American Capital repurchases 20.7m shares

The Maryland-based firm, which has been involved in a strategic review following shareholder criticism of its planned spin-out, has been purchasing more shares under its stock buyback programme.

American Capital has bought back about 20.7 million of its common stock in the fourth quarter, the firm said on Monday.

The stock repurchases amount to about 8 percent of the Bethesda, Maryland-based company’s outstanding shares as of 30 September. They were bought at an average price of $14.44 per share, totaling approximately $298.4 million.  

In November, American Capital said that it had expanded the range of the buyback programme from $300 million-$600 million to $600 million-$1 billion. Under the scheme, purchases will only be made at prices below 85 percent of the company’s net asset value per share. The company has bought $433 million under the plan, which it expects to complete by 30 June this year. 

American Capital has been planning to spin off two business development companies (BDCs), but is carrying out a review of alternatives after shareholder criticism. The firm has appointed an independent committee and advisors Goldman Sachs and Credit Suisse to examine options. 

Hedge fund Elliott Management, which holds an 8.4 percent stake in American Capital, issued a statement in early November urging other shareholders to vote against the planned spin-out, arguing that it would further destroy shareholder value.  

“We are convinced that the company’s plan to spin out BDC assets into a new business development company and create a standalone, external asset manager will put valuable assets at risk, serve to entrench management and significantly limit options for future stockholder value creation,” Elliott said at the time.