American Capital Holding Short-Circuits

A company in which American Capital Strategies(ACAS) has invested $45 million in recent years may now be facing bankruptcy.

Constar International, an electrical-services contractor based in Norwood, Mass., unexpectedly closed its doors last week.

One Constar employee told TheStreet.com that workers found out last Wednesday that the business would be closing the following day.

"Not only did we only get one day notice, they cut off all of our benefits, did not pay us for all of our time and won't pay us our accrued vacation," Constar employee Lori Parker told TheStreet.com. "How in the hell can a company get away with this?" she says.

American Capital's investment in Constar dates back to the 1990s. The firm now calls the investment "New Starcom" in its regulatory filings.

American Capital has invested a total of $44.8 million in New Starcom, but had marked down the investment to a fair value of $23.1 million at the end of June, according to the company's latest quarterly report. The investment consists of various debt pieces and preferred stock.

In an email Wednesday, American Capital spokeswoman Jennifer Burke acknowledged the loss at New Starcom but did not elaborate on the closing of the portfolio company or why employees were given such short notice.

"We never want a loss, particularly because of the impact it has on a portfolio company's employees, but with a large portfolio of companies and the fact that no company is immune from competitive threats, some of our investments have not succeeded, but overall our portfolio has had excellent performance," Burke wrote.

According to Constar's Web site, the firm was founded in 1976 and had $60 million of annual revenue. Parker, the Constar employee, said she has heard the firm is likely to file for bankruptcy.

An article in the Daily News Transcript, a Norwood newspaper, carried an article about the "abrupt" closure of Constar last week, but made no mention of the American Capital's investments in the firm.

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