FOR IMMEDIATE RELEASE:
July 9, 2007

Contact
Myung Yi, Managing Director, Special Situations Group (301) 951-6122

AMERICAN CAPITAL RECOGNIZES $51 MILLION GAIN FROM EVANS ANALYTICAL GROUP INITIAL PUBLIC OFFERING

Bethesda, MD – July 9, 2007 – American Capital Strategies Ltd. (Nasdaq:ACAS) announced today the exit of its investment in its portfolio company EAG Acquisition LLC and its operating subsidiary Evans Analytical Group LLC through an initial public offering of ordinary shares by a newly formed holding company, EAG Limited (LSE: EAG) (together “EAG”).  EAG is the world’s largest independent provider of microanalytical surface analysis and materials characterization services.  American Capital sold its shares in the offering and the EAG’s shares have been admitted to the Official List of the U.K. Financial Services Authority and are traded on the London Stock Exchange's Alternative Investment Market for listed securities under the symbol EAG. 

American Capital realized a gain in the second quarter of 2007 of $51 million on its exit of EAG and recognized total proceeds of $158 million upon the exit, earning an 80% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of American Capital’s investment.  Together with its affiliate American Capital Equity I, LLC (“ACE I”), the combined American Capital group realized an inception-to-date realized aggregate gain of $72 million from the exit, earning an aggregate 96% compounded annual rate of return on their investments, including interest, dividends and fees earned over the life of their investments.  Together, American Capital and ACE I realized approximately 11 times their original equity investment in EAG with an aggregate equity IRR of 315%.  The proceeds received by American Capital were greater than its first quarter 2007 valuation of the investment by $25 million, or 21%.  As part of the transaction, American Capital has committed to a new $50 million revolving credit facility in EAG. 

This is American Capital’s second portfolio company IPO on the London Stock Exchange in the past two months.  In May, the ordinary shares of European Capital Limited (LSE: ECAS), a buyout and mezzanine debt investment firm,  were admitted to the Official List of the U.K. Financial Services Authority and are now traded on the London Stock Exchange's main market.  European Capital now has a market capitalization of $1.5 billion and EAG now has a market capitalization of over $370 million.

“We are extremely pleased with the results of our investment in Evans Analytical and delighted with the Company’s successful IPO,” said Malon Wilkus, American Capital Chairman, Chief Executive Officer and President.  “In less than two years, our Special Situations Group worked diligently with the EAG management team to rescue the company out of a bankruptcy process involving a distressed parent company and build the Company through a series of acquisitions into an outstanding global provider of microanalytical surface analysis and materials characterization services.  The combined efforts and hard work positioned the Company for its IPO.”

“Since first investing in the formation of EAG in 2005, the Company has grown significantly through strategic acquisitions, which have broadened its range of testing capabilities to include substantially all of the major surface analysis techniques and also expanded its market reach, with an especially meaningful presence in Europe,” said Myung Yi, Managing Director, American Capital Special Situations Group.  “We’ve remained impressed with the direction of the management team and their ability to successfully and seamlessly integrate eight acquisitions and exceed growth targets throughout our investment period.  We believe that EAG is in a strong position to thrive as a public company and continue its growth trajectory with the support of its investors and new capital resources.”

In September 2005, American Capital invested $34 million in EAG.  EAG was formed by American Capital, the management of EAG and Auriga Partners Inc. in order to purchase the assets of the Charles Evans and Associates laboratories from High Voltage Engineering Corporation, a company operating in bankruptcy.  The transaction was authorized by the High Voltage bankruptcy court under Section 363 of the Bankruptcy Code.  The transaction also involved the purchase by EAG of the interests not owned by High Voltage in three EAG affiliated entities, Evans East, Evans Texas and Cascade Scientific Labs Inc.  American Capital’s investment took the form of a revolving credit facility, senior term loan, senior subordinated debt and redeemable preferred equity. 

Since the original funding, American Capital made subsequent investments totaling $91 million in EAG, which took the form of additional senior term loans, additional senior subordinated debt and an increased revolving credit facility.  The investments supported EAG’s add-on acquisitions of six companies, including: Accurel Systems International Corporation, a leading provider of advanced failure analysis, microscopy, and focused ion beam circuit edit services based in Silicon Valley; Advanced Materials Engineering Research Inc., a provider of transmission electron microscopy (“TEM”) testing and circuit repair services in both California and Shanghai, China; Materials Analytical Services Inc., a leading provider of TEM and other surface analysis testing services lab with three locations in the U.S.; Cascade Scientific and Cascade GmbH (collectively “Cascade”), one of the largest independent surface analysis and materials characterization labs in Europe, the U.K. and Germany; the Shiva Technologies Group, comprised of Shiva US and Shiva France, the largest provider of glow discharge mass spectrometry services worldwide; and Nano Sciences, the exclusive sales representative for EAG and Shiva in Japan.         

“American Capital has been greatly committed to EAG, providing the capital resources we needed to acquire complementary companies and build a strong operating platform.  Their commitment, in depth understanding of our business and goals and valuable experience in growing companies has enabled us to reach this next phase of growth,” said David Lahar, Evans Analytical Executive Chairman.    

For more information about the Evans Analytical investments, click here.

This press release is neither an offer to sell nor a solicitation of an offer to buy shares of EAG.

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As of June 30, 2007, American Capital shareholders have enjoyed a total return of 578% since the Company's August 1997 IPO—an annualized return of 22% assuming reinvestment of dividends.  American Capital has paid a total of $1.7 billion in dividends and paid $24.24 dividends per share since IPO at $15 per share. 

For a chart showing American Capital’s realized gains as of the end of Q1 2006, click here.

For a chart showing American Capital’s exited portfolio companies, click here.

ABOUT THE AMERICAN CAPITAL SPECIAL SITUATIONS GROUP

American Capital’s Special Situations Group has the flexibility to invest from $20 million to $800 million per transaction in a variety of investments.  The Special Situations Group targets distressed, turnaround and other complex investments, providing flexible capital and a wealth of turnaround experience to middle market companies.  It targets buyouts across all industries involving operational turnarounds, section 363 auctions, corporate orphans, portfolio add-ons and complex management buyouts.  It also provides DIP loans, exit financings, mezzanine financings for sponsored buyouts, second lien refinancings and direct lending to distressed companies.  Companies interested in learning more about American Capital's Special Situations Group should contact Myung Yi, Managing Director at (301) 951-6122 or Dean Anderson, Managing Director at (312) 334-1446.

ABOUT AMERICAN CAPITAL

American Capital, a member of the S&P 500 with $15 billion in assets under management, is the largest U.S. publicly traded private equity firm and one of the largest publicly traded alternative asset managers.  American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies.  American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations.  American Capital and its affiliates invest from $5 million to $800 million per company in North America and €5 million to €500 million per company in Europe.

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 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.