J.P. Morgan Securities LLC, BMO Capital Markets Corp. and UBS
Securities LLC, a unit of
) served as joint lead arrangers and joint bookrunners on the
Managers for the deals include - Citibank, N.A., banking arm of
), Credit Suisse Securities (USA) LLC, a subsidiary of
Credit Suisse Group
) and Goldman Sachs Bank USA, a subsidiary of
The Goldman Sachs Group Inc.
). Bank of America, N.A., a subsidiary of
Bank of America Corporation
) acted as managing agent for revolving credit facility
Owing to the strong demand along with the support of a wide range
of debt investors, the new loan facility will be a positive for the
company. Moreover, these transactions augment the company's capital
position and reduce interest expenses. Therefore, American Capital
will have more funds for new investments and hence will increase
American Capital currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating. However, considering the
fundamentals, we maintain our 'Neutral' recommendation on the
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