Paradigm Precision Adds On

Paradigm Precision, a Phoenix-based portfolio company of American Capital, has acquired TM Industries Inc., a maker of machined components for the aerospace, power generation, oil and gas and defense industries. No financial terms were disclosed. 

PRESS RELEASE

American Capital, Ltd. (Nasdaq: ACAS) announced today that in September it invested in its portfolio company Paradigm Precision Holdings LLC to support the acquisition of TM Industries, Inc., a high-precision machining company that specializes in machining large size, highly technical parts for customers in the aerospace, power generation, oil and gas and defense markets. Paradigm Precision is a leading manufacturer of complex machined components for the aerospace and industrial gas turbine engine industries. American Capital’s investment takes the form of subordinated PIK notes.

“We are pleased to support Paradigm Precision with another complementary acquisition,” said Gordon O’Brien, President, Specialty Finance and Operations. “Following the back-to-back acquisitions of Smith West, Palmer and Eurocast in 2007, our Special Situations Group was eager to become involved in the next step of Paradigm Precision’s build-up strategy.”

American Capital, including its global fund management business, has approximately $20 billion in capital resources under management(1) and over 290 portfolio companies. American Capital has invested directly and through its global asset management business approximately $7 billion in the last twelve months and $5 billion year to date. Not including funds under management, American Capital has invested approximately $4 billion in the last twelve months and $2 billion year to date. American Capital assisted in the syndication of approximately $952 million of senior debt for its portfolio companies in the last twelve months and $462 million year to date. For more information about American Capital’s portfolio, go to http://www.acas.com/our_portfolio/our_portfolio.html.

“The acquisition of TM Industries will expand Paradigm Precision’s machining capabilities into larger and more complex parts,” said Dean Anderson, Managing Director, Special Situations. “TM Industries’ specialty in large parts and its employees’ highly technical skills are very complementary to Paradigm Precision’s existing capabilities.”

“Paradigm Precision is focusing on consolidating the highly fragmented, under-capitalized and capacity constrained supply chain of large OEMs in the aerospace and power generation industries,” said Myung Yi, Managing Director, Special Situations. “Through the various acquisitions completed in the past eighteen months, Paradigm Precision is now able to offer customers a very unique and attractive value proposition.”

American Capital first invested $108 million in Paradigm Precision in 2007 to support its acquisitions of Smith West Inc., Palmer Manufacturing Co. Inc. and Eurocast S.A., leading manufacturers of precision machined aerospace engine and industrial gas turbine components. Based in Tempe, AZ with additional facilities in Malden, MA; Peabody, MA; Guaymas, Mexico and Tunisia, Africa; Paradigm is a manufacturer of highly complex, close tolerance parts and assemblies used mainly in aircraft engine and industrial gas turbines, including combustion liners and nozzles, disks, seals, shafts, spools, casings, frames and housings. For more information about American Capital’s original investment in Paradigm, go to http://www.acas.com/news/newsreleases/2007/pr20070606.html.

Founded in 1963 and based in East Berlin, CT, TM Industries is a high- precision machining operation with approximately $20 million in annual revenue. TM Industries is well known for its capabilities to machine very large parts and provides its clients with “start to finish” services including milling, boring, drilling, grinding, turning, tooling and assembly. TM Industries’ products are used in aircraft engines, defense applications, industrial gas and steam turbines and other end use applications that require highly precise specifications.

“TM Industries has a superb reputation for reliability, quality and quick response time with its customer base, many of which have been doing business with the company for over 25 years,” said Jeffrey Anapolsky, Vice President, Special Situations. “TM Industries’ well-balanced mix of end markets offers an attractive outlook that will support Paradigm Precision’s future growth.”

“Paradigm Precision’s management is very excited about this acquisition and sees a lot of growth opportunities from offering TM Industries’ capabilities to new and existing customers,” said Jim Levine, President and CEO, Paradigm Precision. “We are excited that American Capital continues to support our growth. The firm’s flexible financing and certainty of close are greatly valued in the market and distinguish American Capital from its competitors.”

ABOUT AMERICAN CAPITAL

American Capital, with $20 billion in capital resources under management(1), is the only private equity fund and the largest alternative asset management company in the S&P 500. American Capital, both directly and through its global asset management business, originates, underwrites and manages investments in private equity, leveraged finance, real estate and structured products. American Capital and its affiliates invest from $5 million to $800 million per company in North America and euro 5 million to euro 500 million per company in Europe. American Capital was founded in 1986 and currently has 13 offices in the U.S., Europe and Asia.

As of September 30, 2008, American Capital shareholders have enjoyed a total return of 392% since the Company’s IPO — an annualized return of 15%, assuming reinvestment of dividends. American Capital has paid a total of $2.5 billion in dividends and paid $29.25 dividends per share since going public in August 1997 at $15 per share.

Companies interested in learning more about American Capital’s flexible financing should contact Mark Opel, Senior Vice President, Business Development, at (800) 248-9340, or visit www.AmericanCapital.com or www.EuropeanCapital.com.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor’s shares, when sold, may be worth more or less than their original cost. Additionally, American Capital’s current performance may be lower or higher than the performance data quoted above.

This press release contains forward-looking statements. The statements regarding expected results of American Capital are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.