American Capital Prices Public Offering of Common Stock

BETHESDA (Maryland, USA) September 22 (PROTEXT/PRNewswire) -American Capital Strategies Ltd. ("American Capital" or the"Company") (Nasdaq: ACAS) announced today it has priced itspublic offering of 11,500,000 shares of its common stock at US$31.60 per share. Of those shares, 2,500,000 shares were offereddirectly by the Company and 9,000,000 shares are being sold inconnection with agreements to purchase common stock from AmericanCapital at a future date (the "Forward Sale Agreements"), asdiscussed below. American Capital has granted the underwriters anoption to purchase up to an additional 1,725,000 shares of commonstock to cover over-allotments. The offering is subject tocustomary closing conditions and is expected to close on Friday,September 24, 2004.

Wachovia Capital Markets, LLC, Citigroup Global Markets Inc.,J.P. Morgan Securities Inc., UBS Securities LLC, A.G. Edwards &Sons, Inc. and Legg Mason Wood Walker, Incorporated are theunderwriters for the offering. The joint book-running managersfor the offering are Wachovia Capital Markets, LLC and CitigroupGlobal Markets Inc. J.P. Morgan Securities Inc. is serving as thesole structuring agent for the Forward Sale Agreements.

The offering is being made under American Capital's existingshelf registration statement filed with the Securities andExchange Commission. In connection with the offering, J.P. MorganSecurities Inc., Citigroup Global Markets Inc. and an affiliateof Wachovia Capital Markets, LLC (the "Forward Purchasers")agreed to borrow and sell to retail and institutional investors9,000,000 shares of common stock at the close of this offering atthe same offering price (the "Offering Price") as the 2,500,000shares of the Company's common stock being offered directly byAmerican Capital are sold.

Under Forward Sale Agreements between the Company and theForward Purchasers (or their affiliates), the Forward Purchasersagreed to buy from the Company a total of 9,000,000 shares of theCompany's common stock, for delivery at such times as the Companyelects, over the next twelve months. The Company will physicallysettle all transactions under the Forward Sale Agreements bydelivering shares of common stock and the Forward Purchasers willdeliver to the Company the Offering Price less the underwritingdiscount, subject to certain adjustments, upon each settlement.

American Capital expects to use substantially all of the netproceeds of approximately US$73,000,000 from the direct sale of2,500,000 shares of common stock to reduce the borrowings underthe Company's existing revolving credit facilities and to fundinvestments. American Capital expects to use substantially all ofthe net proceeds from the shares of common stock being offeredpursuant to the Forward Sale Agreements, which initially arevalued at approximately US$272,000,000, subject to certainadjustments, primarily to reduce the borrowings under theCompany's existing revolving credit facilities and to fundinvestments. These repayments will create availability under thefacilities, which will generally be used for funding futureAmerican Capital investments and general corporate purposes.

This press release is neither an offer to sell nor asolicitation of an offer to buy shares of common stock. Theoffering of these securities will be made only by means of aprospectus and a related prospectus supplement. When available,copies of the prospectus and prospectus supplement may beobtained from Wachovia Capital Markets, LLC at 7 Saint PaulStreet, 1st Floor, Baltimore, MD 21202, or Citigroup GlobalMarkets Inc., 140 58th Street, 8th Floor, Brooklyn, New York11220 (telephone number: +1-718-765-6732).

American Capital is a publicly traded buyout and mezzaninefund with capital resources exceeding US$4.2 billion. AmericanCapital is an investor in and sponsor of management and employeebuyouts, invests in private equity sponsored buyouts and providescapital directly to private and small public companies. AmericanCapital provides senior debt, mezzanine debt and equity to fundgrowth, acquisitions and recapitalizations. For more informationabout American Capital, go to http://www.AmericanCapital.com.

This press release contains forward-looking statements. Thestatements regarding expected results of American CapitalStrategies are subject to various factors and uncertainties,including the uncertainties associated with the timing oftransaction closings, changes in interest rates, availability oftransactions, changes in regional, national and internationaleconomic conditions, and changes in the conditions of theindustries in which American Capital has made investments.

Web site: http://www.americancapital.com

Source: American Capital Strategies Ltd.Tom McHale, Vice President, Finance and Investor Relations, ofAmerican Capital Strategies Ltd., +1-301-951-6122FCMN Contact: Agnieszka.Opalka@AmericanCapital.com

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