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American Capital splits up

American Capital said late Wednesday that its board has approved a plan to split into three companies.

Most of American Capital’s investment assets will be transferred to two BDCs, the statement said. The first BDC, American Capital Growth and Income, will consist mainly of securities issued by operating companies bought through American Capital One Stop Buyouts, senior floating rate loans to private companies and CLO equity investments, the statement said. This business will have $3 billion of equity.

The second BDC, American Capital Income, will be comprised of second lien and mezzanine loans to middle market companies originated by American Capital’s Sponsor Finance business. This BDC will have about $1 billion of equity, the statement said.

Bethesda, Md.-based American Capital, a publicly traded PE firm, said it would continue in the asset management business.

The new BDCs will be spun off to its shareholders, the statement said. News of the split caused American Capital shares to surge more than 10 percent, or $1.59, to $16.15 in after hours trading.

The firm also said that cost savings initiatives would result in about $25 million of reduced costs beginning in early 2015.

American Capital could not be reached for comment.

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