John Erickson, Chief Financial Officer (301) 951-6122
Brian Maney, Director, Corporate Communications (301) 951-6122

Bethesda, MD - June 26, 2003 - American Capital Strategies Ltd. (Nasdaq: ACAS) announced today that Weston Solutions, Inc. completed a recapitalization that resulted in Weston employees gaining 100% ownership of the firm by purchasing American Capital's equity interests in the company. American Capital netted proceeds of $24.7 million and a realized gain of $23.5 million. American Capital received $27.4 million in realized gains over the life of the investment, earning a 68% compounded annual return on its investment. The realized gain exceeded the first quarter 2003 valuation by $2.7 million.

Weston was recapitalized by its existing senior lender, Fleet Capital Corporation, part of FleetBoston Financial (NYSE: FBF), American Capital and Allied Capital Corporation (NYSE:ALD). Fleet expanded the senior loan to Weston from $40 million to $47 million. Weston also received a $25 million senior subordinated secured debt investment with American Capital investing $12.8 million and Allied Capital investing $12.2 million of that total.

American Capital invested $30 million in June 2001 in Weston. Weston has periodically prepaid its debt investment with American Capital and with this transaction American Capital has sold its equity stake in the company. The chart below summarizes the amounts invested and proceeds received in the Weston transaction.

American Capital Investment in Weston Solutions
Amounts Invested, Proceeds Received
(000)

"Our investment in Weston illustrates many of our strengths," said Chairman, President and CEO Malon Wilkus. "Weston had been a small cap firm ill-suited to operating as a public company. We were able to execute an innovative transaction using an ESOP to take the company private and provide its employees with a 40% ownership stake. Weston's talented and newly incentivized employees have performed well beyond plan: they were able to repay our debt and purchase our equity more rapidly than anticipated. The employees desired to own the balance of their company and American Capital helped make that possible, as this transaction results in employees owning 100% of the equity. Net realized gains announced by American Capital now total $27 million year-to-date. We continue to anticipate additional realized gains this year as well as realized losses and are on track to achieve our guidance of $10 to $30 million of net realized gains."

Weston is a leading environmental remediation and redevelopment firm, delivering comprehensive solutions to complex problems for industry and government worldwide. American Capital Principal and Managing Director David Ehrenfest Steinglass noted, "Over the last two years, the significant employee stake in the company created by the going-private transaction has resulted in a more focused and profitable business. We believe this latest change positions Weston to grow and thrive and be a preferred employer in its industry for many years to come. We are proud to be part of that story."

"This transaction, which was contemplated by management when we originally partnered with American Capital, puts Weston in control of its own destiny with what we believe will be a self-funding employee ownership program," said Weston President and CEO Pat McCann.

American Capital has exited 31 investments since its August 1997 IPO, and 7 this year. American Capital's blended return for all exits since its IPO is 22%.
For a chart detailing all of American Capital's exits click here.

For more information about the June 2001 Weston transaction click here.

As of May 31, 2003, American Capital shareholders have enjoyed a total return of 196% since the Company's IPO -- an annualized return of 21%. This assumes reinvestment of $11.00 in dividends paid per share during this period. On April 24, 2003, American Capital declared a $0.68 per share dividend to be paid June 30, 2003 to shareholders of record as of June 12, 2003. American Capital has paid or declared a total of $11.68 per share in dividends since its August 1997 IPO at $15 per share.

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $1.8 billion. American Capital is an equity partner in management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal, at (800) 248-9340, or visit our website.

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