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BOWLES NAMES LEADING INVESTMENT PRO TO DIRECT SMALL BUSINESS INVESTMENT COMPANY PROGRAM

 WASHINGTON, Jan. 10 /PRNewswire/ -- A leading New York investment banker, Robert D. Stillman, has been chosen to oversee the expansion of the Small Business Administration's (SBA) Small Business Investment Company (SBIC) program, SBA Administrator Erskine Bowles announced today.
 "I said last month that we would be bringing in a top investment specialist, and we've got one," Bowles said. "Bob Stillman is a venture capital professional with the rare credentials we need to manage the transformation of the SBIC program. I'm very excited that he will be taking on this responsibility."
 SBICs, licensed and regulated by the SBA, are privately-owned and privately-managed investment firms that use their own capital, plus funds secured through SBA guarantees, to make venture investments in small businesses. SBICs provide risk capital in the form of debt and equity financing to small businesses for their growth, modernization or expansion.
 Stillman will direct implementation of a major program restructuring beginning early in 1994. The effort's linchpin is a new preferred security with priority payments similar to dividends and a profit participation feature. SBA will offer it as an alternative to the interest-bearing bonds now used to augment private capital raised by SBICs. The bonds require SBICs to make semi-annual interest payments, which are inconsistent with patient, long-term equity investments in small businesses.
 The new securities -- along with a number of suggested regulatory changes -- will more appropriately match sources and uses of capital and allow the government to share in the profits created by successful SBICs, offsetting the additional early-year risks associated with the new security.
 Other changes planned for the program will help attract substantial new private capital into the venture capital industry by opening the program to investments by public pension funds and state and local governments, tightening regulatory oversight, sharply increasing the maximum funding SBICs can receive from SBA and reducing constraints on SBICs that do not risk government capital.
 "With these changes, the SBIC program will be positioned for a leadership role in the creation of jobs, exports and growth," Bowles said. "And Bob Stillman is the right person for the job at exactly the right time."
 Bowles said his aim for the program is to license up to 200 new SBICs, each with private capital ranging from $10 million to $15 million. Because new regulations now under consideration would allow SBA to leverage that private capital at a ratio of up to 3-to-1, that would mean creating a risk capital pool of up to $9 billion for investment in small businesses.
 Stillman said his priorities are launching the next stage of the restructuring of the program, developing a strategy to deal with current problems in the program and undertaking an orderly liquidation of financially weak and poorly managed licensees.
 "There's nothing wrong with having problems," Stillman said. "There is only something wrong with not dealing with them. This program has been very productive over the years, but it can do better."
 Despite the inherent risks of the program, it is cost-effective for the taxpayers, providing jobs, economic growth and tax revenue at the federal, state and local levels. Many firms that have benefited from early infusions of SBIC financing have become household names, including Apple Computer, Federal Express and Intel. SBICs have invested nearly $10.7 billion in more than 73,000 small businesses since the program's inception in 1958. Those investments have created well over 1 million new jobs, tens of millions of dollars in exports and tax revenues that greatly exceeded the cost of the program.
 Stillman began his career as an investment banker as an associate at Payson & Trask in 1957. The firm was founded in 1946 by Joan Whitney Payson, and was one of the first organized venture capital concerns in the United States. He became a full partner in 1962 and remained with the firm until 1972.
 From 1972 until his retirement in 1992, Stillman served as executive vice president, treasurer and director of the New York-based corporate buy-out firm of AEA Investors, an investment company financed by institutional investors and former CEOs of major companies.
 AEA Investors specialized in buyouts of medium-sized companies, often calling on the managerial skills of its shareholders to direct these companies and build them into more successful businesses. During his years with AEA and Payson & Trask, Stillman served as director of numerous corporations purchased by the firms.
 Stillman holds a bachelor's degree in chemical engineering from Yale University and a master's degree in business administration from Harvard Business School. An Air Force veteran, Stillman is a native of Oak Park, Ill.
 -0- 1/10/94
 /CONTACT: Mike Stamler of the U.S. Small Business Administration, 202-205-6740/


CO: U.S. Small Business Administration ST: District of Columbia IN: SU: PER

IH-DT -- DC010 -- 0512 01/10/94 10:55 EST
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Publication:PR Newswire
Date:Jan 10, 1994
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