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http://www.finanznachrichten.de/nachrichten-2009-04/13784264-rpt-update-2-american-capital-sounds-out-buyers-for-europe-arm-020.htm

30.04.2009 18:37
RPT-UPDATE 2-American Capital sounds out buyers for Europe arm

By Simon Meads and Victoria Howley

LONDON, April 30 (Reuters) - Struggling private equity house American Capital Ltd (News) is sounding out buyers for its European portfolio in a deal that could be worth up to $2 billion, three sources familiar with the situation said.

American Capital is looking to sell the European Capital unit -- which had assets under management of $3.5 billion at the end of the third-quarter 2008 -- in its entirety, or could split it up, one of the sources said.

The group has appointed Citigroup as adviser on the process, the source added. Citigroup declined to comment.

'They are out in the market looking to sell on a full portfolio basis,' the source said.

'They are prepared to divide it into sub-portfolios, but they are looking to sell the whole operation,' the source said.

Shares in American Capital opened higher, gaining up to 8.6 percent in early trades on the Nasdaq. The index was up about 2 percent.

A company official in Europe directed queries to the group's U.S. operations, which could not be reached for comment.

The possible sale is a sign of how private equity houses, fabled for their stellar returns in the boom years before the crisis, are now struggling with weakening performance and excessive debts of the companies they own.

Britain's Candover recently took even more drastic measures, entering talks with parties interested in a buy-out and even mulling winding itself up as a last resort.

American Capital has started sounding out secondary firms -- which buy second-hand stakes in private equity portfolios -- but believes parts of the portfolio will also be of interest to other private equity buyout firms, the sources said.

DEBT RESTRUCTURING

At end-March, American Capital completed the buyout of minority shareholders in European Capital, paving the way for the possible sale of the portfolio.

Earlier that month, American Capital posted a $1.7 billion net loss in the fourth quarter of 2008, revealing steep falls in its net asset value had put it in breach of no fewer than three covenants on its $2.3 billion debt facility.

The company said it had been in talks with its lenders since December about restructuring its credit facilities. It had yet to reach an agreement.

The European Capital unit brands itself as a one-stop shop for buyouts, providing all financing for deals in the first instance and syndicating tranches of debt at a later stage, holding a significant portion of mezzanine on its own books.

It also provides pure mezzanine investment, as in the case of French suitcase manufacturer Delsey. While it invests broadly across Europe, its investments focus primarily on the UK, Germany and France.

(Editing by Rupert Winchester and Andrew Macdonald) Keywords: AMERICANCAPITAL/SALE

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