American Capital Obtains $100 Million Credit Facility Increase; Interest Rate Reduced by 100 Basis Points.

BETHESDA, Md.--(BUSINESS WIRE)--Dec. 15, 1999--

American Capital (NASDAQ: ACAS), announced today that its credit facility with an affiliate of First Union National Bank has been increased by $100 million. The agreement brings the Company's capital resources to a total of $460 million. Interest payable under the entire facility has been reduced 100 basis points from its current level and will now be the greater of First Union's commercial paper rate plus 150 basis points or LIBOR plus 150 basis points.

First Union has increased American Capital's credit facility twice in the last seven months. The original $100 million credit facility, which was established in March 1999, was expanded in June to $125 million. The most recent agreement raises American Capital's total facility to $225 million. Together with its $95 million follow-on equity offering in July of this year, American Capital has raised over $320 million in less than a year to fund middle market businesses throughout the United States.

John Erickson, Chief Financial Officer of American Capital, said, "The latest expansion in our credit facility reflects First Union's continued confidence in the quality and performance of our assets, increasing our total committed capital resources to $460 million. We are pleased that after their current underwriting of our portfolio, First Union concluded that the credit and asset quality merited a 100 basis point decrease in the interest rate charged on the facility."

Malon Wilkus, Chairman and Chief Executive Officer of American Capital, commented, "The relationship we have built with First Union has been an integral component in growing our portfolio of quality assets through partnering with outstanding companies. With this expanded facility and our recent follow-on equity offering, American Capital is well-positioned to continue its portfolio expansion strategy into next year. We are committed to deploying our new capital resources and look forward to hearing from quality companies across America in need of capital."

American Capital is a buyout and specialty finance company with capital resources exceeding $460 million. American Capital invests senior debt, subordinated debt and equity in businesses in need of capital for growth, acquisitions, ESOP buyouts, management buyouts, Internet development, liquidity and restructurings. Through www.AmericanCapitalOnline.com, financing is provided for receivable and inventory financing, working capital loans, machinery and equipment loans, real estate loans, construction financing, acquisition funding, management buyouts, ESOP financings, Internet development, liquidity and restructurings.

Companies interested in learning more about American Capital and our flexible financing should contact John Hoffmire, Vice President of Sales and Marketing, at [phone], or visit our website at www.AmericanCapitalOnline.com or our shareholder site at www.ACASOnline.com.

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 or national economic conditions, or changes in the conditions of the industries in which American Capital has made investments.