The business-development company American Capital Ltd., which continues to restructure its debt, is getting a helping hand from the hedge fund Paulson & Co.
Paulson agreed to buy 43.7 million American Capital shares for proceeds of about $221 million as part of a registered direct offering to institutional investors. Overall, the company is selling about $295 million of stock. In late 2009, American Capital had about 284 million shares outstanding.
In an e-mailed statement, Paulson said: "American Capital is a very important lender to middle-market companies. Paulson's equity investment will allow American Capital to continue to provide this vital function to small- and medium-sized businesses."
The deal isn't a stretch for Paulson, which is well versed in buying distressed assets. It increased its positions in banking companies such as Bank of America Corp. and Citigroup Inc. since the financial market turmoil began.
American Capital has extended the deadline for getting a deal on restructuring several times. It now has until May 31 to reach an agreement with its creditors, and said the deadline can be extended to June 30.