NEWS

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

Bethesda, MD - July 7, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it plans to publicly offer 3,750,000 shares of its common stock. The net proceeds of the offering will be used to reduce the borrowings under American Capital's existing revolving credit facilities. This will create availability under these facilities, which will generally be available for funding future American Capital investments.

A.G. Edwards & Sons, Inc., BB&T Capital Markets, a division of Scott & Stringfellow, Inc., Legg Mason Wood Walker, Incorporated, Piper Jaffray & Co., and RBC Capital Markets are the underwriters. A.G. Edwards & Sons, Inc. is acting as the book-running manager of the offering. American Capital expects to grant the underwriters an option to purchase an additional 562,500 shares to cover over-allotments.

American Capital is a publicly traded buyout and mezzanine fund with capital resources exceeding $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.

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 A.G. Edwards & Sons, Inc., One North Jefferson, St. Louis, Missouri 63103 (telephone number: 314-955-3000). 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, national and international economic conditions, and changes in the conditions of the industries in which American Capital has made investments.