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Monday, September 15, 2008

American Beacon Takes Flight

News summary by MFWire's editors

AMR Corp., which owns American Airlines, has finished the $480 million sale of American Beacon Advisors to Lighthouse Holdings. Lighthouse is owned by investment funds affiliated with private equity firms Pharos Capital Group and TPG Capital. AMR will acquire a small equity stake in Lighthouse's parent.

Founded in 1986, American had AUM of $57 billion as of end-August. The deal was first announced in April (see The MFWire, April 16, 2008).

"Pharos and TPG believe that the asset management business is a robust sector, in which American Beacon is a strong leader with an outstanding, 20-year track record of performance in multiple-asset classes across a variety of investment cycles," said Kneeland Youngblood, co-founder and managing partner of Pharos Capital.

For his part, American Beacon Advisors chairman Bill Quinn said that with American Beacon substantially increasing its third-party revenue over the past several years, "we believe the timing of the divestiture is just right for our company, our customers and our employees."




Company Press Release

FORT WORTH, Texas, Sept. 15 /PRNewswire-FirstCall/ -- AMR Corporation, the parent company of American Airlines, Inc., announced today that it has completed the sale of American Beacon Advisors, Inc., its wholly owned asset-management subsidiary, to Lighthouse Holdings, Inc., which is owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms. AMR received a total consideration of $480 million. While primarily a cash transaction, AMR will acquire a small equity stake in the parent company of Lighthouse Holdings.

American Beacon Advisors has consistently grown since its creation in 1986, adding new products and growing assets under management to $57 billion as of Aug. 31, 2008. This transaction creates one of the largest minority-owned investment management firms in the country.

American Beacon will continue to provide a number of services for AMR and its affiliates, including cash management for AMR and investment advisory services and investment management services for American Airlines pension, 401(k) and other health and welfare plans. An independent third party reviewed and approved the continuing relationships between American Beacon and American Airlines pension, 401(k) and other health and welfare plans to satisfy the fiduciary duties and other rules that apply to these plans.

In addition to providing investment management services to AMR, American Beacon serves as the investment manager of the American Beacon Funds, a family of mutual funds with both institutional and retail shareholders. Shareholders of the American Beacon family of mutual funds voted to approve American Beacon's continued appointment as the investment manager for the mutual funds.

"Pharos and TPG believe that the asset management business is a robust sector, in which American Beacon is a strong leader with an outstanding, 20-year track record of performance in multiple-asset classes across a variety of investment cycles," said Kneeland Youngblood, co-founder and managing partner of Pharos Capital. "We look forward to working with the American Beacon team and TPG to fully leverage its strengths into an industry-leading firm. And, we welcome the opportunity to work with AMR not only as a significant client, but as a long-term partner."

"Having significantly grown our third-party revenue over the past several years, we believe the timing of the divestiture is just right for our company, our customers and our employees," said American Beacon Advisors Chairman William F. Quinn. "We're looking forward to focusing on growing our core business, while continuing to serve the needs of our customers and building on our successful history under a new ownership structure. Our management team and employees are excited about the many opportunities that this transaction will present to American Beacon, and our customers can rest assured that we intend to provide the same high level of service and expertise that they have come to expect from American Beacon in the past."

About AMR Corporation


AMR is the parent company of American Airlines and American Eagle Airlines. American Airlines is the world's largest airline. American, American Eagle and the AmericanConnection(R) airlines serve 250 cities in 40 countries with more than 4,000 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award-winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld(R) Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve nearly 700 destinations in over 140 countries and territories. American Airlines, American Eagle, the AmericanConnection(R) airlines, AA.com, We know why you fly and AAdvantage are registered trademarks of American Airlines, Inc. (NYSE: AMR)

About American Beacon Advisors, Inc.

American Beacon Advisors, Inc. is an experienced provider of investment advisory services to institutional and retail markets. American Beacon Advisors serves defined benefit plans, defined contribution plans, foundations, endowments, corporations and other institutional investors. American Beacon Advisors acts as an investment advisor and/or manager for certain pension and short-term cash assets of American Airlines. American Beacon Advisors also manages the American Beacon Funds, a series of low-cost, no-load mutual funds open to institutional investors, retirement accounts such as IRAs and individual investors. The Fund family currently includes several portfolios spanning a variety of longer-range investments from international and domestic equity through balanced portfolios. They also include short-term investment options including bond funds and money market funds.

About Pharos Capital Group, LLC

A private equity firm based in Dallas and Nashville, Pharos Capital Group invests through three private equity funds. Pharos maintains a broad and diverse limited partner base comprised of public, private and Taft-Hartley plans. Pharos primarily invests in companies seeking later-stage equity funding for internal growth, acquisitions, management buyouts or recapitalizations across industry sectors, with particular focus on health care, business services (including financial services), and applied technology. To learn more about Pharos Capital Group, LLC, please visit http://www.pharosfunds.com.

About TPG Capital

TPG Capital is the global buyout group of TPG, a leading private investment firm founded in 1992 with more than $55 billion of assets under management and offices in San Francisco, London, Hong Kong, New York, Fort Worth, Menlo Park, Washington, D.C., Melbourne, Moscow, Mumbai, Paris, Luxembourg, Beijing, Shanghai, Singapore and Tokyo. TPG Capital has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, joint ventures and restructurings. Please visit http://www.tpg.com.
 

Edited by: Armie Margaret Lee


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