Realizations

American Capital Realizes a Gain of $31 Million in the Second Quarter From Sale of Piper Aircraft

In May, American Capital completed the sale of its portfolio company Piper Aircraft, Inc. to Imprimis and realized a gain of $31 million from the transaction, subject to post closing adjustments. American Capital’s total inception to date realized gains on its Piper investments were $48 million and its compounded annual rate of return, including interest and fees earned over the life of its investment was 19%. Including investments in Piper by American Capital’s affiliated funds under management, the inception to date realized gains were $51 million and the compounded annual rate of return was 18%.

Including the sale, American Capital received 4.5 times its equity and subordinated debt investments. The proceeds received by American Capital were greater than the fourth quarter 2008 valuation of the investment by $7.7 million, or 33%.

American Capital first invested $20 million in subordinated debt in Piper in May 1998. In June 2003, American Capital invested a subsequent $34 million in the buyout and recapitalization of Piper. American Capital’s 2003 investment took the form of senior debt and a revolving credit facility. American Capital also funded Piper’s ambitious development of a very light jet (VLJ), which Imprimis intends to continue to develop and take to market.

Piper is a leading manufacturer of general aviation aircraft. Based in Vero Beach, Florida, the company designs, develops and produces new aircraft and proprietary replacement and remanufactured spare parts, and is the only general aviation manufacturer to offer a comprehensive line of aircraft, from trainers and high-performance piston aircraft for personal and business use to turbine-powered business aircraft.

For the complete press release, click here.

For more information about American Capital's original investment in Piper, click here.

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American Capital Receives Cash Proceeds of $22 Million From Sale of Corrpro Companies

In March, American Capital received cash proceeds of $22 million from the sale of its portfolio company Corrpro Companies, Inc. to a wholly-owned subsidiary of Insituform Technologies, Inc. (Nasdaq: INSU), realizing a gain of $6 million. Including investments in Corrpro by American Capital’s affiliated funds under management, total inception to date realized gains and dividends received were $9 million. American Capital's compounded annual rate of return, including interest, dividends and fees earned over the life of its investment was 21%. The proceeds received by American Capital were greater than the fourth quarter 2008 valuation of the investment by $0.5 million, or 2%.

In March 2004, American Capital invested $16 million in Corrpro to support its recapitalization by Wingate Partners. American Capital’s investment took the form of senior subordinated debt with warrants and redeemable preferred equity with warrants.

Corrpro, headquartered in Medina, Ohio and Houston, Texas, with over 30 offices worldwide, is a leading provider of corrosion control engineering services, systems and equipment to the infrastructure, environmental and energy markets around the world. Corrpro is the leading provider of cathodic protection systems and engineering services, as well as corrosion protection services relating to coatings, pipeline integrity and reinforced concrete structures.

For the complete press release, click here.

For more information about American Capital's original investment in Corrpro, click here.

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Corporate News

American Capital to Host Annual Meeting on June 11

On June 11, American Capital will hold its 2009 Annual Meeting of Stockholders at the Bethesda Marriott Hotel in Bethesda, MD. The items for discussion at the Annual Meeting include:

• To elect eight directors, each to serve a one-year term;
• To approve one or more amendments to the certificate of incorporation to effect a reverse stock split, subject to certain limitations;
• To approve the adoption of the 2009 Stock Option Plan;
• To ratify the appointment of Ernst & Young LLP to serve as independent public accountants for the year ending December 31, 2009; and
• To transact such other business as may properly come before the meeting or any adjournment thereof.

More information on the items to be discussed at the meeting can be found in the Company's proxy statement available at www.AmericanCapital.com.

For further information or questions, please do not hesitate to contact the Investor Relations Department at 301-951-5917 or IR@AmericanCapital.com.

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Malon Wilkus Presents at KBW Diversified Financials Conference on June 4

Malon Wilkus, American Capital Chairman and Chief Executive Officer, presented at the Keefe, Bruyette & Woods (“KBW”) Diversified Financials Conference on June 4 in New York City. The presentation is archived on the American Capital website in the Investor Relations section.

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American Capital Acquires Remaining European Capital Shares

On March 26, American Capital completed the acquisition of the shares of its affiliate European Capital Limited that it did not already own. The shares had previously traded on the Main Market of the London Stock Exchange. The acquisition was approved by a special majority of the shareholders of European Capital, not including American Capital, and the Royal Court of Guernsey. In February, American Capital stockholders had approved the issuance of shares at a price below the stock’s net asset value, allowing the acquisition to proceed.

The acquisition was completed by means of a scheme of arrangement under Guernsey company law, which provided that each outstanding European Capital ordinary share at the time of the acquisition (other than any owned by American Capital or held in treasury) was acquired for 0.333 shares of American Capital common stock. Prior to the transaction, American Capital owned 67.7% of European Capital.

For the complete press release, click here.

