FOR IMMEDIATE RELEASE:
February 4, 2005

Contact
Ian Larkin, Principal (312) 681-7400
John Cannon, Vice President (312) 681-7400
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $16 MILLION IN WAUSAU FINANCIAL SYSTEMS

Bethesda, MD - February 4, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $16 million in Wausau Financial Systems, a leading provider of fully-bundled software and hardware technology solutions for remittance and check processing. American Capital's investment takes the form of senior subordinated debt and equity and supports Frontenac Company's acquisition of Wausau and Wausau's primary licensed software developer, Kyris Image Software Inc. Wells Fargo Foothill is investing in senior term debt and is providing a revolving credit facility. Frontenac CEO1st™ executive Joseph Delgadillo is Wausau's incoming CEO. He is investing in the equity and, along with Wausau senior management, is participating in an option pool.

"American Capital is investing in a high quality niche company with an experienced management team," said COO Ira Wagner. "In addition, we are pleased to add Frontenac Company to the roster of private equity firms with whom we partner. Frontenac is our first new private equity relationship in 2005 and our 21st new private equity relationship since the beginning of 2004."

American Capital invested approximately $2 billion in 2004, approximately $750 million in the fourth quarter of 2004 and $115 million year to date. For more information about American Capital's portfolio click here.

"Wausau is a recognized leader of check payment processing solutions in the small-to-midsized bank market," said American Capital Principal Ian Larkin. "Led by a highly experienced chief executive, the Company is well positioned to capitalize on the increasing need for efficient check processing. Wausau's product offering to address new check processing legislation positions the Company well for substantial incremental revenue growth in the near term."

"Wausau provides critical functionality to its customers' core operations and will continue to benefit from the growing recurring maintenance revenue stream generated from its diversified customer base," said American Capital Vice President John Cannon. "We look forward to working with the Company as it continues to serve its existing customers and focuses its resources on growing markets."

Wausau, based in Mosinee, WI, was founded in 1974 as a provider of cash registers, accounting machines and maintenance services to financial institutions. Wausau's software platform is a customized imaging and transaction processing system installed onto NCR and Unisys hardware. The Company delivers its bundled solutions to a diverse customer base of over 600, including commercial clients, third-party processors, and financial institutions. Customers include The Bank of New York Company, Bank of America Corporation, Wachovia Corporation, Citigroup Inc., Wells Fargo & Co. and California Bank and Trust. The Company has seen sales growth of 16%, annualized, since 1995 and has nearly 400 employees.

"We are delighted to be working with American Capital," said Frontenac Managing Director Pat Blandford. "They lived up to their reputation for both speed and efficiency by performing demanding due diligence without compromising the ability to get to a close."

Click here for more information about Wausau's market leading enterprise transaction processing services.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of more than $4.8 billion. American Capital is an investor in and sponsor of management and employee buyouts, invests in private equity 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.

As of January 31, 2005, American Capital shareholders have enjoyed a total return of 335% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $651 million in dividends and paid $16.03 dividends per share since its August 1997 IPO at $15 per share.

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

ABOUT FRONTENAC COMPANY

Frontenac Company is a private equity investment firm based in Chicago and founded in 1971. Frontenac has invested in more than 135 companies across eight private equity funds. Today, Frontenac is led by the firm's eight managing directors, with a total team of more than 20 professionals. Frontenac portfolio companies include Encore Legal Solutions, providing a range of outsourced services to the nation's leading law firms and the legal departments of Fortune 1000 companies; 3E Company, the leading provider of Environmental Health & Safety information and compliance management services; and Prenova Inc., the nation's leading Business Process Outsourcing company focused on retail facility management.

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, national or international 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.