FOR IMMEDIATE RELEASE:
May 22, 2008

Contact
(301) 951-6122Tom McHale, Senior Vice President, Finance
(301) 951-6122Brian Maney, Director, Corporate Communications

AMERICAN CAPITAL PROVIDES DETAILS OF $28 MILLION NET REALIZED GAINS FROM PORTFOLIO COMPANIES IN FIRST QUARTER 2008

Bethesda, MD – May 22, 2008 – American Capital, Ltd. (Nasdaq: ACAS) announced today information regarding its $28 million of total net realized gains from the disposition of portfolio investments in the first quarter of 2008.  The portfolio net realized gains exclude realized gains or losses from interest rate derivatives, taxes on realized gains and foreign currency transactions.  During the first quarter of 2008, American Capital received $0.9 billion of proceeds from the disposition of portfolio investments.

Since its August 1997 IPO through the first quarter of 2008, American Capital has earned a 16% compounded annual return, including interest, dividends, fees and net gains, on 230 realizations of senior debt, subordinated debt and equity investments, totaling $10 billion of committed capital.  These realizations represent 45% of all amounts invested by American Capital since its August 1997 IPO. Proceeds from these realizations exceeded the total associated prior quarter valuation of the investments by 1%.  American Capital earned a 29% compounded annual return on the exit of its equity investments, including dividends, fees and net gains.

American Capital and its funds under management have received $6 billion in total amortizations, prepayments and exits in the last twelve months and approximately $1 billion year to date.  Not including funds under management, American Capital has received $5 billion in total amortizations, prepayments and exits in the last twelve months and approximately $0.9 billion year to date. 

Including previously announced exits in the second quarter of 2008, American Capital has recognized approximately $97 million of net realized gains year to date on exits of its portfolio companies.

Exstream Software LLC

American Capital previously announced that it recognized a gain of $18 million and recognized total sale proceeds of $371 million in the first quarter of 2008 from the sale of its portfolio company Exstream Holdings Inc. (“Exstream”) to HP.  Exstream Holdings is the parent company of Exstream Software, LLC (“Exstream Software”), a leading provider of enterprise software for the rapid design and delivery of personalized communications.

American Capital has now realized an inception to date net gain on its investment in Exstream of $15 million, earning a 22% compounded annual rate of return on its investment, including interest, dividends and fees earned over the life of its investment.  Together with its funds under management, the combined American Capital group realized an inception to date aggregate gain of $21 million from the exit, earning an aggregate 23% compounded annual rate of return on their investments, including interest, dividends and fees earned over the life of their investments.  The proceeds received by American Capital were less than its fourth quarter 2007 valuation of the investment by $5 million, or 1%.

For more on the Exstream investment, click here.

Pasternack Enterprises Inc.

In the first quarter of 2008, American Capital realized a gain of $33 million from the sale of its portfolio company Pasternack Enterprises Inc. to Windjammer Capital Investors.  Pasternack is a manufacturer, marketer and value-added distributor of coaxial, fiber optic connectors, adaptors, cables, and other related electronic parts. American Capital has now realized an inception to date net gain on its investment in Pasternack of $42 million, earning a 31% 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 funds under management, the combined American Capital group realized an inception to date aggregate gain of $58 million from the exit, earning an aggregate 35% compounded annual rate of return on their investments, including interest, dividends and fees earned over the life of their investments. The proceeds received by American Capital were less than the fourth quarter 2007 valuation of the investment by $2 million, or 3%.

In December 2004, American Capital originally invested in the One Stop Buyout™ of Pasternack.  American Capital's investment took the form of a revolving credit facility, senior term debt, senior and junior subordinated debt and equity. 

“It was a pleasure working with the experienced CEO and management team,” said Frank Do, Managing Director, American Capital Buyout Group.  “We are proud to have helped Pasternack grow over the last four years and wish the Company continued success with its new partner.”

nSpired Natural Foods Inc.

In the first quarter of 2008, American Capital realized a loss of $10 million from the sale of its portfolio company nSpired Holdings Inc., the parent of Natural Foods Inc., to The Hain Celestial Group, Inc. (Nasdaq: HAIN), receiving total proceeds of $29 million.  nSpired is a natural and organic food products company.  American Capital has now realized an inception to date net loss on its investment in nSpired of $32 million, earning a negative 9% compounded annual rate of return on its investment, including interest and fees earned over the life of American Capital’s investment.  Together with its funds under management, the combined American Capital group realized an inception to date aggregate loss of $29 million from the exit, earning an aggregate negative 7% compounded annual rate of return on their investments, including interest and fees earned over the life of their investments. The proceeds received by American Capital were greater than the fourth quarter 2007 valuation of the investment by $9 million, or 44%.

In December 2004, American Capital originally invested $63 million in the One Stop Buyout™ of nSpired.  American Capital’s investment took the form of a revolving credit facility, senior term loans, senior and junior subordinated debt and preferred and common equity.

For more information about the nSpired Natural Foods investment, click here.

Other Company Exits and Repayments

American Capital also recognized net realized losses of $13 million from the realization of various other portfolio investments during the first quarter of 2008.

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For a chart showing American Capital’s realizations as of the end of Q1 2008, click here.

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

ABOUT AMERICAN CAPITAL

American Capital is the only private equity fund and the largest alternative asset management company that is a member of the S&P 500. With $19 billion in capital resources under management, American Capital is the largest U.S. publicly traded alternative asset manager. 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.

As of April 30, 2008, American Capital shareholders have enjoyed a total return of 448% since the Company's IPO—an annualized return of 17%, assuming reinvestment of dividends. American Capital has paid a total of $2.3 billion in dividends and paid or declared $28.20 dividends per share since going public in August 1997 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 www.AmericanCapital.com or www.EuropeanCapital.com.

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.