American Capital Sees 57% Growth in New Investments
Raises Approximately $132 Million in Equity Offering

Table of Contents

» 57% Growth in New Investments, First Half 2000 to 2001

» American Capital Follow-On Offering Raises $132 Million

American Capital's recent follow-on offering raised $132 million. On June 26, 2001, 5,175,000 shares of common stock were sold to the public at $25.50 per share, including shares sold pursuant to the over-allotment option granted to the underwriters. With this offering, American Capital has raised approximately $444 million in debt and equity over the past 13 months and now has nearly $900 million in capital resources. The offering was underwritten by Salomon Smith Barney, First Union Securities Inc., A.G. Edwards & Sons Inc. and Robertson Stephens.

» $30 Million Going-Private Transaction with ESOP

At Roy F. Weston Inc. we sponsored a going private ESOP transaction, investing $27 million in subordinated debt financing in addition to a $3 million investment in preferred and common stock for a total of $30 million. Bank of America Commercial Finance led a $49 million senior credit facility in a tough bank market. WESTON is a leading infrastructure redevelopment services firm which delivers integrated environmental engineering solutions to industrial and government clients, providing services in site remediation, redevelopment, infrastructure operations and knowledge management. WESTON employees are expected to receive approximately 40% of the equity over a five-year period through the company's employee retirement savings and stock ownership plan ("ESOP").

WESTON is one of thousands of companies that are too small to be public. The transaction demonstrates American Capital's capacity to work with micro-cap public companies and unlock their value using ESOP techniques which we have developed over the past 15 years, and to provide and raise capital in a difficult credit environment.

WESTON is now wholly owned by WESTON ACAS Holdings, a portfolio company controlled by American Capital and partially owned by senior WESTON managers, who invested $1.5 million, and, over time, by the rest of the WESTON employees through an employee stock bonus plan. The new ownership structure should enable WESTON to flourish, enhancing its future potential and market opportunities.

Consistent with WESTON's expertise and focus, we are also seeking add-on acquisition opportunities in high hazard remediation and ports and waterway infrastructure redevelopment. Contact David.Steinglass@AmericanCapital.com, or call (301) 951-6122. Click here to learn more about the WESTON transaction.

American Capital has raised several senior credit facilities to fund buyouts over the last 12 months. Our flexibility (manifested by our ability to act as a one-stop shop) and our strong banking relationships are critical success factors in many transactions. American Capital has invested a total of $78.5 million in buyouts to date in 2001 and $134 million for the past twelve months. We raised $137 million in third-party senior debt to support those transactions.

American Capital Buyouts, 2Q 2001

Click here for more information about our transactions. »

» $23 Million in Portfolio Company Aeriform

In June, American Capital invested $23 million in its portfolio company Aeriform Corporation to finance Aeriform's acquisition of a significant cylinder gas distribution operation from Air Liquide America. Employee-owned Aeriform is one of the country's largest independent distributors of specialty and industrial cylinder gases. With its strategic acquisition of 22 cylinder gas operations, Aeriform nearly doubles its size and strengthens its position as a market leader. American Capital's investment took the form of a senior term loan and senior and junior subordinated debt with warrants. We now hold warrants that are convertible into 51% of the fully diluted common stock. Aeriform senior management and directors will also invest in this transaction and the ESOP will continue its common stock ownership.

Click here for more information. »

» $25.5 Million in Texstars

Also in June, American Capital invested $25.5 million to fund the buyout of Texstars Inc. from BBA US Holdings, Inc., a subsidiary of BBA Group plc (London: BBA). American Capital's investment took the form of senior debt, senior subordinated debt, and common equity. Texstars management has also invested equity. Texas-based Texstars is the leading supplier of canopies for the F-16 fighter aircraft, the most widely used U.S. fighter aircraft. The canopy is the clear one-piece windshield that wraps around the pilot. Texstars is also a leading supplier of polycarbonate canopies for many other military aircraft applications. In addition, Texstars manufactures components for both military and non-military aircraft, and for mass transit applications. American Capital's flexibility made this transaction possible, as we funded all but a line of credit, which was provided by LaSalle Bank NA. We are seeking add-on acquision opportunities.

Click here for more information. »

» Dallas Deal Team Expands

Jeffrey N. MacDowell has joined the company as a principal in our Dallas office. Jeff had been Vice President-Finance and Corporate Development at Dynamex Inc. (Amex: DDN), a leading provider of same-day delivery and logistics services in the United States and Canada.

American Capital's Dallas office, founded in 1998, has participated in nine middle market financing transactions totaling $167 million in manufacturing, wholesale/retail, services and information technology.

This newsletter 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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.