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American Capital Combines Three Portfolio Companies

In February, American Capital completed the combination of three portfolio companies within its Financial Services Group to create Core Financial Group, a diversified commercial finance holding company. The strategic combination brought together Core Business Credit, an asset-based lender, Velocity Financial Group, a venture debt finance and middle market equipment leasing company, and Oceana Media Finance, a film finance company. Each company will maintain its market presence under its current name while benefiting from the strong capitalization and synergies resulting from the combination.

For the complete press release, click here.

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Private Equity International Names American Capital as One of the World's Largest Private Equity Firms

In May, Private Equity International (PEI) presented its PEI 300, a list that ranks the largest 300 private equity firms in the world. American Capital was listed 13th, up from 15th place in 2008. The list includes notable private equity firms such as The Carlyle Group, Kohlberg Kravis Roberts, The Blackstone Group and Apollo Global Management. For more information on the ranking, visit the PEI 300 website at http://www.peimedia.com/pei300/.

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Buyouts Magazine Nominates American Capital for Middle Market Deal of the Year

In March, Thomson Financial’s Buyouts publication presented its annual Deal of the Year Awards. American Capital was one of five firms nominated for Middle Market Deal of the Year for its sale of BPWest (click here for more on the BPWest sale). The award went to ABS Capital Partners. The annual awards ceremony included awards for: Buyout Firm of the Year, Deal of the Year and Best New Firm of the Year, among others. For more information on the awards, visit the Buyouts website at http://www.buyoutsconferences.com/buyouts_third_annual_awards_dinner.aspx.

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Portfolio Company Spotlight

SMG

American Capital invested in the One Stop Buyout™ of SMG in June 2007. As of December 31, 2008 it is among the top 10 holdings of American Capital.

About SMG: Founded in 1977, SMG provides management services to 218 public assembly facilities including arenas, stadiums, theaters and performing arts centers, and convention, congress and exhibition centers. As the recognized global industry leader, SMG provides venue management, sales, marketing, event booking, pre-opening services, programming, and construction and design consulting.

American Capital’s Investment in SMG:

• Key Attractions - Premier global venue management company with a scalable and highly diversified business model, driven by steady contract renewals and growing recurring revenue streams.
• One Stop Buyout™ in June 2007 - American Capital’s investment took the form of a revolving credit facility, first lien term loan, senior subordinated debt, holding company PIK notes and convertible preferred and common equity; post-close, American Capital syndicated the senior debt, which consisted of revolving credit and first lien term loan facilities.

Recent Performance: SMG increased the number of facilities it manages from 207 in 2007 to 218 in 2008, demonstrating its ability to increase market share in the current recession. In fact, SMG has increased the number of facilities it manages every year since 1993.

For more information about American Capital's investment in SMG, click here.

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WIS International

American Capital invested in the One Stop Buyout™ of WIS International in January 2007. As of December 31, 2008 it is among the top 10 holdings of American Capital.

About WIS International: Founded in 1953, WIS International is a leading global provider of inventory verification services to over 7,000 blue chip retailers and other customers. The Company’s core business is to provide physical inventory counts for its customers in order to manage and deter inventory shrinkage and to comply with mandatory audit requirements of at least one physical inventory per year. WIS completes approximately 200,000 counts annually, or approximately 550 counts per day. In addition, WIS provides merchandising services to consumer product manufacturers and retailers. The Company services its customers via its extensive North American platform and has a growing international presence in key markets including the UK, China, Japan, Mexico and Argentina.

American Capital’s Investment in WIS:

• Key Attractions - The Company’s sophisticated operating systems, expansive geographic coverage, store-level expertise and experience in the management of large labor forces give WIS numerous competitive advantages versus smaller, regional players and potential new entrants. WIS maintains strong, long-term relationships with its diversified and desirable retail customers, many of which have above-market growth rates.
• One Stop Buyout™ in January 2007 - American Capital’s investment took the form of a revolving credit facility, senior term loan, senior subordinated debt, holding company PIK notes and common and redeemable preferred equity.
• WIS International's List of Clients Include:

  Walmart	Dollar General Stores
  Lowes Hardware	Family Dollar
  Home Depot	Safeway
  Target	Walgreens
  CVS Drug	Rite Aid

• Recent Performance: As a result of the superior service delivery provided to its customers, WIS increased the number of inventory counts it performed in North America by 39% from approximately 155,000 in the fiscal year ending March 31, 2007 to approximately 195,000 in the fiscal year ending March 31, 2009.

For more information about American Capital's investment in WIS, click here.

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eLynx, Ltd.

American Capital invested in the One Stop Buyout™ of eLynx in December 2004.

