American Capital Ltd. to split itself into 3 companies and cut jobs, shares jump

American Capital Ltd. said Wednesday that it plans to split into three companies and cut an unspecified number of jobs.

The announcement sent shares of the Bethesda, Maryland-based private equity and asset management firm up 10 percent in extended trading.

American Capital said that under the plan, it will transfer most of its investment assets into two new companies and it would operate primarily as an asset management business. The arrangement would ultimately result in three publicly traded companies.

The two new companies will be American Capital Growth and Income Ltd., with estimated equity of $3 billion, and American Capital Income Ltd., with roughly $1 billion of equity.

Chairman and CEO Malon Wilkus said in a statement that the move will benefit its shareholders and will allow the company to allocate its investments under two distinct strategies.

American Capital also said that it is taking a number of cost-saving moves that will save $25 million annually, beginning in 2015. The majority of the savings will come through job cuts but it did not disclose how many positions would be eliminated.

The company also said it plans to put a program in place under which portfolio companies in which it or its managed funds have invested will reimburse the company for certain services American Capital provides them. This program is expected to provide $21 million in reimbursement annually by the end of 2015.

Shares of American Capital increased $1.44 to $16.10 in extended trading.