UPDATE 1-American Capital declares dividend, shares jump
* Sets dividend of $1.07/shr
* Says spent all of 2008 taxable income
* Shares up as much as 22 pct
June 11 (Reuters) - Struggling private equity firm American Capital Ltd (ACAS.O) declared a dividend of $1.07 a share in order to maintain its tax status as a regulated investment company and eliminate its income tax liability.
Shares of the company surged 22 percent to $3.37 in morning trade on Nasdaq.
The dividend, its first since January 2008, is payable on Aug. 7 to stockholders of record as of June 22, 2009 , the Bethesda, Maryland-based company said.
The dividend is payable either in cash or in shares of common stock, or due to certain limitations, in a combination of cash and common stock, the company said.
American Capital, which was removed from the S&P 500 market index .SPX in February, has defaulted on $2.3 billion of unsecured credit arrangements as of March 31 and auditors included a going concern explanatory paragraph in their opinion on its financial statements.
Business development firms like American Capital and Allied Capital (ALD.N), which usually make loans to small businesses in return for equity stakes, have seen their investment portfolio deplete and raising capital turn increasingly difficult amid the financial crisis. (Reporting by Anurag Kotoky in Bangalore; Editing by Anil D'Silva)