 

About eLynx: Founded in 1994, Cincinnati-based eLynx was a pioneer in developing a web-based electronic document delivery (“EDD”) processing system that transmits secure mortgage documents. The Company now provides secure electronic document collaboration and distribution services for the financial services industry. Enterprises use eLynx to capture and maintain data electronically throughout the document life cycle, automating paper-intensive processes, improving workflow, reducing costs and ensuring compliance with industry regulations.

American Capital’s Investment in eLynx:

• Key Attractions - eLynx has helped to establish the industry standard for secure EDD solutions within the mortgage space. The Company serves a large, established customer base of top mortgage lenders and offers a compelling value proposition by providing significant cost savings over traditional courier based delivery methods, enhanced regulatory compliance and increased business process efficiency. Over 600 banks, including ten of the top U.S. mortgage lenders rely on eLynx’s on-demand, web-based services for secure electronic processing, and eLynx enables more than 65% of the nation’s mortgage closings.
• One Stop Buyout™ in December 2004 - American Capital's investment took the form of a revolving credit facility, senior term loan, senior and junior subordinated debt and redeemable preferred and common equity.
• Add-on Acquisition in September 2006 - American Capital made an additional investment in eLynx to support its acquisition of SwiftView Inc., a leading provider of electronic document distribution services and document viewing technology, thereby solidifying its leadership position in the industry.
• eLynx's List of Clients Include:

  Wells Fargo	SunTrust
  PNC/National City	HSBC
  GMAC/ditech	UAMC
  US Bank	Huntington Bank

Recent Performance: eLynx began to see a significant uptick in revenues in December 2008, driven by a surge in mortgage refinancings resulting from declining mortgage interest rates and related Federal Reserve and Treasury Department actions. Combined with new business won in 2008, eLynx is experiencing increased rates of both electronic and paper based deliveries in the year-to-date April 2009 period; traditionally a seasonal low in the mortgage industry. For the year-to-date April 2009 period, eLynx’s core electronic web posting service average daily volumes increased 26% over the comparable prior year period. April 2009 average daily volumes were higher than the same period last year by 48%. This represents the fourth consecutive month of year-over-year growth. Furthermore, April average daily volumes are at their highest level in over two years.

Monthly Average Daily Volumes:

For more information about American Capital's investment in eLynx, click here.

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American Capital looks to invest in the very best private companies. With 286 companies¹ in the American Capital portfolio, we are highly diversified across industry sectors. For more information about our portfolio, click here.

Current American Capital Portfolio Company Statistics:

• $159 MM Weighted Average Revenues
• $33 MM Weighted Average EBITDA
• 31 Years Weighted Average Age
• 5.8x Average Maximum Debt to EBITDA
• 4.2x Average Mean American Capital Debt to EBITDA
• 2.0x Average Interest Coverage

(as of 3/31/09)

¹Includes portfolio companies of European Capital. Excludes portfolio companies of AGNC, ACAS CLO 2007-1 and ACAS CRE CDO 2007-1.

Industry Diversification

(as of 3/31/09)

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Department Spotlight

Operations Team

The American Capital Operations Team is comprised of 28 members, including 11 former CEOs and Presidents, 3 former COOs and 2 former CFOs, among others, with vast experience in industries such as consumer products, financial services, energy, technology, industrial, outsourcing and supply chain. This skilled team assists our investment professionals with initial operational due diligence, works with the investment teams to analyze investment decisions and provides an operations perspective on American Capital sponsored investments. If American Capital has a struggling portfolio company that is underperforming, the team will work closely with the company to improve performance by providing interim leadership and to identify business actions to help improve performance. The team provides hands-on assistance to reduce costs, systemize sales and marketing, develop and align business plans, grow the business and strengthen management talent at the portfolio company.

American Capital’s recent sale of Piper Aircraft is an Operations Team success story. Following our initial investment in Piper, the Operations Team was responsible for the buyout and recapitalization of the company. Throughout the course of our investment, Piper experienced several setbacks including: September 11, 2001 and the grounding of general aviation aircraft, a product recall, the 2001 recession, three hurricanes and several new and now deceased competitors. However, through all this, American Capital was able to produce a wonderful liquidity event at a great value.

In May 2009, 11 years after American Capital’s initial investment, the sale of Piper generated a $31 million gain and 19% compounded annual return, including interest and fees earned over the life of the investment. The Operations Team is proud of its success and excited for Piper as it moves forward with new ownership.

For more information about American Capital’s Operations Team and to watch videos of interviews with Principals from the team, click here.

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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 newsletter contains forward-looking statements. The statements regarding expected results of American Capital or any of its affiliates 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 or such affiliate has made investments. This newsletter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock of American Capital or any of the other companies mentioned herein. The offering of securities can be made only by means of a prospectus and a related prospectus supplement.

Two Bethesda Metro Center
14th Floor
Bethesda, MD 20814
Phone: (301) 951-6122
Fax: (301) 654-6714
Info@AmericanCapital.com

Nasdaq: ACAS
www.AmericanCapital.com

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