FOR IMMEDIATE RELEASE:
January 5, 2005

Contact
Tom McHale, Vice President, Investor Relations and Finance (301) 951-6122
Darin Winn, Managing Director (214) 273-6650
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL REALIZES $18 MILLION GAIN AND 25% IRR EXITING TRANSCORE

Bethesda, MD - January 5, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that in December of 2004 it received proceeds of $26 million from the exit of its preferred and common equity investment in TransCore Holdings Inc., realizing a gain of $18 million. TransCore was acquired by Roper Industries Inc. in a transaction valued at approximately $600 million.

In January 2004, American Capital was repaid its $27 million subordinated debt investment in TransCore, realizing a $2 million gain. American Capital has realized a total gain of $20 million and a 25% compounded annual return on its total investment in TransCore, including the realized gains, interest, dividends and fees received over the life of American Capital's total investment in the company. The sale proceeds recognized by American Capital include proceeds to be held in escrow to secure standard representations and warranties of the sale and additional amounts due American Capital totaling approximately $3 million. The amount realized by American Capital was less than the third quarter 2004 valuation of the investment by $0.7 million, or 3%.

"In early 2004 we announced that we anticipated our 2004 dividend would be between $2.88 and $3.00 per share and that we anticipated realized gains on our portfolio company investments would exceed 2004 realized losses within the year," said American Capital Chairman, President and CEO Malon Wilkus. "For 2004, dividends declared totaled $2.91 per share. However, including the gain upon exiting our investment in TransCore, we expect our net realized loss on portfolio company investments for 2004 to total approximately $23 million. We have several more portfolio companies that are in the process of being sold and were projected to close in 2004, which would have resulted in net realized gains on portfolio company investments for 2004. The timing of these additional exits now appears likely early in 2005. These exits are anticipated to offset the net realized loss in 2004."

"We were delighted to support TransCore's transition to an independent company, and to work with its dynamic, industry-leading management team over the years," said American Capital Managing Director Darin Winn. "In addition, this was our first transaction with KRG Capital Partners, another partnership that has flourished."

TransCore is a provider of technologies and related services in areas such as radio frequency identification (RFID), satellite-based communication, mobile asset tracking, security applications and comprehensive toll system and processing services. In 1999, American Capital invested $7.3 million in subordinated debt with warrants and redeemable preferred stock of TransCore Holdings as part of a buyout of the business sponsored by management and KRG Capital Partners. Prior to the buyout, the company was a wholly-owned subsidiary of Science Applications International Corporation (SAIC), the world's largest closely held employee-owned business. In 2000, American Capital invested $20.5 million in the form of senior subordinated debt with warrants and preferred equity to finance the acquisition of Amtech, Inc. by TransCore. In January 2004, American Capital was repaid its $27 million senior subordinated debt investment in TransCore, earning a $2 million realized gain through a recapitalization of TransCore by its existing senior lenders.

For a chart detailing American Capital realized gains and losses as of September 30, 2004 click here.

For a chart listing American Capital's exited portfolio companies click here.

About American Capital

American Capital is a publicly traded buyout and mezzanine fund with capital resources of more than $4.8 billion. American Capital is an investor in and sponsor of management and employee buyouts, invests in private equity 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.

As of December 31, 2004, American Capital shareholders have enjoyed a total return of 326% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $645 million in dividends and paid or declared $16.03 dividends per share since its August 1997 IPO at $15 per share.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, 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, national or international economic conditions, or changes in the conditions of the industries in which American Capital has made investments.