American Capital shareholders agree to swap debt; restructuring plan to go through

American Capital debt restructuring to go through

BETHESDA, Md. — Private equity firm American Capital Ltd., which is trying to restructure its $2.4 billion in debt outside of bankruptcy court, said Wednesday that holders of 98 percent of its 2012 notes have agreed to swap their debt for cash payments and new notes.

The company, for the second time, also extended the debt swap offer until Friday. American Capital’s offer hinged on at least 85 percent of holders of its unsecured 6.65 percent senior notes due 2012 supporting the swap.

American Capital, whose largest shareholder is John Paulson’s hedge fund with a 12.9 percent stake, said its lenders also unanimously supported its reorganization plan. Lenders backing about 49 percent worth of the company’s existing $1.4 billion credit agreement elected to be repaid in cash, and the rest chose to become lenders in an amended credit agreement or receive new secured notes.

American Capital defaulted on its revolving line of credit, bonds and privately placed term notes last year as the credit quality of its loan portfolio deteriorated amid the recession. Under a restructuring deal reached with credit line lenders, American Capital will pay off the debt over four years.

In afternoon trading, American Capital shares slipped 2 cents to $5.56.