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Filed by Allied Capital Corporation Pursuant to
Rule 425 under the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
[ALLIED CAPITAL LOGO]
Subject Companies: Allied Capital Corporation
(Commission File No. 0-22832) and BLC Financial
Services, Inc. (Commission File No.001-14065)
ALLIED CAPITAL TO ACQUIRE BLC FINANCIAL SERVICES IN STOCK TRANSACTION
New Portfolio Company Positioned to Become Technology Leader in Small Business
Lending
WASHINGTON, DC - NOVEMBER 1, 2000 -- Allied Capital Corporation (Nasdaq: ALLC)
today announced that it plans to acquire BLC Financial Services Inc. (Amex: BCL)
in a stock for stock exchange. The transaction will create a private portfolio
company controlled by Allied Capital. Allied Capital also plans to merge its
Allied Capital Express operations into the new portfolio company.
BLC Financial Services is a non-bank small business lender licensed as a
participant in the SBA 7(a) Guaranteed Loan Program. BLC, headquartered in New
York City, has 15 offices throughout the country and is a preferred lender in 63
SBA markets. BLC's fiscal year 2000 loan originations, including loans
originated for others, approximated $190 million.
The combination of BLC with Allied Capital Express will result in a leading
small business lender with 22 offices located nationwide, 64 Preferred Lender
markets, and projected annual loan origination volume of over $450 million.
Robert F. Tannenhauser, Chairman and CEO of BLC, will be appointed CEO and
President of the new portfolio company.
The new portfolio company, which has not yet been named, will be a technology
leader in online small business loan origination. As was recently announced,
Allied Capital Express has developed proprietary online rules-based underwriting
technology that will be used to streamline the portfolio company's operations.
The portfolio company will have significant online loan origination
relationships as well as solid core broker relationships in the small business
community.
Bill Walton, Chairman and CEO of Allied Capital, remarked, "We believe market
conditions in the small business lending sector have presented an excellent
investment opportunity for Allied Capital. Bank consolidation and consolidation
in the commercial finance industry has left a gap in serving the small business
market, and our new portfolio company will be positioned with the capital,
management and technology to capture this opportunity. We began building the
expansion and technology platform for Allied Capital Express in the first
quarter of 1999 and the BLC buyout accelerates our business plan by several
years."
Robert Tannenhauser said, "This transaction is positive for BLC shareholders.
Allied Capital Corporation is a much larger public company with a liquid stock
that has a strong regular quarterly dividend. By approving this transaction, BLC
shareholders will increase their liquidity as well as benefit from the diversity
of a large investment company. By combining the exceptional talent of our
complementary companies, with the strength of automated rules-based
underwriting, the new portfolio company is positioned to be a leading player in
the small business loan market."
To effect the transaction, Allied Capital will issue approximately 4.2 million
shares of common stock, and BLC shareholders will receive a fixed exchange ratio
of 0.18
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shares of Allied Capital common stock for each share of BLC stock in a tax-free
exchange. In addition, in a separate transaction, Allied Capital intends to
acquire a corporate shareholder of BLC for approximately $9.1 million in cash.
Allied Capital will own approximately 95% of the portfolio company upon
completion of the transaction. Management will retain 5% ownership. Allied
Capital's investment is structured to provide a current return through interest,
dividends and fee income, and the investment will include debt, preferred stock
and common stock.
In addition, Allied Capital believes there is opportunity to significantly
increase the value of the new portfolio company. Necessary approvals to complete
the transaction include an affirmative vote of BLC shareholders, as well as
regulatory approval by the SBA. The transaction is expected to close by December
31, 2000.
INVESTOR WEB CAST/ CONFERENCE CALL
Allied Capital will host a web cast/ conference call at 10:00 a.m. (EST)
Thursday, November 2, 2000 to discuss the proposed transaction. All interested
parties are welcome to attend the live web cast, which will be hosted through
our web site at www.alliedcapital.com. Please visit the web site to test your
connection before the call. An archived replay of the event will be available on
our web site.
You can also access the conference call by dialing (888) 748-9804 approximately
15 minutes prior to the call; please reference the passcode "Allied Capital."
International callers should dial (712) 271-3410. Investors may also listen to a
replay of the call by dialing (888) 568-0393. International callers can access
the replay by dialing (402) 530-7932.
If you have questions about the web cast/ conference call, please visit our web
site or call Allied Capital Investor Relations at (888) 818-5298
ABOUT ALLIED CAPITAL
Allied Capital is the country's largest business development company, and
provides long-term investment capital to support the expansion of growing
companies nationwide. The company is headquartered in Washington, DC. Allied
Capital Express (www.alliedcapitalexpress.com) provides small business loans
nationwide as the oldest non-bank participant in the SBA 7(a) guaranteed loan
program. Allied Capital Express recently launched its proprietary online
rules-based loan application, which has positioned the company as a technology
leader in small business finance. Allied Capital Express has eight regional
offices throughout the United States, and is an SBA Preferred Lender in 27
markets. Allied Capital is quoted on the Nasdaq Stock Market and trades under
the symbol "ALLC."
ABOUT BLC FINANCIAL SERVICES
BLC Financial Services is a non-bank small business lender (www.sbaloans.com)
and an active participant in the SBA 7(a) Guaranteed Loan Program and USDA
Business & Industry Loan Program. BLC has 15 offices through the United States
and is an SBA Preferred Lender in 63 markets. BLC is listed on the American
Stock Exchange and trades under the symbol "BCL."
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CONTACTS
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Danielle Mackie Suzanne Sparrow Jennifer Goldstein
Ogilvy Public Relations Allied Capital BLC Financial Services
(202) 452-9480 (202) 973-6326 (212) 751-5626 x230
[email protected] [email protected] [email protected]
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ADDITIONAL INFORMATION
Allied Capital Corporation and BLC Financial Services, Inc. plan to file with
the SEC a registration statement on Form N-14. In connection with the merger,
BLC Financial Services expects to mail a proxy statement/prospectus to
shareholders of BLC Financial Services, which contains important information
about the merger. BLC Shareholders are urged to read the proxy statement
prospectus and any other relevant documents filed with the SEC. The proxy
statement/prospectus will contain important information about Allied Capital,
BLC Financial Services, the persons soliciting proxies in connection with the
merger and related transactions. Once filed with the SEC, the registration
statement and proxy statement/prospectus will be available free of charge on the
SEC website at http://www.sec.gov and from the contacts listed on this press
release.
In addition to the registration statement and proxy statement/prospectus,
Allied Capital and BLC Financial Services file annual, quarterly and special
reports and other information with the SEC. You may read and copy any reports
filed by Allied Capital and BLC Financial Services at the SEC public reference
rooms or on the SEC website. Copies of such reports can also be obtained from
the contacts listed on this press release.
FORWARD-LOOKING STATEMENTS
The information contained in this press release contains forward-looking
statements. These forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain factors could
cause actual results and conditions to differ materially from those projected in
these forward-looking statements, and these factors are enumerated in the
company's periodic filings with the Securities and Exchange Commission.
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