NEWS

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

Bethesda, MD - July 2, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has invested $31 million in the acquisition of Safemark Systems L.P., a leading supplier of in-room safes to the hospitality industry, from Richards Capital Fund L.P. American Capital's investment takes the form of a senior term loan, senior subordinated debt, junior subordinated debt with warrants and redeemable preferred and common equity. American Capital is also providing a revolving credit facility. American Capital owns approximately 75% of Safemark on a fully diluted basis, with the balance owned by management.

"Our investment in Safemark is American Capital's sixth announced buyout this year," said American Capital COO Ira Wagner. "The transaction demonstrates American Capital's ability to find exceptional middle market companies, negotiate an appropriate transaction, conduct intense in house due dilligence and quickly bring a transaction to closing."

American Capital has invested over $1.3 billion in the last twelve months and over $600 million year to date. For more information about American Capital's portfolio click here.

"Safemark's strong historical financial performance, large installed base with recurring revenue stream, low cost, high quality procurement and outstanding management team have made it an attractive investment. Additionally, management's significant rollover and continued ownership demonstrate their confidence in the business," said American Capital Managing Director Robert Klein.

"With strong alliances with leading national hotel chains and franchises, Safemark can capitalize on improving hotel industry fundamentals, including a recovery from a travel downturn fueled by an improving economy and increased business travel, and increasing demand for in-room safes to safeguard highly valuable portable consumer electronics. We're looking forward to working with management as it grows Safemark through increased market penetration and expansion into other high potential markets," added American Capital Principal Todd Wilson.

Founded in 1983, Orlando, FL-based Safemark Systems is a supplier of safes used in hotel guestrooms. The company offers a broad range of safe products through direct purchase and leasing options. Safemark has significant customer relationships with such vendors as Cendant Corporation, Choice Hotels International, and Prime Hospitality and has an installed base of over 300,000 safes in the US and Canada. The company also has a strong relationship with Walt Disney World Resort, Carlson Hospitality, Interstate Hotels and Marriott Vacation Club. Safemark has recorded revenue growth of nearly 14% since 1997. Pictured at left is one of Safemark's in-room hotel safes, providing security for travelers' valuable possessions.

"American Capital's flexible financing, long term investment perspective and understanding of our business and future growth plans made them the right choice for our investment partner," said Safemark President and CEO George Oelschig. "With the support of American Capital, Safemark can continue to provide travelers peace of mind for the security of their valued belongings."

For more information about Safemark's leading products and successful revenue sharing program click here.

As of June 30, 2004, American Capital shareholders have enjoyed a total return of 242% since the Company's IPO - an annualized return of 20%, 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.