NEWS

John Erickson, CFO (301) 951-6122

Bethesda, MD - May 24, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that the Company has priced an offering of 6.5 million shares of common stock to the public at $25.71 per share for total gross proceeds of approximately $167 million. Citigroup, Wachovia Securities, J.P. Morgan Securities Inc. and UBS Securities LLC are the underwriters. Citigroup is acting as book-running manager of the offering. American Capital has granted the underwriters an option to purchase an additional 975,000 shares with a public offering price of $25.71 to cover over-allotments.

Substantially all of the net proceeds of the offering will be applied to reduce the borrowings under American Capital's existing credit facilities. This will create availability under these facilities, which will generally be available for funding future American Capital investments.

As of April 30, 2004, American Capital shareholders have enjoyed a total return of 213% since the Company's IPO - an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 per share in dividends since its August 1997 IPO.

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $3 billion. American Capital is an investor in and sponsor of 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 and Senior Vice President, Business Development, at (800) 248-9340, or visit our website.

All shares of common stock will be offered under American Capital's existing shelf registration statement filed with the Securities and Exchange Commission. This press release is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offering of these securities will be made only by means of a prospectus. When available, copies of the prospectus may be obtained from Citigroup Global Markets Inc, 140 58th Street, 8th Floor, Brooklyn, New York 11220 (telephone number: 718-765-6732). This press release contains forward-looking statements. The statements regarding 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 or national economic conditions, and changes in the conditions of the industries in which American Capital has made investments.