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American Capital

» Table of Contents

Corporate News
American Capital...
    Follow-On Raises $130 Million
    Added to Nasdaq Financial 100 Index, Preliminary Russell 2000
    First Half 2000 New Investments Up 31% Over 1999
    Opens Los Angeles Office

Portfolio Investments
American Capital...
    Invests $20.5 Million to Finance Acquisition of Amtech, Inc. by Transcore
    Invests $5 Million to Finance Acquisition of Clymer Enterprises by Inca Metal Products
    Invests $3 Million in Information Technology Staffing and Consulting Company
    Invests $30 Million in Goldman Industrial Group

Portfolio Companies:
    IGI, Inc. to Sell Poultry Vaccine Division
    Chance Coach, Inc. to Build New Manufacturing Facility

» American Capital Follow-On Offering Raises $130 Million

American Capital's recent follow-on offering raised $130 million. On May 22, 2000, 5,500,000 shares of common stock were sold to the public at $20.50 per share. Subsequent to that, the company closed on the sale of 825,000 shares of its common stock at $20.50 per share pursuant to the over-allotment option granted to the underwriters. With this offering, American Capital now has over $650 million in capital resources. The offering was underwritten by Robertson Stephens, First Union Securities, Inc., A.G. Edwards & Sons, Inc. and PaineWebber Incorporated.

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» American Capital Added to Nasdaq Financial 100 Index, Preliminary Russell 2000

American Capital's common stock has been added to The Nasdaq Financial 100 Index. The Index consists of 100 of the largest financial companies listed on the Nasdaq National Market tier of The Nasdaq Stock Market. In addition, Frank Russell Company has included American Capital in the preliminary ranking of stocks that make up the Russell 2000. The final list went in to effect on July 1, and will be published on July 10. Russell may change membership in the list without notice before then. Membership in Russell's indices is determined by market capitalization rankings.

» First Half 2000 New Investments Up 31% Over 1999

Dollar volume of American Capital's new investments in the first half of 2000 increased by 31% over first half of 1999.

American Capital New Investments, First Half 2000 Compared with 1999 ($ Millions)

                          1999          2000       % Increase,
                                                   1999 - 2000

          2Q              44.1          60.0           36%
          1Q              26.2          32.0           23%
          --              ----          ----           ---
          First Half
          of Year         70.3          92.0           31%

New Investments, $3 Million and Over, First Half 2000

    Company     Amt ($ Millions)  Transaction              Industry

2Q  Transcore         20.5        Add-on Acquisition       Transport. Info.
    Holdings, Inc.                Existing Portfolio Co.   Mgmt. Systems &
                                                           Services

    The Inca Group     5.0        Add-on Acquisition       Mfr. Industrial
                                  Existing Portfolio Co.   Rack & Shelving

    JAAGIR, LLC        3.0        Direct Investment        Info. Tech. Staffing
                                                           & Services

    Goldman           30.0        Direct Investment        Machine Tools
    Industrial
    Group

1Q  Fulton Bellows    24.5        American Capital         Bellows &
    & Components, Inc.             Buyout                   Control Devices

    A&M Cleaning       7.0        American Capital         All Purpose
    Products, Inc.                Buyout                   Household Cleaner

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» American Capital Opens Los Angeles Office

On May 1, American Capital announced the opening of a new office in Los Angeles, the company's eighth. Jeri J. Harman joined the company as Head of Office and Principal. The new Los Angeles office allows American Capital to build on the California presence it established with its San Francisco office four years ago.

Harman has over 18 years of financing experience involving over $1 billion in aggregate transactions. She comes to American Capital from First Security Van Kaspar, where she was Managing Director of Corporate Finance, responsible for leading that firm's efforts in private placements, including equity, mezzanine and debt securities. She currently serves as President of the Association for Corporate Growth-Los Angeles; Co-Chair of the ACG Middle Market Conference on Mergers, Acquisitions and Finance; a director of MACC Private Equities Inc. (Nasdaq:MACC), and as a resource speaker for TEC Worldwide, an organization of CEOs.

