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American Capital In Forbearance Pact With Some Noteholders
Staff Reporters

04 September 2009

Some of American Capital Ltd.'s debt holders may be running out of patience.

The troubled business development company said late Wednesday that holders of $393 million of its privately placed notes served it with notices of acceleration on August 28. By doing so, they became entitled to "make-whole" payments of about $21.6 million and default interest, which is 2% higher than the normal interest on the notes.


Shortly after it received the notices, the firm entered into forbearance agreements with holders of 99% of the notes, agreeing to add the make-whole payments to the outstanding principal amount and to pay default interest rates retroactive to March 30. As a result, the noteholders can't sue to collect payment or commence an involuntary bankruptcy proceeding.

Some $82 million of the notes was originally scheduled to mature two days after American Capital received the acceleration notice.

American Capital has been in default on $2.3 billion of unsecured debt since December. During its second quarter conference call, Chief Executive Malon Wilkus was reticent about discussing the progress of talks with the firm's debtholders, although he did say that dealing with about 100 different lenders in the talks has been challenging.

The forbearance period is in effect until the noteholders decide to terminate it and provide written notice to American Capital.

Fellow BDC Allied Capital Corp. recently resolved its own debt default issues, but said that the settlement with its lenders was very expensive.

Reach American Capital at 301-951-5917.


http://www.americancapital.com


Document DJFLBO0020090904e594000b5


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