FOR IMMEDIATE RELEASE:
June 30, 2005

Contact
John Erickson, CFO (301) 951-6122

AMERICAN CAPITAL STOCKHOLDERS ELECT DIRECTORS, APPROVE REPEAL OF FUNDAMENTAL POLICIES

Bethesda, MD - June 30, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that at its 2005 annual meeting of stockholders, stockholders re-elected two directors of the Company, approved the repeal of the Company's fundamental policies and approved the adoption of the Company's 2005 Employee Stock Option Plan. Stockholders also approved the continuation of Ernst & Young LLP as the Company's independent auditors.

Neil M. Hahl and Stan Lundine were re-elected to three year terms on the American Capital Board of Directors. Mr. Hahl is a general business consultant. He chairs the American Capital Board's Audit and Compliance Committee. Mr. Lundine is Of Counsel of the law firm Sotir and Goldman and Executive Director of the Chautauqua County Health Network. He serves on the American Capital Board's Compensation and Corporate Governance Committee.

"Every year, we have submitted to our stockholders important proposals affecting our ability to perform at the highest level as a public company. We appreciate the support of our stockholders in passing these proposals. It allows us to continue to serve our constituents well," said Chairman, President and Chief Executive Officer Malon Wilkus. "We particularly appreciate the support of the repeal of our fundamental policies, which was rather complicated and required the approval of a majority of all our outstanding shares versus just a majority of the quorum. The passage of this proposal provides us greater flexibility to navigate our business in the proper direction in the years to come."

AMERICAN CAPITAL STRATEGIES LTD. 2005 PROXY VOTING

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $5.4 billion. American Capital invests in and sponsors 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 May 31, 2005, American Capital shareholders have enjoyed a total return of 364% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital outperformed 86%, 72%, 85% and 91% of all U.S. public companies with a current market capitalization greater than $1 billion in the one-year, three-years, five-years and the approximately seven and a half years since the IPO, in each case ending May 31, 2005. American Capital has paid a total of $717 million in dividends and paid or declared $17.51 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.

Performance data quoted above represents past performance of American Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in American Capital will likely fluctuate. Consequently, an investor's shares, when sold, may be worth more or less than their original cost. Additionally, American Capital's current performance may be lower or higher than the performance data quoted above.

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.

This announcement is neither an offer to sell nor a solicitation to buy securities.
This announcement appears as a matter of record only.