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Ares Capital $ARCC to Buy American Capital $ACAS for $3.4B, Mortgage Unit Sold to $AGNC for $562M

Ares Capital $ARCC to Buy American Capital $ACAS for $3.4B, Mortgage Unit Sold to $AGNC for $562M

Ares Management LP (NYSE: ARES) will provide financial support to the transaction. Through its subsidiary, Ares Capital Management LLC, which serves as the investment adviser to Ares Capital, Ares Management will provide $275 million of cash, or $1.20 per fully diluted share, to American Capital shareholders at closing. In addition, Ares Management has agreed to waive up to $100 million in Part I income based fees (ARCC Income Based Fees) payable for the ten calendar quarters beginning the first full quarter following the closing of the transaction, in an amount of up to $10 million of ARCC Income Based Fees to the extent earned and payable to Ares Capital Management in such quarter, to support the expected profitability of the combined company during the integration and portfolio repositioning period for the two businesses. The combined company will remain externally managed by Ares Capital Management LLC and all current Ares Capital officers and directors will remain in their current roles. “The growing demand for capital from middle market borrowers has created the need for flexible capital providers like us to fill the financing gap as banks continue to retrench from the market,” commented Michael Arougheti, co-chairman of Ares Capital’s board of directors. “We believe this transaction materially enhances our presence as a market leading direct lender with the size and scale to capitalize on the attractive competitive dynamics in the market today and for the foreseeable future.” “Similar to the strategy we successfully utilized in our acquisition of Allied Capital in 2010, we plan to leverage our robust origination platform to redeploy American Capital’s portfolio into directly-originated investments generating a higher level of current income and ultimately improved risk-adjusted returns,” said Kipp deVeer, CEO of Ares Capital. “We are confident in our ability to maximize long-term value for both Ares Capital and American Capital shareholders.” “We are excited to have entered into this mutually beneficial combination with Ares Capital,” commented Malon Wilkus, chairman and CEO of American Capital. “Our shareholders should benefit immediately from the stable dividend offered by Ares Capital and the fee waiver support provided by Ares Management. Moreover, we expect the combined company to have a more diversified portfolio and a stronger balance sheet that will position it well for future growth.” Prior to closing, American Capital may continue its plans to monetize certain investments (in collaboration with Ares Capital) and the proceeds of any such sales would be used to retire indebtedness or to remain in cash balances as the company has ceased its stock repurchase program. Since March 31, 2016, American Capital has announced sales of over $550 million in balance sheet investments. Elliott Management, holder of a 14.4% interest in American Capital, supports the transactions and will vote its shares in favor at the upcoming special meeting. Portfolio managers Jesse Cohn and Pat Frayne said in a statement, “We are pleased with the result of the strategic review and thank the independent board committee of ACAS for its hard work and success in delivering an excellent outcome for shareholders.” Consummation of Ares Capital’s acquisition of American Capital is subject to American Capital and Ares Capital shareholder approvals, customary regulatory approvals and other closing conditions. The transaction is also conditioned on the successful completion of the sale of American Capital Mortgage Management to American Capital Agency. American Capital Mortgage Management is the external advisor to American Capital Agency and American Capital Mortgage Investment. Assuming satisfaction of these conditions, the transaction is expected to close within the next 12 months. Wells Fargo Securities LLC and Bank of America Merrill Lynch served as financial advisors to Ares Capital. Latham & Watkins LLP and Willkie Farr & Gallagher LLP served as legal counsel to Ares Capital. Sutherland Asbill & Brennan LLP served as legal counsel to the independent directors of Ares Capital. Proskauer Rose LLP acted as legal counsel to Ares Management. Goldman Sachs & Co. and Credit Suisse Securities (USA) LLC served as financial advisors to American Capital. Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to American Capital. Ares Capital is a leading specialty finance company that provides one-stop debt and equity financing solutions to U.S. middle market companies, venture capital backed businesses and power generation projects. Ares Capital has elected to be regulated as a business development company (BDC) and as of March 31, 2016, was the largest BDC by total assets and market capitalization. Ares Management LP is a leading global alternative asset manager with approximately $94 billion of assets under management as of March 31, 2016 and more than 15 offices in the United States, Europe and Asia. Each of the company’s three investment groups, Credit, Private Equity and Real Estate, is a market leader based on assets under management and investment performance. The company was founded in 1997. American Capital Ltd. is a private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. As of March 31, 2016, American Capital managed approximately $20 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $77 billion of total assets under management (including levered assets). Through a wholly owned affiliate, American Capital manages publicly traded American Capital Agency Corp. (NASDAQ: AGNC), American Capital Mortgage Investment Corp. (NASDAQ: MTGE) and American Capital Senior Floating, Ltd. (NASDAQ: ACSF) with approximately $10 billion of total net book value. American Capital and its affiliates operate out of six offices in the U.S. and Europe.]]>

Pawn Shop Chain EZCORP $EZPW Hires $UBS to Sell Mexican Grupo Finmart

Pawn Shop Chain EZCORP $EZPW Hires $UBS to Sell Mexican Grupo Finmart

EZCORP, Inc. (NASDAQ: EZPW), the second largest pawn shop operator in the U.S. and a leading provider of consumer loans in Mexico, said that after completing a strategic review,  investment bank UBS (NYSE: UBS) has been empowered to sell its Mexican Grupo Finmart. In 2012, EZCORP acquired a 60% controlling interest in Prestaciones Finmart SAPI de CV (Grupo Finmart), a specialty consumer finance company headquartered in Mexico City and operating under the name Crediamigo. On September 1, 2015, EZCORP officially announced it had increased its ownership stake in Grupo Finmart to 94%. The purchase price for the additional 18% interest was $29 million in cash, thus giving Finmart a total market value of $161 million as of September 2015. In September 2015, EZCORP also acquired 13 USA Pawn & Jewelry Co. stores for $12.5 million. “We have completed the strategic review of Grupo Finmart announced in February 2016,” said EZCORP’s CEO Stuart Grimshaw. “We have concluded that a sale of this business is the preferred alternative and have commenced a process to solicit proposals from interested buyers.” The company’s core pawn businesses remain focused on growth. In the U.S., the company completed the acquisition of six stores in the Houston area doing business under the Pawn One brand. These stores have now been fully integrated as part of the EZPAWN brand. In Mexico, the business is focusing on new store openings, with four set to be opened in coming months. EZCORP also announced a month ago that Jodie Maccarrone, Chief Strategy Officer and Vice Chair, Grupo Finmart, would be leaving the company effective May 1, 2016. In July 2015, the company said that an increasingly challenging legislative and regulatory environment and a lack of scale limited the competitiveness and prospects of the company’s unsecured and auto title lending operations in the U.S. As a result, the company closed its U.S. Financial Services business, including all payday, auto title and installment lending. As of September 30, 2015, EZCORP operated approximately 834 locations comprising 522 United States pawn stores under the EZPAWN or Value Pawn & Jewelry names; 232 Mexico pawn stores under the Empeño Fácil name; 53 Grupo Finmart locations in Mexico; and 27 CASHMAX financial services stores in Canada. The company was founded in 1989 and is headquartered in Austin, Texas.]]>