American Capital, Ltd. (ACAS)

June 15th, 2009 payable by Setember 30, 2009, ACAS will be declaring a $300 million dollar dividend in order to meet its RIC requirements. New rules allow the company to pay up to 90% of the dividend in stock. The Company will be announcing how the dividend will be paid out at that time. The directors have also asked the shareholders to approve a reverse stock split, at which point they will sell a limited number of shares to raise cash, which would be used for general purposes and to bring the ACAS to a resolution of it's defaults. The Company believes its NAV per share is $17.07, but due to FAS #157 ACAS's stated NAV it's $12.32, as of March 31, 2009. ACAS feels the stated NAV does not reflect the companies assets if they were to be sold in a more favorable business climate.

In short, ACAS has a plan to correct the perceived share value for it's investors. It seems to be a sound plan. Only time will tell for sure. I personally feel much better about their prospects of remaining a going concern. I would be very conservative with new money until after they announce how the dividend will be paid, and how many shares you will own after the reverse stock split. We can only wait until June 15th to see what the final plan will be. If it satisfies the creditors, it's share price should gain upward momentum rather quickly, as the stock should be valued somewhere between $12 to $17 before the reverse split, (not including dilution from new shares issued). It is currently trading near $3.