NEWS

John Erickson, CFO (301) 951-6122
Tom McHale, Vice President, Finance and Investor Relations (301) 951-6122

Bethesda, MD - July 2, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today that it has obtained a $125 million securitized credit facility funded through a commercial paper conduit administered by Harris Nesbitt, the U.S. investment and corporate banking practice of BMO Financial Group (NYSE: BMO). The facility has a three year commitment with a one year revolving term and is priced at the cost of commercial paper plus 125 basis points, currently 2.61%. The facility is secured by certain senior and subordinated debt assets originated by American Capital.

"We are pleased to establish a new credit relationship. With the addition of the Harris Nesbitt facility, American Capital now has $545 million of capacity from our combined credit facilities. To date we have raised approximately $1.5 billion of debt capital through our credit facilities and our on balance sheet term securitizations," said American Capital CFO John Erickson. "The increased credit capacity will help us meet the demands of our robust pipeline of investment opportunities."

As of June 30, 2004, American Capital shareholders have enjoyed a total return of 242% since the Company's IPO - an annualized return of 20%, 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 over $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.

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.