Including the investments in BPWest of American Capital's funds under management, the gain totals $123 million over the life of the investment. Including inception to date dividends, cumulative gains and dividend income realized by American Capital and affiliates of American Capital totaled over $139 million over the life of the investment.
Anchor is the nation's largest independent provider of drilling fluids and fluid-handling services for onshore oil and gas drilling. In support of Castle Harlan's acquisition of BPWest, American Capital provided $68 million of financing in the form of senior subordinated notes and senior term loans.
American Capital formed BPWest in 2005 to acquire Anchor Drilling Fluids USA Inc. American Capital invested $21 million in BPWest in the form of a senior term loan, senior subordinated debt and preferred and common equity. In 2006, American Capital invested an additional $39 million in a partial recapitalization of BPWest and to support the acquisition of two separate companies, Toby's Vacuum and Truck Services Inc. and Ozark Mud and Chemical Inc. American Capital has earned a 100% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of its investment. On its equity only investment, American Capital earned a 198% compounded annual rate of return, including dividends and fees earned over the life of its investment. Including the investments in BPWest of American Capital's funds under management, the combined American Capital group earned a 117% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of their investments. On the equity only investments, the combined American Capital group earned a 214% compounded annual rate of return, including dividends and fees earned over the life of their investments.
"We are very pleased with the result of our sale of BPWest and equally pleased to continue to invest in this strong company by supporting its new investment partner, Castle Harlan," said Darin Winn, Regional Managing Director, American Capital. "This is American Capital's first transaction with Castle Harlan and we look forward to building our relationship with this respected international private equity firm."
American Capital has invested directly and through its funds under management approximately $9.6 billion in the last twelve months, $1.5 billion year to date and $340 million quarter to date. Not including funds under management, American Capital has invested approximately $7.1 billion in the last twelve months, $1.1 billion year to date and $240 million quarter to date. American Capital assisted in the refinance or syndication of approximately $2 billion of senior debt for its portfolio companies in the last twelve months, $331 million year to date and $30 million quarter to date.
"We are thrilled to be announcing this transaction, as well as our continuing relationship with Anchor and their new owners," said Kevin Kuykendall, American Capital Managing Director, Energy Group. "Our relationship with Anchor has been extraordinarily profitable on a professional level, and has been equally rewarding on a personal level. Anchor's management team, led by Bob West, Phil West and Greg Davis, is of truly the highest quality, and we will continue to support management in any way possible as our relationship continues."
"The Company's experienced management team is looking forward to significant growth opportunities," said Chris Carey, American Capital Principal, Sponsor Finance Group. "This year, management expects to increase its drilling fluids' presence in the Barnett Shale, East Texas and North Louisiana."
Anchor, based in Tulsa, OK, has more than 20 operating facilities in Arkansas, Colorado, Montana, Oklahoma, Texas, Utah and Wyoming. The company's operations focus on regions that have complex onshore drilling environments which require proprietary drilling fluid blends and customized engineering services. Drilling fluids are used to remove cuttings from oil and gas wellbores, lubricate drill bits and control formation pressures. In addition to drilling fluids, the company's fluid-handling operations include freshwater and production water transport services in the Piceance Basin in Colorado, one of the fastest growing drilling regions in the United States.
"We are excited to be partnering with American Capital for the first time," said William Pruellage, Managing Director, Castle Harlan. "American Capital brings a unique and intimate knowledge of BPWest and Anchor since it has been the majority owner for the past three years. We look forward to cultivating a strong relationship with the dedicated team at American Capital." -- American Capital Strategies Ltd.
