Bethesda-based American Capital Ltd. is asking shareholders to approve a measure that would let it sell its common stock at below net asset value, subject to certain limitations.
Private equity firm American Capital (NASDAQ: ACAS) asked stockholders to approve the measure ahead of the special meeting Feb. 12 at the Hyatt Regency Hotel in Bethesda.
If approved, American Capital would be able to sell at below net asset value a maximum of 58,324,930 shares of common stock, which is 20 percent of the number of shares outstanding, subject to adjustment for shares issued following events such as stock splits, stock dividends, distributions and recapitalizations. The authorization would be good for one year.
This extends a previous one-year authorization to sell stock at below net asset value, which expires Feb. 19.
As of Sept. 30, the most recent quarter for which financial data are available, American Capital’s net asset value per share was $7.80. It’s stock was trading for less than half that at $3.52, as of Monday.
One reason the company gave for needing to sell stock at below net asset value is tied to the debt restructuring the company is pursuing with a group of lenders led by Wachovia Bank. American Capital’s deadline for completing that agreement was Sunday, and the company has not yet announced if it was completed or extended again.
In a Jan. 8 securities filing, American Capital said it wanted to the ability to raise capital by selling stock to help it make payments on the restructured debt, though it expects to fund those payments primarily through the sale of its portfolio investments.
If shareholders don’t’ approve the sale of stock at below net asset value, the company likely would be unable to raise money by selling stock.
Source: by Bryant Ruiz Switzky