FOR IMMEDIATE RELEASE:
October 7, 2005

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Kenneth Jones, Principal (610) 238-0210
Steve Gord, Vice President (610) 238-0210
Brian Maney, Director, Corporate Communications (301) 951-6122

INFILTRATOR SYSTEMS PROMISES TO BE IMPERVIOUS

By Linda Corman

Infiltrator Systems, Inc. got its start in the mid-1980s when James Nichols, a mechanical engineer who had been a consultant in the design and manufacture of plastic components, was wrestling with a failing septic system in his own backyard. In 1986, Nichols, in partnership with George Haines, founded the company, which has become the leading manufacturer of plastic chambers used in underground wastewater (septic and stormwater) management systems. A year later, the company, based in Old Saybrook, Connecticut, developed a plastic substitute for traditional stone and pipe septic systems.

In a September 30, 2005 transaction Graham Partners, a private equity fund of Newtown Square, Pa., acquired Infiltrator. American Capital Strategies Inc. (NASDAQ: ACAS) provided $29 million in senior subordinated debt financing. A syndicate led by Merrill Lynch Capital provided senior financing, including a revolving credit facility, a capex facility and senior term loans.

Infiltrator is widely regarded as the premier brand in the "alternative" septic leach field market and is the single largest player, with leading market share of all installed leach field systems, including both alternative systems (which also include polystyrene tube) and plastic systems. The company currently holds 30 patents and continues to innovate in plastic chamber technology used in wastewater management.

"Since its invention of a plastic substitute in 1987, Infiltrator has led an ongoing conversion from traditional stone and pipe leach field systems in the septic market to plastic chamber systems," said Robert McHugh, the company's CFO. "While stone and pipe represented nearly 100% of the market in 1986, that share is now down to about 57%."

Onsite septic wastewater management systems are the primary alternative to municipal sewer systems. Infiltrator's plastic chambers are large, arch-shaped chambers that are linked to form an underground structural framework or leachfield, which serves as both a storage tank for wastewater and a medium through which it can be disposed of directly into the soil. Stormwater management systems are used to control rainwater runoff, remove pollutants, replenish groundwater supplies and control rates of water flow. Pictured here is the new revolutionary Quick4™ Equalizer® 36 septic leaching chamber.

Besides its Connecticut headquarters, the company has manufacturing facilities in Winchester, KY, the company's original plant, and Ogden, UT, a facility opened in 1995 to serve the western market.

In April 2003, American Capital partnered with Graham Partners to support the buyout financing of Nailite International, Inc., a manufacturer of molded polypropylene siding products. Then in June 2004, American Capital also supported Graham's acquisition of Supreme Corq Holdings, LLC, a leading manufacturer of thermoplastic elastomer corks for the global wine and spirits industry. Infiltrator Systems has joined American Capital's portfolio of more than 130 middle market companies in a wide range of industries. Since 1997, American Capital has invested approximately $6 billion in these companies. For more information about American Capital's portfolio click here.

The main alternative to septic systems is sewer systems. Over the last 35 years, the proportion of septic to sewer systems has remained the same. Growth in the septic systems market is primarily driven by two factors-the pace of new home construction and the demand for replacement systems. Industry analysts expect the septic system market to grow at a 1% to 2% annual rate for the next few years and the market for alternative systems to grow 5% to 6% in the next few years. The competitiveness of chamber systems versus stone and pipe systems depends on the cost of stone, which varies significantly from region to region, and whether regulators permit reductions in length or width of trenches for chamber systems.

Infiltrator's potential competitors face substantial obstacles to make inroads on its business because the company has a large manufacturing capacity as well as ample capacity to recycle used plastics for use in making its chambers. Recycling provides a significant cost advantage as the price of plastics rises. Infiltrator has a total fixed asset base, including recycling equipment, large part injection molding equipment and proprietary and patented molds.

Infiltrator is particularly counting on a next generation chamber product--"Quick 4™"-which is lighter, and therefore cheaper to make than previous models because of a reduction in material and freight costs. Unlike its predecessors, the total installed cost of the Quick 4™ is expected to be less, on average, than the installation of a stone and pipes system. Infiltrator has already begun introducing the product.

Having begun infiltrating the underground wastewater management system market in 1986, Infiltrator is well on its way to completely permeating it.