American Capital suffers $910m loss in 2009

The publicly traded business development company made a profit of $107m in the fourth quarter and continues to iron out a debt restructuring plan with its lenders.

American Capital, the publicly traded business development company, suffered a net loss of $910 million in 2009, which, while staggering, is an improvement from the $3.1 billion net loss the company experienced in 2008.

The company is hoping to launch a debt exchange offer in March “to solicit formal approval of a complete debt restructuring”, according to American Capital’s chairman and chief executive officer Malon Wilkus.

The company, based in Bethesda, Maryland, is working to restructure its debt load, and has reached preliminary agreement to push back debt maturities on $2.4 billion. The company, founded in 1986, has been in default on the unsecured debt, which came due 30 June, 2009, and faced a possible bankruptcy filing. 

The agreement was reached “in principal”, and the company has continued ironing out the restructuring, which has taken “longer than any of us anticipated”, Wilkus said.

“Last year was a tremendously difficult year. We worked diligently to restructure our debt facilities and position ourselves for the future,” Wilkus said in an earnings statement. “While working hard on our debt restructuring, we have been providing operational, managerial and financial support to our portfolio companies for growth, acquisitions and support in distressed situations.”

The company also cut about 55 percent of its workforce since 2008, American Capital said during an earnings presentation Wednesday.

While reporting a heavy full-year loss for 2009, the company did swing to a profit in the fourth quarter, gaining $107 million.

American Capital was able to realise $1.1 billion of liquidity last year through exits. “Despite the poor M&A environment in 2009, we exited both performing and non-performing assets at approximately fair value,” said John Erickson, chief financial officer. “We believe that the recession has ended and we are seeing a modest improvement in the performance of the portfolio and the M&A market.”

“We expect that if the economy continues to recover, our portfolio and its valuation should also continue to improve,” Erickson said.