Good news from ACAS: Borrowing costs reduced from 5.50% to 4.25% plus LIBOR! Today's news: "The term loan facility is priced at LIBOR plus 4.25%, with a LIBOR floor of 1.25%," http... Business & Finance > Investments > Stocks (A to Z) > Stocks A > American Capital, Ltd.
As predicted ACAS's cost of funds and the terms make it impossible for ACAS to do any meaningful competitive lending and stil is subject to sharing proceeds from any sales to paydown debt.
In the meantime, PSEC and ARCC have reported stellar earnings and NAV growth.
Any business that has to pay ACAS 250 basis points more for money is certainly no business I would want to see either of the above BDCs entertain. Let the best BDCs take the best and leave the rest for ACAS.
ARCC just floated 22.5 M shares up from their original planned amount and the IBs took the entire allotment immediately rather than waiting the 30 days they can otherwise wait before committing to the overallotment. ARCC is moving ahead while ACAS simply stands in place, relegated to using up NOLs rather than pay shareholders dividends. Its about the income stupid and there will be none at ACAS for at least two more years.
Comparing ARCC to ACAS shows how nearsighted the author is. More so with the comment" its about the income stupid." No stupid, it is not about the income. This is a restructuring situation. Once you can get your myopic mind focused on how the street is warming to ACAS..... as an asset manager ......with breakup catalysts..... you may understand why the current holders like myself have enjoyed the best return out of any BDC.
If ONLY ACAS could have achieved the 25% and 9% YTD growth that PSEC and ARCC respectively have. However, since ACAS has been hampered so badly as you have mentioned, we are tuck with a measly 66% growth YTD.
Why is it that everyone that complains about ACAS compares it to stocks that are not returning what ACAS is? Get out of the past people! Hanging on to ages old conceptions about a company will lose you money.
If your point is that without access to the equity markets for lending cash, ACAS is at a disadvantage ... then obviously "yes".
That said, ACAS's ability to grow income through the LLC, retain income through clever positioning to maximize NOL's and bank "guaranteed returns" using cash for buybacks .. all 3 of those roll-up to a very compelling story for gains over the next 2 years.
The techincal-default and the resulting restructuring debt is now off the balance sheet and a thing of the past. The BLT's once underwater are actually conveying positive assets to the balance sheet. Once those are paid down, ACAS will be free to reconfigure and maximize valuations.