NEWS

Jeff MacDowell, Principal (214) 273-6633
Brian Maney, Director, Corporate Communications (301) 951-6122

Bethesda, MD - June 24, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS)announced today it has invested $10 million in the recapitalization of Valley Proteins Inc., a leading independent recycler and renderer of food processing by-products. American Capital's investment takes the form of senior subordinated debt. US Bank NA and a syndicate of lenders are providing a revolving credit facility and a senior term loan. Valley Proteins management retains its ownership.

"American Capital's recapitalization of Valley Proteins reflects our expertise in locating exceptional middle market companies led by strong management teams and providing them with the necessary financing to support their growth," said American Capital COO Ira Wagner. "This is our 14th announced investment in a new portfolio company to date in 2004."

American Capital has invested over $1.1 billion in the last twelve months and over $400 million year to date. For more information about American Capital's portfolio click here.

"The company's ability to efficiently collect and process high volumes of by-products for some of the world's largest chicken and turkey processors has solidified Valley Proteins' leadership position in its regional markets," said American Capital Principal Jeff MacDowell. "Valley is an attractive company because of its impressive customer base, high barriers to entry and talented management team."

Founded in 1949, Winchester, VA-headquartered Valley Proteins is a leading independent recycler and renderer of food processing by-products. Rendering is the process of collecting inedible animal by-products from poultry and meat processors, restaurants, farms and grocery stores and recycling the by-products into useable products such as proteins and fats that are sold primarily to producers of livestock feed and pet foods. The company provides high quality services that are vital to poultry and meat processors, farmers and commercial food preparation facilities, enabling them to comply with strict federal and state regulations for meat processing and waste disposal of by-products. Valley also provides services including cooking oil collection, grease trap disposal, and removal of dead stock. The company procures its raw materials from over 40,000 suppliers, ranging from small restaurants, butcher shops and grocery stores to some of the world's largest poultry and beef processors. The company sells fats, proteins and related products to over 170 customers, including producers of livestock feed and pet food. Valley Proteins employs over 1,000 in 20 operating facilities, including rendering plants, pet food product plants, grease processing plants and transfer stations located in Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, Tennessee, West Virginia, Texas, Oklahoma, and New Mexico.

"American Capital sets the standard for partnership," said Gerald F. Smith, Jr., who has served as the company's President since 1992. "Their flexible approach to problem solving and ability to understand our business are precisely what Valley Proteins requires as we grow and meet new market challenges."

For more information about Valley Proteins vital high quality services click here.

As of May 31, 2004, American Capital shareholders have enjoyed a total return of 219% since the Company's IPO - an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 per share in dividends since its August 1997 IPO.

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $3 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored 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.

Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal and Senior Vice President, Business Development, at (800) 248-9340, or visit our website.

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 or national 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.