NEWS

Robert Klein, Managing Director (212) 213-2009
Todd Wilson, Vice President (212) 213-2009
Brian Maney, Director, Corporate Communications (301) 951-6122

Bethesda, MD - June 17, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $71 million in the acquisition of Life-Like Products LLC from ZS Fund LP. Life-Like is a leading manufacturer, marketer and distributor of expanded polystyrene foam ("EPS") consumer and industrial products and a marketer and distributor of hobby trains, train sets and racecars. American Capital's investment takes the form of senior term loans, senior subordinated debt, junior subordinated debt with warrants and common and redeemable preferred equity. American Capital is also providing a revolving credit facility. American Capital owns approximately 80% of Life-Like on a fully diluted basis.

"Life-Like is another good example of the type of company American Capital looks to invest in," said American Capital COO Ira Wagner. "Its leadership in the EPS foam industry, ability to service national retailers across the country and experienced, strong management team make Life-Like an attractive investment opportunity for American Capital."

American Capital has invested over $1.1 billion in the last twelve months and over $350 million year to date. For more information about American Capital's portfolio click here.

"We are pleased to invest in Life-Like, a steady performer that has been successful at maintaining a solid cash flow throughout the year with its seasonal and contra-seasonal product lines," said American Capital Managing Director Robert Klein. "We look forward to working with Life-Like's deep and highly experienced management team as they focus on expanding the company through various growth opportunities."

"Life-Like is a clear leader in the picnic cooler market, essentially an annuity business, and is the sole supplier to a majority of its customers. By offering attractive pricing, excellent customer service and the ability to deliver on-time to customers nationally through its seven manufacturing and distribution facilities, Life-Like has maintained its leadership position, serving a strong and long-standing diverse base of over 2,500 customers," added American Capital Vice President Todd Wilson.

Founded in the early 1930's, Life-Like is a leading manufacturer, marketer and distributor of a broad array of molded expandable polystyrene (EPS) foam products under the brand name LIFOAM® for consumer and industrial end markets. The only EPS consumer foam manufacturer with a national scale and scope, Life-Like provides a broad range of consumer foam and accessory products, such as reusable ice and freeze packs, to large national and regional retail accounts with large, well known retailers and has major market share in consumer foam picnic coolers. The company's industrial foam business consists of custom molded foam products used in protective packaging; thermal packaging under the ProPak® brand name for shipping pharmaceuticals, food and other perishable goods; and building applications such as siding and insulation. In addition to its foam products, Life-Like also sells an extensive line of electric model trains, train sets, electric racecar sets and related accessories under the Proto, Darda and Life-Like brands to mass market retailers. Life-Like currently employs over 500 in seven operating facilities in Maryland, Georgia, Florida, Texas, Illinois and California. The company recorded 2003 revenue of approximately $69 million. Pictured above is one of Life-Like's market leading durable coolers.

"American Capital's in depth understanding of our two lines of business, flexible capital and ability to commit long term and support us as we seek new growth opportunities for our excellent line of products made them the ideal investor," said Life-Like Products President Jerry Kandel.

In a separate transaction, American Capital also invested $7 million into Life-Like's Hong Kong based supplier of its train and racecar products. American Capital's investment took the form of common equity.

As of May 31, 2004, American Capital shareholders have enjoyed a total return of 219% since the Company's IPO - an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 per share in dividends since its August 1997 IPO.

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $3 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal and Senior Vice President, Business Development, at (800) 248-9340, or visit our website.

This press release contains forward-looking statements. The statements regarding expected results of American Capital Strategies are subject to various factors and uncertainties, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.

This announcement is neither an offer to sell nor a solicitation to buy securities. This announcement appears as a matter of record only.