Principal investment firm American Capital Ltd. (ACAS) late Monday announced that it has amended its unsecured credit facility to maintain consistent liquidity. Wachovia Bank, N.A. serves as administrative agent for the facility. The company also backed its forecast of dividend payment for the fourth quarter and fiscal 2008.
In a statement, senior vice president of Finance, Tom McHale said, "As we announced earlier this quarter, American Capital has sought to amend covenants in certain of our debt facilities to improve or maintain availability."
According to the amendment issued, the minimum tangible net worth of the facility has been reduced to $4.5 billion plus 40% of new issuances of equity and debt converted into equity after the third quarter of 2008. Further, the size of the facility was changed to $1.409 billion, as of September 29, 2008 and $1.252 billion on December 31, 2009. The size was changed from $1.565 billion as of September 29, 2008.
The Bethesda, Maryland-based American Capital noted that the maturity date of the facility was revised to March 31, 2011, from May 16, 2012. As per the amendment, interest on borrowings would be initially charged at LIBOR plus a spread of 3.25%, up from 0.90%. The unused facility fee has also been increased to 50 basis points from 12.5 basis points.
American Capital also backed its dividend forecast for the fourth quarter and fiscal 2008. The company expects to pay $1.10 per share as dividend for the fourth quarter of fiscal 2008. The payment would be made as $1.05 quarterly dividend and a $0.05 bonus dividend.
The dividend forecast for the full-year 2008 continues to be $4.19 per share. In order to pay the 2009 dividends, American Capital also reiterates its commitment to rollover more than $500 million of ordinary taxable income and net long term capital gains from 2008. However, the amendment would increase the company's borrowing cost. American Capital also expects to continue to invest in higher yielding subordinated debt, which has very attractive spreads over the cost of capital."
"The continued support of our lenders in the midst of the turmoil in the financial sector highlights our quality investment portfolio and low leverage," added John Hooker, Vice President, Debt Capital Markets.
ACAS closed Monday's regular trading session at $22.46, down $3.83 or 14.57% on a volume of 3.60 million shares.
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