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WASHINGTON, DC-In a $976-million cash transaction, Allied Capital Corp. has closed the books on the disposition of its commercial mortgage-backed securities and collateralized debt obligation bonds portfolio to Canadian pension fund company Caisse de dépôt et placement du Québec. The deal, which also included the sale of Allied Capital preferred shares, will ultimately result in a $216-million net gain for the District-based commercial lending concern.

During a conference call held this morning, Allied Capital chairman and CEO Bill Walton offered details on the motive behind the sale. “It was the best course of action to sell the portfolio as a whole and realize the capital mass we had built,” he explained. “It allows us to focus on our core business, which is finance.”

The resulting funds from the company’s securities sale will be put to use in a handful of areas. During the call, Allied Capital COO Joan M. Sweeney noted that the net gains will be used to “repay borrowings on our $200-million revolving line of credit, repay long-term debt and for general corporate purposes.” Allied Capital also plans to use some of the funds to invest in private finance investments. “We hope to get the capital back to work in the not too distant future.”

As part of the multimillion transaction, Allied Capital and the Caisse also signed a letter of intent involving the Caisse’s potential acquisition of Allied Capital’s remaining commercial real estate holdings; decisions on this matter could be settled by the end of the second quarter.

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