American Capital, lenders ink restructuring lock-up agreement

By Caroline Salls

Pittsburgh, Nov. 30 - American Capital, Ltd. has entered into a lock-up agreement with lenders holding about 95% of the loans outstanding under its unsecured revolving line of credit agreement with administrative agent Wachovia Bank, NA, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, American Capital reached an agreement in principle on Nov. 4 with a steering committee of the lenders to restructure the credit agreement.

The company said the lock-up agreement furthers its efforts to restructure the credit agreement and its other principal unsecured debt arrangements.

Under the lock-up agreement, American Capital intends to enter into an out-of-court exchange of the loans outstanding under the credit agreement and its private and public unsecured notes.

If fewer than 100% of the lenders, fewer than 100% of the holders of the private unsecured notes and holders of less than $467.5 million principal amount of its public unsecured notes agree to the exchange transaction, American Capital said it intends to implement its restructuring proposal through a solicitation of votes for a proposed pre-packaged Chapter 11 plan of reorganization.

The company said it plans to conduct the exchange offer and plan vote solicitation simultaneously.

According to the 8-K, each consenting creditor has agreed to participate in the exchange and to vote its claims to accept the plan.

Also under the lock-up agreement, the consenting creditors have agreed not to exercise their rights related to the company's default on the credit agreement until the earlier of completion of the exchange or filing of a Chapter 11 case, the date on which any holder of American Capital's private unsecured notes or public unsecured notes files a lawsuit or an involuntary Chapter 11 case against the company, the date on which any one or more creditors of the American Capital with claims in excess of $25 million files a lawsuit against American Capital or the filing of any involuntary bankruptcy petition against American Capital.

American Capital is a Bethesda, Md.-based private equity firm and global asset manager.

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