FOR IMMEDIATE RELEASE:
February 25, 2005

Contact
Tom McHale, Vice President, Finance and Investor Relations (301) 951-6122
John Thornton, Principal (415) 591-0120
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL RECEIVES PROCEEDS OF $60 MILLION FROM TWO EXITS

Bethesda, MD - February 25, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has received proceeds of $60 million from the full exit of two portfolio companies, realizing a gain of $4 million.

Cycle Gear Inc.

American Capital realized a $4 million gain through a re-capitalization of its portfolio company Cycle Gear Inc. by Harvest Partners. American Capital received total proceeds of $21 million upon the exit, earning a 20% compounded annual rate of return on its investment in senior notes, subordinated notes, preferred stock and common stock warrants. The 20% return includes the realized gain and interest, dividends and fees received over the life of American Capital's investment in the company. The proceeds recognized by American Capital include proceeds to be held in escrow to secure standard representations and warranties for the recapitalization of approximately $1 million. The amount realized by American Capital exceeds the fourth quarter 2004 valuation of the investment by $0.6 million, or 3%.

In September 1998, American Capital invested $6 million senior and junior secured notes and common stock warrants in Cycle Gear Inc., the largest multi-store retailer of general motorcycle parts and accessories in the U.S., supporting the chain's expansion. Subsequently, American Capital invested an additional $10 million in junior secured notes, common stock warrants and preferred stock.

"We are happy to have been able to work alongside of Cycle Gear, a worker-owned company and leader in its niche, as it successfully executed its expansion plan," said American Capital Managing Director Roland Cline.

"American Capital has been an outstanding partner and has provided Cycle Gear the necessary growth capital and financial expertise for our team to grow our company from six stores to 45 stores over the last six years," said Cycle Gear CEO Dave Bertram.

For more information about the Cycle Gear transaction click here.

CamelBak Products Inc.

American Capital received full repayment of its original $38 million of junior and senior subordinated debt investments, including $1 million payment-in-kind interest, in CamelBak Products LLC, earning a 20% compounded annual rate of return, including all fees, interest and principal received over the life of American Capital's investment in CamelBak.

In November 2003, American Capital invested $38 million in junior and senior subordinated debt in CamelBak Products LLC, the dominant global designer, manufacturer and marketer of portable hands-free hydration systems, or customized backpacks that include integrated water storage and delivery systems. American Capital's investment supported the acquisition of CamelBak by Bear Stearns Merchant Banking.

"The CamelBak investment was an excellent opportunity for American Capital to support a world leader in a growth market and to work with a first class equity sponsor," said American Capital Principal John Thornton.

For more information about the CamelBak transaction click here.

For a chart detailing American Capital realized gains, go to: http://www.ACAS.com/investor_relations/realized_gains.cfm.

For a chart listing American Capital's exited portfolio companies, go to: http://www.ACAS.com/our_portfolio/exited_companies.cfm

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.

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.