UPDATE 3-ACAS further extends debt exchange offer; stock jumps

* Extends debt-exchange offer to June 9

* Second extension in as many weeks

* 14 pct of participating public noteholders back plan

* Odds still favor company, says BMO Capital analyst

* Shares rise as much as 16 pct
(Adds comments from lender sources; updates stock movement)

June 9 (BestGrowthStock) – American Capital Ltd (ACAS.O: ) said it
further extended its debt-exchange offer by a day to June 9,
and only 14 percent of participating public noteholders have
voted so far in favour of the offer.

However, the company said 100 percent holders of the
company’s unsecured private notes support the plan.

Shares of the company rose as much as 16 percent to $5.02
Wednesday morning on Nasdaq. They pared some of the early gains
and were up 10 percent at $4.79 in afternoon trade.

The fact that private noteholders and lenders support the
restructuring plan is encouraging as hopes still remain for a
workaround with public noteholders, BMO Capital Markets analyst
David Chiaverini said.

“Even though the possibility of bankruptcy still exists, we
continue to believe the odds favor ACAS completing this
restructuring out of court,” Chiaverini said in a note to

So far, bank loan lenders have not been informed of an
imminent bankruptcy, sources at a bank loan group told Reuters.

The deadline can be extended until end June, but a failure
to get the required votes by that time will leave American
Capital with the only option of filing for bankruptcy, the
sources said.

American Capital, a publicly traded private-equity firm and
asset manager, is trying to restructure debt, but is having a
hard time getting bondholders to sign an exchange offer.

It needs approval from 85 percent of public noteholders on
terms for its proposed exchange offer.

Analyst Chiaverini said the 85 percent hurdle is not a
“make or break” level, as the plan can still go through with
the support of a majority of both private and public debt

American Capital said 79.7 percent of public holders
participated in the solicitation of votes for the standby plan,
of which about 5.71 percent in principal amount and 14 percent
in number of votes cast supported the plan.

The company did not immediately return calls seeking more

Wednesday’s extension of the exchange offer was the second
in two weeks. On June 2, American Capital extended its
debt-exchange offer to June 8. [ID:nSGE6530I7]

In regulatory filings, the company had said it may file for
bankruptcy if it fails to restructure $2.5 billion of debt.

Business development companies like American Capital have
struggled to survive the economic downturn as the value of
their portfolio companies, to which they make loans in return
for equity stakes, has reduced.

Stock Analysis

(Reporting by Anurag Kotoky in Bangalore; Editing by Gopakumar
Warrier and Vinu Pilakkott)

UPDATE 3-ACAS further extends debt exchange offer; stock jumps