UPDATE 4-American Capital extends debt exchange offer, again

* Extends debt exchange offer to June 22

* Second extension on Wednesday

* 14 pct of participating public noteholders back plan

* Odds still favor company to avoid bankruptcy – analyst

* Shares rise as much as 16 pct
(Recasts with latest extended offer)

June 9 (BestGrowthStock) – American Capital Ltd (ACAS.O: ), a private
equity firm and asset manager trying to restructure $2.5
billion of debt, amended the terms of a debt exchange offer and
extended the deadline, sending its shares up 16 percent on

The company, whose biggest shareholder is billionaire
investor John Paulson with a near-13 percent holding, has said
in regulatory filings it may file for bankruptcy if it fails to
restructure the 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 dropped.

American Capital has been trying to get its bondholders to
sign up to an exchange offer, for which it needs approval from
85 percent of public noteholders.

The company said it added an exchange option to holders of
a class of unsecured notes and entered a lock-up agreement with
holders of about 43 percent of its public notes.

These noteholders agreed to tender their notes in the
exchange offer, and call a meeting to recommend the exchange
offer to other public noteholders.

The group also agreed to support American Capital’s bid to
reduce the percentage of notes required for the exchange offer
from 85 percent to an amount specified by the company.

Earlier, American Capital extended the offer by a day to
end-Wednesday, saying only 14 percent of participating public
noteholders had voted in favour of the offer, though it added
that all holders of the unsecured private notes backed the

American Capital shares jumped as much as 16 percent to
$5.02 on Nasdaq, and later traded up 9.7 percent at $4.76.

The stock has doubled so far this year, but has tumbled
almost 30 percent since hitting a 19-month high at end-April.

The fact that private noteholders and lenders support the
restructuring is encouraging as there are still hopes for a
workaround with public noteholders, BMO Capital Markets analyst
David Chiaverini said before American Capital’s second
announcement on Wednesday.

“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 client note.

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

Chiaverini said the 85 percent hurdle was 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 holders.

American Capital said 79.7 percent of public holders
participated in the solicitation of votes for the standby plan,
of which 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

On June 2, American Capital had extended its debt exchange
offer to June 8. [ID:nSGE6530I7]

Growth Stocks

(Reporting by Anurag Kotoky in BANGALORE; additional reporting
by Elinor Comlay in NEW YORK, Editing by Gopakumar Warrier,
Vinu Pilakkott and Ian Geoghegan)

UPDATE 4-American Capital extends debt exchange offer, again