JSM Financial: Billionaire investor John Paulson to buy an about 14% share of American Capital.

April 19, 2010 - PRLog -- John Paulson, JSM Financial sources report, has agreed to buy a stake of around 13% in business development company American Capital Ltd., giving the firm a much needed capital injection to restructure debt and pushing its share price up 14%.

Paulson’s hedge fund firm Paulson & Co will purchase 43.7 million shares of about 58.3 million being sold at a reduced price which will make Paulson and Co the new largest shareholder.

Paulson, although not charged, has been in the news lately in connection with fraud charges brought against Goldman & Sachs by the Securities and Exchange Commission. JSM Financial believes the commission alleges that Goldman & Sachs failed to disclose to investors Paulson’s role in selecting mortgage assets which were in a collateralized debt obligation which Paulson is believed to have bet against.

American Capital is likely to use the huge capital injection together with its $450 million cash on hand, towards paying down some $2.4 billion in debt that is currently in default.


"There has been fear around the debt restructuring and this deal solidifies the hopes around the restructuring being done,” JSM Financial believes one analyst said.

The company’s pro form cash balance is nearing $1.4 billion and the new deal should provide it with significant flexibility with regard to a deleveraging of its balance sheet.

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