ACAS Offering $1.5 bln in Stock

In a filing with the Securities Exchange Commission (SEC), American Capital (ACAS - Analyst Report) has said that it may offer up to $1.5 billion aggregate of common stock, preferred stock and debt in one or more offerings from time to time. The filing was done on Wednesday.

Like other entities, American Capital has been facing the fallout in the financial markets and as such, this step would help to preserve its capital. The company intends to use the proceeds from the offerings for general corporate purposes. These may include investment in middle market companies in accordance with the company’s investment objectives, repayment of indebtedness, acquisitions and other general corporate purposes.

American Capital has been significantly impacted by the negative developments in the financial world. Last month, the company reported a loss of $547 million. It also defaulted on $2.3 billion of debt repayments.

Current recessionary conditions have drained the value of company portfolios in which it invests. Losses have led to a decline in shareholders’ equity to $3.2 billion in 2008 from $6.4 billion in 2007. The company also has exposure to structured products on account of its investments including commercial mortgage backed securities collateralized loan obligation securities, and collateralized debt obligation securities.

American Capital Ltd is a publicly traded private equity fund and global asset manager. It primarily invests in senior debt, subordinated debt and equity in the buyouts of self-sponsored private companies and buyouts of private companies sponsored by other private equity firms, besides providing capital directly to early stage and mature private and small public companies.

American Capital competes with MCG Capital (MCGC - Snapshot Report), CapitalSource Inc (CSE - Snapshot Report), and Allied Capital Corp (ALD).

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