* Stifel says management may give in to creditors' demands
* Stifel says bondholders demanding "make-whole" payment
* Moody's says may cut debt rating
* Moody's says bankruptcy risk rises
* Stock closes down 3 pct
(Recasts; adds analyst comments)
By Anurag Kotoky
BANGALORE, June 4 (Reuters) -American Capital Ltd's
ACAS.O risk of bankruptcy has reduced and the company's
management is likely to give in to public bondholders' demands
of a "make-whole" payment, an analyst at Stifel Nicolaus said.
Analyst Greg Mason said the company may satisfy bondholders
by making a payment of $75 million to $100 million.
"In our mind, we would expect that ACAS will ultimately
write that check to bondholders before they file chapter 11,"
Mason told Reuters.
His position represents a change from Thursday, when he
downgraded the stock to "sell," saying that debt-laden American
Capital may file for bankruptcy based on the disappointing
outcome of a bondholder vote on debt restructuring.
On June 2, American Capital extended its debt-exchange
offer to June 8. It needs approval from at least 85 percent of
public noteholders to go ahead with the debt restructuring
As of June 2, the company had approval of only seven
percent of note holders for the restructuring plan.
Earlier in the day, Moody's Investors Service said it may
downgrade American Capital' debt, as the company is more likely
to file for restructuring through bankruptcy.
"In the event of bankruptcy, ACAS would likely be
downgraded one to two notches given Moody's belief that the
recovery for bondholders would be high due to the company's
substantial equity base," the rating agency said Friday.
In regulatory filings, the company had said that it may
file for bankruptcy if it fails to restructure $2.5 billion of
Business development companies like American Capital have
struggled as the biggest economic downturn since the Great
Depression reduced the value of their portfolio companies, to
which they make loans in return for equity stakes.
American Capital shares closed down more than 3 percent at
$4.65 on Nasdaq, after touching a low of $4.50.
(Reporting by Anurag Kotoky in Bangalore; Editing by Gopakumar