FOR IMMEDIATE RELEASE:
October 7, 2005

Contact
Kenneth Jones, Principal (610) 238-0210
Steve Gord, Vice President (610) 238-0210
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $29 MILLION IN INFILTRATOR SYSTEMS

Bethesda, MD - October 7, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $29 million in Infiltrator Systems Inc., a leading manufacturer of plastic chambers used in underground wastewater management systems. American Capital's investment takes the form of senior subordinated debt and supports Graham Partners' acquisition of Infiltrator. A syndicate led by Merrill Lynch Capital is providing senior financing, including a revolving credit facility, a capex facility and senior term loans. A group led by Graham Partners and Infiltrator management are investing in the equity.

"We are pleased that Graham Partners has turned to us for the third time for mezzanine financing, this time in support of their acquisition of Infiltrator Systems. Graham's considerable expertise in the plastics industry should add substantial value to the Company," said American Capital Chief Operating Officer Ira Wagner. "American Capital not only establishes new relationships with private equity firms, but we also continue to build on existing relationships, as we have with Graham. We believe that our strong market position as a trusted partner, flexible mezzanine financing capabilities and experience in a variety of industries make us an excellent investment partner."

American Capital has invested nearly $3 billion in the last twelve months, over $2.2 billion year to date and approximately $920 million in the third quarter of 2005. For more information about American Capital's portfolio click here.

"Infiltrator is widely regarded as the premier brand in the alternative septic leachfield market and is also the single largest market player in installed leachfield systems. The Company has been especially successful in leveraging its significant barriers to entry, including low cost manufacturing, through its proprietary on-site material recycling and processing capabilities; significant invested capital in exclusive and customized machinery; and mandatory state and municipal regulatory approvals on its products," said American Capital Principal Ken Jones. "We're excited to work with Graham again, a quality sponsor, and believe that their exceptional sponsorship abilities and deep plastics experience will prove beneficial for Infiltrator."

"Infiltrator is a market leader in its niche with a patented product line, which is driving an industry conversion from traditional stone and pipe wastewater systems to plastic systems. Holding nearly 30 patents, Infiltrator is the originator and leading innovator of plastic chamber technology used in wastewater management," said American Capital Vice President Steve Gord. "The Company's latest product line, the Quick4™ family, takes the next step in continuing to drive contractor and consumer acceptance of plastic technology."

Founded in 1986 and headquartered in Old Saybrook, CT, Infiltrator Systems manufactures plastic chambers used mainly in North American septic leachfield systems, an underground structural framework for wastewater management. The Company's plastic chambers are also used in North American stormwater systems. Infiltrator's large, arch-shaped plastic chambers link to form a leachfield, which serves as both a storage tank for wastewater and a medium through which it can be disposed. Since its invention of a plastic chamber substitute, Infiltrator has led an ongoing conversion from traditional stone and pipe leachfield systems in the septic market to plastic chamber systems. The Company has an established distribution network of nearly 600 distributors covering every U.S. state and Canadian province and includes septic tank manufacturers and distributors, waterworks and plumbing supply distributors and septic distributors. In addition to its headquarters, Infiltrator has two operating facilities in Kentucky and Utah and employs over 400. The Company's sales have grown every year since its inception. Pictured here is the new revolutionary Quick4™ Equalizer® 36 septic leaching chamber.

"This is Graham's third deal with American Capital in the past three years. We see them as an attractive and reliable source of mezzanine financing that has earned our repeat business," said Graham Partners Managing Principal Rob Newbold. "The Infiltrator acquisition is representative of our conviction that significant growth potential exists in companies that are driving conversions in their industries from traditional materials to higher quality, lower cost alternatives. Infiltrator will continue to benefit from further penetration of its plastic chamber systems due to the many functional and cost saving advantages versus old fashion gravel and pipe alternatives."

For more information about Infiltrator Systems' history of innovation and market leadership click here.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $6 billion. American Capital invests in and sponsors 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 September 30, 2005, American Capital shareholders have enjoyed a total return of 407% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $868 million in dividends and paid $18.29 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 GRAHAM PARTNERS

Graham Partners is a leading, lower middle market industrial private equity firm based in suburban Philadelphia with over $800 million under management. Graham Partners is an investment affiliate of the privately held Graham Group of York, PA, an industrial and investment concern with global interests in plastics, packaging, machinery, building products and outsource manufacturing. Graham Partners seeks to acquire industrial companies with revenues between $20 million and $350 million. Graham Partners' portfolio of investments includes companies such as: Abrisa, a fabricator of advanced specialty industrial flat glass components; Dynojet, a leading manufacturer of aftermarket engine performance products for motorcycles, power sports vehicles, and cars, and a leading manufacturer of performance diagnostic equipment for engines; Line-X, a leading provider of branded spray-on pick-up truck bedliners and other industrial coatings; Nailite International Inc., a niche manufacturer of molded polypropylene siding for the remodeling and new construction markets; and Supreme Corq Holdings LLC, a leading manufacturer of thermoplastic elastomer corks for the global wine and spirits industry. American Capital supported Graham's April 2003 acquisition of Nailite and June 2004 acquisition of Supreme Corq, in addition to its most recent acquisition of Infiltrator Systems.

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.