American Capital nears agreement with all its lenders on debt restructuring

By Thomas Heath
Washington Post Staff Writer
Saturday, November 28, 2009

American Capital, a key financial player in the Washington region for decades, said it has reached agreements with lenders on 95 percent of its loans in an attempt to avert bankruptcy, the company said in a regulatory filing Friday.

The company said it needs the unanimous agreement of its lenders to pursue the debt exchange. American Capital, which provides financing to businesses in return for equity, said in its filing that without support from all of its creditors, it will pursue a prepackaged Chapter 11 bankruptcy reorganization.

The Bethesda investment firm said on Nov. 3 that it had reached an agreement with a steering committee of its lenders to support a restructuring of $2.4 billion in debt on which the company defaulted earlier this year.

In return for an agreement on its debt, American Capital agreed to use nearly all of its assets as collateral.

Shares of American Capital closed at $2.88 Friday, down 14 cents or 4.6 percent.

In a research note on Nov. 5, Wells Fargo senior analyst Jim Shanahan said the "debt restructuring plan outline by [American Capital] seems reasonable, in our view, and we believe its lenders will agree to the terms."

The recession has hammered the value of the companies in American Capital's portfolio. The company was removed from the Standard & Poor's 500-stock index this year.

The company has reduced its workforce by nearly half since March 2008. Its auditors earlier issued an opinion accompanying American Capital's financial statements expressing concern that the company was in danger of going out of business.

American Capital's media spokesperson could not be reached for comment.

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