FOR IMMEDIATE RELEASE:
March 7, 2007

Contact
Brendan Gallaher, Managing Director, Distressed Debt Group (310) 405-7270
Gordon O’Brien, Managing Director, American Capital (301) 951-6122
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL APPOINTS BRENDAN GALLAHER MANAGING DIRECTOR, DISTRESSED DEBT GROUP

Bethesda, MD – March 7, 2007 - American Capital Strategies Ltd. (Nasdaq: ACAS) announced today the appointment of Brendan Gallaher as Managing Director in the Distressed Debt Group.  Mr. Gallaher brings over 20 years of experience in the distressed arena.  He will be building a team of investment professionals within the Distressed Debt Group in American Capital’s Los Angeles office.

“We are pleased to have Brendan Gallaher building the Distressed Debt Group,” said Gordon O’Brien, American Capital Managing Director.  “Brendan, with his significant experience managing distressed funds, will play a key role in establishing a talented team with a global presence.”

American Capital invested directly and through its funds under management $6.7 billion in 2006 and $2.2 billion in the fourth quarter of 2006 and has invested $1.2 billion in 2007 year to date.  Not including funds under management, American Capital invested $5.1 billion in 2006 and $1.7 billion in the fourth quarter of 2006 and has invested $890 million in 2007 year to date.  For more information about American Capital’s portfolio, click here.

“I am delighted to join the American Capital organization,” said Brendan Gallaher, American Capital Managing Director, Distressed Debt Group.  “I look forward to collaborating with my new colleagues throughout the American Capital organization both here and abroad, as we search for investment and cross-selling opportunities.”

Prior to joining American Capital, Mr. Gallaher was on the Executive Committee and Investment Committee of William E. Simon & Sons, overseeing private equity, real estate and special situations investments, and he managed domestic and offshore distressed funds as President of William E. Simon & Sons Special Situations.   Prior to that, he coordinated workouts and established and managed a global distressed proprietary fund for Bank of America.  Mr. Gallaher holds a B.A. with honors in Economics from the College of William and Mary, a M.A. with honors and L.L.M. with honors from Cambridge University.

ABOUT THE AMERICAN CAPITAL DISTRESSED DEBT GROUP

American Capital’s Distressed Debt Group will target undervalued stressed, distressed and defaulted investment opportunities in all tiers of the capital structure.  Companies interested in learning more about American Capital's Distressed Debt Group should contact Brendan Gallaher, Managing Director at (310) 405-7270.

ABOUT AMERICAN CAPITAL

American Capital is the second largest U.S. publicly traded alternative asset manager with approximately $11 billion in assets under management (second to Fortress (NYSE: FIG)).  American Capital, both directly and through its global asset management business, is an investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies.  American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations.  American Capital and its affiliates invest from $5 million to $750 million per company in North America and €5 million to €400 million per company in Europe.

As of February 28, 2007, American Capital shareholders have enjoyed a total return of 590% since the Company's IPO - an annualized return of 23%, assuming reinvestment of dividends.  American Capital has paid a total of $1.4 billion in dividends and paid or declared $23.33 dividends per share since going public in August 1997 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 www.AmericanCapital.com or www.EuropeanCapital.com.

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 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.