FOR IMMEDIATE RELEASE:
February 18, 2005

Contact
Frank Do, Managing Director (310) 806-6280
Bill Bujake, Vice President (310) 806-6280
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $24 MILLION IN ACQUISITION BY NORTHWEST COATINGS

Bethesda, MD - February 18, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $24 million in its portfolio company Northwest Coatings LLC to support an add-on acquisition and to refinance existing debt, including $10 million of American Capital senior subordinated debt. Northwest Coatings is a leading developer and manufacturer of customized specialty energy-curable and water-based coatings and adhesives serving predominantly customers in the packaging, narrow-web tag and label, printing and other industries. American Capital is providing a revolving loan facility and is investing in senior term loans, subordinated debt and equity. American Capital's total investment in Northwest Coatings is $27 million. Caltius Capital Management, the majority owner of Northwest Coatings, and company management are investing additional equity alongside American Capital.

"American Capital is pleased to support the growth of a portfolio company by supporting an add-on acquisition and to continue an excellent relationship with Caltius, a leading private equity firm," said COO Ira Wagner.

American Capital invested approximately $2 billion in 2004, approximately $750 million in the fourth quarter of 2004 and has invested $170 million year to date. For more information about American Capital's portfolio click here.

"This strategic acquisition by Northwest Coatings expands its considerable R&D and marketing talent and creates a larger, more diverse company with greater scale and geographic reach in its specialty niches," said American Capital Managing Director Frank Do. "In particular, the combination of excellent technical staffs should accelerate the development of several key technologies."

"Northwest's acquisition will allow it to incorporate a focus on wide web packaging and niche industrial markets into its own focus on both narrow and wide web printing and packaging as well as specialty converting markets, an excellent fit," added American Capital Vice President Bill Bujake. "Furthermore, the acquisition adds production diversity, a strong pipeline of new products and some cost savings to the combined entity."

In November 2002, American Capital invested $12.5 million to support the acquisition of Northwest Coatings by Caltius Capital Management. Northwest Coatings was founded in 1970 to manufacture customized water-based adhesives and coatings for regional industrial customers. The company now manufactures a wide range of primarily energy-curable adhesives and coatings for customers worldwide. Northwest Coatings has experienced exceptional success in the tag and label market, where it has secured the position of market leader with its energy-curable adhesives and coatings.

"American Capital's familiarity with Northwest Coatings and the coatings and adhesives industry made them a natural investment partner for an accretive acquisition to a portfolio company," said Caltius Managing Director Garrick Ahn. "We have come to rely upon American Capital's diligence, thoroughness and speed."

Click here for more information about Northwest Coatings.

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 339% 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 or declared $16.76 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 CALTIUS CAPITAL MANAGEMENT

Caltius Mezzanine provides subordinated debt and Caltius Private Equity makes controlling equity investments in small and medium sized businesses throughout the United States. Caltius Private Equity provides equity in amounts of up to $10 million, seeking controlling or substantial minority ownership positions. In addition to Northwest Coatings, Caltius portfolio companies include Scientech LLC, which provides a broad range of products and services to electric utilities and other commercial and government clients; Arrowhead Brass Products, the premier domestic manufacturer and marketer of high quality exterior faucets and hydrants; and Consolidated Fire Protection, LLC, a leading provider of services to the fire and life safety industry.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

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.