Numbers Show Depth of Deal
American Capital Strategies Ltd.
has completed the buyout and recapitalization of its portfolio
company, The New Piper Aircraft Inc., by purchasing $57 million of
Piper's senior debt for $34 million and providing a revolving loan
facility.
In addition, American Capital exchanged $22 million of the
purchased senior debt for common equity in Piper. American
Capital's original $20 million investment in subordinated debt is
now a senior facility.
American Capital now owns 94% of Piper's voting equity
Affiliates of Exeter Capital Partners, a private equity firm and
long time investor in Piper, made an additional common equity
investment of approximately $1 million for 6% of the common equity
as part of the recapitalization.
"While Piper has reduced its new airplane production as a
result of the downturn in general aviation after September 11th, we
believe Piper is an excellent, well-run company," said American
Capital COO Ira Wagner.
"With an iconic brand name in
the general aviation industry and the most extensive product line,
we are confident Piper will enjoy great success as the general
aviation industry rebounds. Our investment in Piper is an example
of our ability to step in as the equity sponsor of an existing
portfolio company under the right circumstances."
Long-term relationship blossoms.
"This is an exciting opportunity for American Capital to
continue our relationship with Piper," said American Capital Senior
Vice President and Managing Director Gordon O'Brien. "We are
working with a strong CEO, an industry veteran and innovator, who
oversees a well established worldwide dealer network selling an
unmatched product offering to a remarkably loyal customer base.
Piper's installed base of 100,000 aircraft worldwide feeds its
large proprietary parts business, and its underlying intellectual
property is protected by numerous Federal Aviation Administration
Type Certificates that govern manufacture of its planes. Its
exemplary track record of new product releases and strong pipeline
of new products also bode well for its future. Furthermore, we
believe this transaction enhances the value of our original
investment."
American Capital first invested in
Piper, headquartered in Vero Beach (FL), in May 1998. Over 60 years
in operation, Piper employs nearly 700. Piper notes it is "the only
general aviation manufacturer to offer a complete line of aircraft
for every general aviation mission, from trainers and
high-performance aircraft for personal and business use to
turbine-powered business aircraft."
Piper's next step: into a promising future.
"We look forward to growing Piper and introducing new products,"
said Piper CEO Chuck Suma. "American Capital's dedication, support
and expertise bring to Piper the necessary resources to excel as we
meet market demands with new products. Now that commercial travel
is more time consuming than ever, flying a Piper makes more sense
than ever."
American Capital bucked trend, made money for IPO
investors.
As of June 30, 2003, American Capital shareholders have enjoyed
a total return of 177% since the Company's IPO -- an annualized
return of 19%, assuming reinvestment of dividends.
American Capital has paid a total of $11.68 per share in
dividends since its August 1997 IPO at $15 per share. It now lists
capital resources of approximately $1.8 billion.
NTSB Prelim: Piper PA-23
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