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» Transcore Acquires Amtech, Inc.

On June 30, 2000 American Capital invested $20.5 million to finance the acquisition of Amtech, Inc. by TransCore, Inc. The investment consists of $20.0 million in the form of senior subordinated debt with detachable warrants and $0.5 million in the form of preferred stock. American Capital had previously invested $7.3 million in subordinated debt with warrants and redeemable preferred stock of TransCore in September 1999. KRG Capital Partners, a Denver-based private equity fund, will substantially increase its equity investment in the company in conjunction with the acquisition. Management and employees of Transcore will retain a large equity position in the combined company.

TransCore is the leading system integrator and operator in the toll collection and intelligent transportation systems industry. Amtech, a subsidiary of Unova, Inc. (NYSE: UNA), is a Dallas-based leading supplier of wireless data technologies, such as radio frequency identification devices for intelligent transportation systems including highway, rail and parking applications. Amtech is also is a leading systems integrator and operator with a significant market presence in the US and internationally.

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» Inca Metal Products Acquires Clymer Enterprises

On June 29, 2000 American Capital invested $4,850,000 to finance the acquisition of Clymer Enterprises, Inc. by Inca Metal Products, Inc. Clymer Enterprises, located in Pandora, Ohio, is a manufacturer of industrial racks and agricultural equipment. American Capital funded a recapitalization of Inca in September 1999. Inca is a leading manufacturer of steel products for the construction, distribution and manufacturing industries. Its products and services include rack and shelving, mechanical and structural steel tubing, and toll processing for large steel mill customers.

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» American Capital Invests $3 Million in Information Technology Staffing and
     Consulting Company

On June 9, 2000 American Capital invested $3 million in the form of senior subordinated debt with warrants in JAAGIR, LLC, a holding company for the Adea Group, Inc. and edeagroup.com. American Capital's investment is for growth financing, and is part of an $8.5 million package that includes a $5 million revolving line of credit and a $500,000 term facility provided by Bank of America. Adea provides information technology and e-commerce staffing services and edeagroup.com provides e-commerce development services. Edeagroup.com was recently established in order to provide end-to-end e-business solutions, primarily to Fortune 500 companies.

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» American Capital Invests $30 Million in Goldman Industrial Group

On April 24, 2000 American Capital purchased $30 million of senior subordinated notes with warrants from Goldman Industrial Group of Boston, MA and its affililates. Goldman owns a group of machine tool companies that have set standards for quality within their respective industries and technologies. American Capital's investment will provide permanent financing and refinance an existing bridge loan put in place for the acquisition of Bridgeport Machines, Inc. in August, 1999. Bridgeport Machines is a leading manufacturer of vertical machining centers (VMCs) and manual milling machines. VMCs are automated machine tools that make one or multiple machine parts according to computerized instructions.

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» IGI, Inc. to Sell Poultry Vaccine Division

American Capital portfolio company IGI, Inc. (Amex: IG) has signed an asset purchase agreement to sell its poultry vaccine division, Vineland Laboratories, to Lohmann & Co., AG, of Cuxhaven, Germany. The sale is expected to be completed in the near future, and is subject to IGI shareholder approval.

The terms of the proposed sale provide for the payment by Lohmann to IGI of $12.5 million subject to certain post closing adjustments. Lohmann will also assume $2.0 million of IGI's liabilities. IGI produces and markets a diversified line of consumer and health products, many of them employing its patented Novasome microencapsulation technology. American Capital invested $7 million in senior subordinated debt with warrants to support the recapitalization of IGI in a November, 1999 transaction. Fleet Capital, a unit of FleetBoston Financial Corp. provided the senior debt.

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» Chance Coach, Inc. to Build New Manufacturing Facility

Plans for Chance Coach's state-of-the-art manufacturing facility in Park City, Kansas are complete. The new 125,000 square foot plant will produce Chance's new small, low-floor bus, designed to meet the needs of the fastest growing segment of the transit market. Anticipated cost of the project, approximately $5 million, will be funded by an Industrial Revenue Bond issued by Park City.

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This newsletter contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.