Allied Capital Announces Gain from Sale of Minority Equity Interest in HMT Inc.

WASHINGTON -- Allied Capital Corporation (NYSE:ALD) announced today that it has realized a gain on the sale of its minority equity interest in HMT Inc. of approximately $40 million, subject to post-closing adjustments. Nassau Point Investors, the majority owner of HMT, completed the sale of the company to Berkshire Partners on May 10, 2007. Allied Capital owned approximately 27% of the fully-diluted shares of HMT and the cost basis of its equity investment totaled $6.8 million.

HMT is a leading international provider of products and services for the maintenance, repair and inspection of aboveground storage tanks. Allied Capital financed the buyout of HMT by Nassau Point Investors in March 2000 with a subordinated debt and minority equity investment. Allied Capital's subordinated debt was repaid in May 2005.

"This sale of HMT culminates a highly successful investment for Allied Capital," said Robert Monk, Managing Director of Allied Capital. "We have been very pleased to work with Nassau Point and the management team of HMT over the past seven years, and we wish the company continued success in its new partnership with Berkshire Partners."

"We greatly appreciate Allied Capital's support of our investment in HMT, which has culminated in a very positive outcome," said Jonathan Wendell, Partner of Nassau Point Investors.

About Allied Capital

Allied Capital Corporation is a leading business development company (BDC) in the U.S. that invests private debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has paid consistent or increasing regular, quarterly cash dividends annually to shareholders since 1963.

Allied Capital provides long-term debt and equity capital for management and sponsor-led buyouts, and for recapitalizations, acquisitions and growth of middle market companies. Allied Capital's one-stop financing capabilities include first and second lien senior loans, unitranche debt, junior or subordinated debt and equity. Allied Capital seeks to invest in stable, less cyclical companies that produce significant free cash flow and high returns on invested capital. At March 31, 2007, the Company's private finance portfolio included investments in 144 companies in a variety of industries. These companies currently generate aggregate revenues of over $13 billion and employ more than 90,000 people.

Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in its New York Stock Exchange-listed stock. Allied Capital invests in the American entrepreneurial economy by providing long-term capital and access to managerial resources often unavailable to middle market companies. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at [phone], or e-mail us at [e-mail].

About HMT Inc.

Based in Tomball, TX, HMT is an international provider of products and services for the maintenance, repair and inspection of aboveground storage tanks. The company's products and services are primarily used by the petroleum and petrochemical industries, and HMT's customers include all the major domestic refiners in the U.S. For more information, please visit www.hmttank.com.

About Nassau Point Investors

Nassau Point Investors, founded in 1999, is a private equity firm based in Greenwich, Conn. The firm targets investments in middle market companies and applies its operating expertise to grow acquired businesses in partnership with management. For additional information, contact [e-mail] or [phone].

Forward-Looking Statements 

The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in Allied Capital's filings with the Securities and Exchange Commission.