European Capital Limited Reports 2012 Net Operating Income of euro 21 Million and Net Earnings of euro 78 Million

ST. PETER PORT, Guernsey, April 16, 2013 /PRNewswire/ -- European Capital Limited ("European Capital" or the "Company") today issues a Management Statement announcing net operating income ("NOI") for the half year and year ended 31 December 2012 of €22 million and €21 million respectively. Net earnings for the half year and year were €55 million and €78 million respectively. As at 31 December 2012, net asset value ("NAV") was €705 million, an 8%, or €55 million increase from the 30 June 2012 NAV of €650 million and a 12%, or €78 million increase from the 31 December 2011 NAV of €627 million.

2012 FINANCIAL SUMMARY

• €21 million NOI
  • €32 million, or 60%, decrease over 2011
• €1 million net realised gain on investments
  • €29 million improvement over 2011
• €57 million net unrealised appreciation on investments excluding foreign exchange
  • €60 million increase over 2011
• €78 million net earnings
  • €80 million increase over 2011
• €82 million of cash proceeds from realisations
• €37 million of securitised debt repaid
• €151 million of committed investments
  • €122 million in new portfolio companies
• Net Asset Value €705 million
  • €78 million, 12% increase from 31 December 2011

H2 2012 FINANCIAL SUMMARY

• €22 million NOI
  • €8 million increase compared to H2 2011
• €1 million net realised gain on investments
  • €14 million improvement compared to H2 2011
• €39 million net unrealised appreciation on investments excluding foreign exchange
  • €141 million improvement compared to H2 2011
• €55 million net earnings
  • €143 million improvement compared to H2 2011
• €27 million of cash proceeds from realisations
• €17 million of securitised debt repaid
• €56 million of committed investment
  • €37 million in new portfolio companies
• Net Asset Value €705 million
  • €55 million, 8% increase from 30 June 2012

"Two thousand and twelve capped a good year for European Capital. NAV grew by €78 million, or 12% in 2012, with investments performing better than we had expected considering the weak economy in some parts of Europe," said Malon Wilkus, Chairman and Chief Executive Officer. "We generated €82 million of cash realisations and invested €151 million of which €122 million was in new portfolio companies."

PORTFOLIO LIQUIDITY AND ORIGINATIONS
In the half year and year ended 31 December 2012, €27 million and €82 million of cash proceeds were received from realisations of portfolio investments respectively. The Company also made new committed investments of €56 million in the second half of the year and €151 million for the full year respectively. Of the full year total commitments, €122 million was committed to new portfolio companies and €29 million in our existing portfolio for growth, acquisitions and refinancings.

"During the second half, we continued to see liquidity in the portfolio and deployed our capital into areas that add to shareholder value," said Ira Wagner, President. "We are committed to supporting our existing portfolio companies as well as originating new investments in both debt opportunities and for One Stop Buyouts®. We are seeing increasingly attractive opportunities in European credit as a result of the regulatory environment making it difficult for banks to lend to mid market companies as they had in the past. As a result, we are seeing more lending opportunities with better pricing and terms."

PORTFOLIO VALUATION
For the half year and year ended 31 December 2012, net unrealised appreciation of investments totalled €39 million and €57 million respectively; with €40 million of appreciation for the year attributable to our controlled portfolio driven by performance improvements in the portfolio and €17 million of appreciation attributable to the sponsored finance portfolio.

Since inception, European Capital has invested €3.5 billion in 105 portfolio companies and has realised €1.9 billion from portfolio company exits. Out of the €1.9 billion we have exited fully 45 portfolio companies, realising an aggregate of €1.2 billion comprising:

• €826 million of principal repayments;
• €166 million from loan syndications and sales;
• €128 million of collections of PIK notes and dividends; and
• €113 million from sales of equity. 

These exits achieved an aggregate IRR of 9.9%. The equity investments of these exited portfolio companies have achieved a 29.1% IRR.

The European Capital portfolio as of 31 December 2012 stood at fair value of €1.2 billion, with an average investment size of €25 million per portfolio company. European Capital's largest investment represents 15.0% of total investment assets at fair value and the ten largest investments represent 56.4% of total investment assets at fair value as of 31 December 2012.

As at 31 December 2012, loans with a cost of €307 million and a fair value of €60 million were on non-accrual, representing 8.0% of total loans at fair value, compared to €263 million cost and €60 million fair value of non-accrual loans, representing 8.2% of total loans at fair value as at 30 June 2012. Fair value of loans remained stable during the second half although cost of loans on non-accrual increased as result of loans added to non-accrual status with nil fair value.

Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. There were no new investments made in 2009 to 2011.

(1) Assumes investments are exited at current US GAAP fair value.
(2) Includes fully exited investments of existing portfolio companies.
(3) Excludes investments in Structured Products.
(4) Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt.
(5) Majority Owned Portfolio Company ("MOPC") investments represents investments in which European Capital, or its affiliates, have a fully diluted ownership percentage of 50% or more or has over 50% board representation at the portfolio company.
(6) Adjusted EBITDA may reflect certain adjustments to the reported EBITDA of a portfolio company for non-recurring, unusual or infrequent items or other pro-forma items or events to normalize current earnings which a buyer may consider in a change in control transactions. These adjustments may be material and are highly subjective in nature. Portfolio company reported EBITDA is for the most recently available twelve months, or when appropriate, the forecasted twelve months or current annualized run-rate
(7) For portfolio companies with a nominal Adjusted EBITDA amount, the portfolio company's maximum debt leverage is limited to 15 times Adjusted EBITDA.
(8) Excludes investments in which we own only equity.
(9) For the most recent twelve months, or when appropriate, the forecasted twelve months.
(10) As a percentage of our total debt investments.
(11) Weighted average based on fair value.
(12) Weighted average based on fair value of equity investments.
(13) Non euro-denominated amounts are retranslated at the exchange rate ruling at the date of original investment.
(14) Non euro-denominated balances, other than those referred to in (13), are retranslated at the exchange rate ruling at the balance sheet date.
(15) Balance Sheet appreciation (depreciation) of investments excluding foreign exchange revaluation.
(16) Calculated as the estimated enterprise value of the MOPC's less the cost basis of any outstanding debt of the MOPC's.

IMPORTANT DISCLOSURES
NAV
Any valuation information relating to the portfolio companies of European Capital stated or referred to in this release has been determined by the Board of European Capital in good faith, on a basis consistent with past practice and for the purposes of complying with its reporting obligations under applicable laws.

Forward-looking statements
This document may contain "forward-looking statements." By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Many of these risks and uncertainties relate to factors beyond European Capital's control or which cannot be estimated precisely. These factors include, but are not limited to, uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, and changes in the conditions of the industries in which European Capital has made investments. Actual outcomes and results may therefore differ materially from any outcomes or results expressed or implied by any such forward-looking statements.

Performance data quoted above represents past performance of European Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in European Capital will likely fluctuate. Additionally, European Capital's current performance may be lower or higher than the performance data quoted above.

Basis of preparation
This interim management statement has been prepared to provide further transparent information about European Capital and should not be relied on by any person for any other purpose. Certain financial information in this interim management statement is based on unaudited management accounts. Nothing in this document is intended to be, or should be construed as, a profit forecast.

ABOUT EUROPEAN CAPITAL
European Capital is an investment company for pan-European equity, mezzanine and senior debt investments with €1.2 billion in assets under management. European Capital is a wholly-owned affiliate of American Capital, Ltd ("American Capital"). It is managed by European Capital Financial Services (Guernsey) Limited ("ECFSG" or the "Investment Manager"), a wholly-owned affiliate of American Capital. The Investment Manager has offices in London and Paris. As of 31 December 2012 the Investment Manager had 5 investment teams with 22 investment professionals and employed 27 support staff. European Capital and its affiliate, American Capital, will consider senior and mezzanine debt investment opportunities from 10 million to 40 million in either euros or sterling and up to 400 million for One Stop Buyouts®. For further information, please refer to www.EuropeanCapital.com.

ABOUT AMERICAN CAPITAL
American Capital, Ltd. (Nasdaq: ACAS) is a publicly traded private equity firm and global asset manager. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate and structured products. American Capital manages $18.6 billion of assets, including assets on its balance sheet and fee earning assets under management by affiliated managers, with $117 billion of total assets under management (including levered assets). Through an affiliate, American Capital manages publicly traded American Capital Agency Corp. (Nasdaq: AGNC) with approximately a $13 billion market capitalization and American Capital Mortgage Investment Corp. (Nasdaq: MTGE) with approximately a $1.5 billion market capitalization. From its eight offices in the U.S. and Europe, American Capital and its affiliate, European Capital, will consider investment opportunities from $10 million to $750 million. For further information, please refer to www.AmericanCapital.com.