American Capital Senior Floating IPO to raise $150 million

By Toni Weeks

San Luis Obispo, Calif., Jan. 15 - American Capital Senior Floating, Ltd. priced its $150 million initial public offering of common shares, according to a press release.

The company is selling 10 million shares at $15 each. The underwriters will have a 30-day greenshoe for an additional 1.5 million shares.

The company's shares will begin trading on Jan. 16 on Nasdaq under the symbol "ACSF."

Settlement is expected Jan. 22.

Investment objective, strategy

The newly organized, externally managed finance company seeks to provide attractive, risk-adjusted returns over the long term primarily through current income while seeking to preserve capital.

The company intends to achieve its investment objective by constructing and actively managing a leveraged portfolio composed primarily of first-lien and second-lien floating-rate loans to large-market, U.S.-based companies. Investments may also include equity tranches of collateralized loan obligations that are collateralized primarily by leveraged loans, loans issued by middle-market companies, unitranche loans, high-yield bonds and debt tranches of CLOs collateralized primarily by leveraged loans.

Mark Pelletier leads the senior investment team, which also includes Michael Cerullo, Dana Dratch, Juan Miguel Estela, Christian Toro and William Weiss.

Bethesda, Md.-based American Capital ACSF Management, LLC, the investment manager, has agreed to pay the underwriting discounts and commissions for the offering on the company's behalf.

Including a management fee of 1.48%, total annual expenses are expected to be 4.16%.

More IPO information

As previously reported, Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Keefe, Bruyette & Woods, Inc. and UBS Securities LLC are joint-book running managers; Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Oppenheimer & Co. Inc. and RBC Capital Markets, LLC are co-lead managers; and BB&T Capital Markets, Sterne, Agee & Leach, Inc. and Wunderlich Securities, Inc. are co-managers for the offering.

The underwriters have reserved 299,900 shares of the company's common stock for sale to American Capital Asset Management, LLC (ACAM), a wholly owned portfolio company of American Capital, Ltd., and up to 200,100 shares of the company's common stock for sale to some employees of the parent company of the manager through a directed share program. As a result, ACAM will own roughly 3% of the company's outstanding common stock upon completion of the offering, assuming no greenshoe exercise.

Net proceeds will be used to repay its credit facility with ACAM, which the company drew on to finance its initial investment portfolio and matures on the earlier of the consummation of this offering and Oct. 15, 2014.

Any remaining net proceeds will be used to (a) repay American Capital for the company's organizational and offering costs, (b) invest in loans and equity tranches of collateralized loan obligations collateralized by leveraged loans in accordance with the company's investment strategy and (c) for general working capital.

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