FOR IMMEDIATE RELEASE:

July 27, 2006

Contact
Myung Yi, Principal, Special Situations (301) 951-6122
Brian Maney, Director, Corporate Communications (301) 951-6122

American Capital Invests $58 Million in One Stop Buyout™ of Pan Am International Flight Academy

Bethesda, MD – July 27, 2006 – American Capital Strategies Ltd. (Nasdaq: ACAS) announced today it has invested $58 million in the One Stop Buyout™ of the assets of Pan Am International Flight Academy’s Commercial Division and Air Traffic Control Division and certain assets of the Regional Division. Pan Am International Flight Academy is a leading provider of simulator-based flight training to commercial airlines and professional pilots. American Capital’s investment takes the form of a senior term A loan, senior subordinated debt and series A convertible preferred equity. American Capital is also providing a revolving credit facility. Dimeling, Schreiber & Park and Pan Am International Flight Academy management are also investing in the equity.

“The operating experience of our Special Situations Group and our ability to execute this One Stop Buyout™ by funding throughout the balance sheet will provide the necessary support for the continued growth of Pan Am International Flight Academy,” said American Capital Managing Director Gordon O’Brien.  “This is an excellent opportunity for the Special Situations Group to leverage American Capital’s knowledge of the aerospace industry from previous investments and we look forward to working with management to further expand the Company’s reach domestically and overseas and in pursuing other avenues of growth.”

American Capital has invested $4.6 billion in the last twelve months, $2.5 billion year to date and $90 million quarter to date. These amounts do not include American Capital's unfunded equity commitment and debt funded to its portfolio company European Capital.  For more information about American Capital's portfolio click here.

“Pan Am International Flight Academy is a well-known brand name in the flight training industry.  As a well-established force in its industry with a limited number of direct competitors, its large inventory of simulators, wealth of knowledge in operating simulators and maintenance capabilities and experience pose sizeable barriers to entry,” said Myung Yi, American Capital Principal, Special Situations Group.  “Pan Am International Flight Academy’s simulators are in steady demand, a result of the industry-wide trend of second- and third-tier airlines outsourcing their flight simulation training.  Its flexibility in accommodating the needs of customers, its array of services and its offering of simulation experience in a wide variety of older aircraft attracts a broad range of customers.  In addition, long-standing Federal Aviation Administration regulations and stringent employment protocols create non-cyclical recurring revenues for the Company.”

Founded in 1992, the Pan Am International Flight Academy, based in Miami, FL, grew out of the flight simulation and training center for the former Pan Am Airways.  The Company provides flight training on simulators with or without an instructor, training on simulators for air traffic controllers, ground school and other miscellaneous airline crew training.  Its principal customers are commercial passenger airlines and air freight carriers, which are primarily regional carriers in North and South America, and air traffic control authorities worldwide.  The Company has training facilities in Miami, FL, Memphis, TN, Minneapolis, MN, Las Vegas, NV, and Cincinnati, OH.

“We are thrilled with American Capital’s investment in our company. Thanks to the thorough and expert analyses of its investment professionals, we developed a shared vision of the direction and potential of Pan Am International Flight Academy,” said Pan Am International Flight Academy Chief Executive Officer Vito Cutrone. “With American Capital’s extraordinary financial and professional resources, we are confident that vision will be achieved."

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.