CapitalSource cuts loans by $300 million to extend facility until 2012

By Susanna Moon

Chicago, July 27 - CapitalSource Inc. said it reduced the balance of its syndicated bank facility by $300 million, which satisfies the condition for extending the facility to March 31, 2012.

The company reduced the facility commitment amount to $600 million with proceeds from its recent debt and equity offerings.

"The closing of our notes offering and extension of the last of our credit facilities are important transactions for CapitalSource for several reasons," John K. Delaney, CapitalSource chairman and chief executive officer, said in a statement.

"First, we are proud to be a continuing source of liquidity and financing solutions for small and mid-size businesses looking to grow or reposition their balance sheets. With the extension of the syndicated facility, we believe our loan book is largely match-funded and the company is well-positioned to get to the other side of this credit crisis with a greater market share.

"Second, in an environment where addressing problem loans is a high priority, the company now enjoys significantly greater flexibility in its approach to credit issues. Specifically, we can look to manage or control assets and companies to maximize long-term recoveries in those situations where borrowers are not in a position to offer constructive solutions.

"Finally, our ability to navigate the current economic crisis without the benefit of short or long term government aid, though costly and not an inconsequential task, underscores the soundness of the company's balance sheet strategy which has emphasized high capital levels and deposit-based funding."

CapitalSource is a commercial lending, investment and asset management business based in Chevy Chase, Md.

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