020209 American Capital Invests $8.5M in Organic Poultry

Bethesda, MD - American Capital Strategies Ltd. announced that it had invested $8.5 million in senior subordinated notes to recapitalize Petaluma Poultry Processors Inc. as part of an acquisition financing. Petaluma management is participating in the transaction in the form of preferred equity. The senior lender is U.S. Bank and the equity group is led by Vail, Colo.-based Booth Creek Management Corp. Petaluma is an integrated producer, distributor and marketer of organic and natural fresh chicken meat. It was the first company to sell chicken with the U.S. Department of Agriculture certification for organic poultry, trademarked as Rosie the Organic Chicken.

“American Capital is off to a strong start in 2002,” said Chief Operating Officer Ira Wagner. “Our first investment was a buyout, and this, our second of the year, is a mezzanine investment supporting an equity sponsor in a company producing a branded niche consumer product. While senior lenders continue to wait out the recession, we anticipate more opportunities to invest in strong middle market companies requiring access to capital.”

American Capital has invested $400 million in middle market companies in the last 12 months.

“Petaluma is the dominant west coast player in the rapidly growing and highly profitable organic chicken market,” said American Capital Principal John Thornton. “It is able to leverage significant barriers to entry to its market: Petaluma is among the few companies with USDA organic certification, distributes a broad product line of poultry products, and possesses the significant expertise required to raise birds organically and achieve acceptable yields.”

Petaluma, based in Sonoma County, Calif., saw sales increase significantly in 2001, consistent with the growth of the overall natural and organic food markets. The company was founded in 1969 to serve the ethnic poultry markets in the San Francisco Bay Area. Petaluma now employs several hundred people and operates a hatchery, chicken ranches, a processing plant and a feed mill.

“American Capital and our other new investment partners will allow Petaluma to continue to be the market leader in organic chickens,” said Petulama Chief Executive Officer Darrell Freitas. “We will continue to build market share by focusing on the customer, maintaining the highest quality standards and expanding our product line.”

American Capital is a publicly traded buyout and mezzanine fund with capital resources exceeding $1 billion. American Capital is an equity partner in management and employee buyouts; invests in debt and equity of companies led by private equity firms, and provides capital directly to private and small public companies. American Capital funds growth, acquisitions and recapitalizations. The Company has paid and declared $8.35 per share in dividends since going public in 1997.

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