FOR IMMEDIATE RELEASE:
October 31, 2005

Contact
Ian Larkin, Managing Director (312) 681-7400
Greg Long, Vice President (312) 681-7400
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $32 MILLION IN LEADING DESIGNER, IMPORTER AND DISTRIBUTOR OF ACCENT FURNITURE

Bethesda, MD - October 31, 2005 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $32 million in the debt refinancing of Stein World LLC, a leading designer, importer and distributor of residential accent furniture and portable lighting. American Capital's investment takes the form of a senior term B loan and senior and junior subordinated debt. GE Antares Capital, a unit of GE Commercial Finance, and Dymas Capital Management are investing in a senior term A loan and are also providing a revolving credit facility. Goense Bounds & Partners, New York Life Insurance Company, Stein World management and private investors are currently invested in the equity. Goense Bounds is the majority equity investor.

"Our investment in Stein World not only backs the growth of an excellent accent furniture company, but also develops a new relationship with an experienced private equity firm, Goense Bounds. This is our 10th new private equity partnership in 2005 and 14th in the last twelve months," said American Capital Chief Operating Officer Ira Wagner. "American Capital's strong position in the market, flexible capital, dedicated professionals and experience in a variety of industries make us a great partner for private equity firms seeking financial support for their portfolio companies."

American Capital has invested nearly $3.6 billion in the last twelve months, over $2.9 billion year to date and $164 million quarter to date. For more information about American Capital's portfolio click here.

"Stein World's unique outsourced business model and 'fashion-current' business approach has enabled it to experience significant growth in the attractive accent furniture market. In addition, the Company's differentiating one-week delivery ability, exceptional customer service, large product offering, strong Asian sourcing relationships, and lack of customer and product concentration have solidified Stein World's unique market position," said American Capital Managing Director Ian Larkin. "Furthermore, Stein World's volume allows it to cost-effectively address the demands of its retail customers and achieve economies of scale unmatched by its competition. We believe in the strong management team that has delivered impressive financial results and are confident in the leadership of President Andy Stein, a highly motivated visionary."

Headquartered in Memphis, TN, Stein World offers a broad selection of attractive, upscale residential accent furniture, including credenzas, chests (pictured at left), cabinets, tables and armoires under The Painted Treasures Collection and the Andrew Marc Collection brand names. Earlier in 2005, the Company expanded its product offering by introducing a new line of lighting products under the Stein World Decorative Lighting trade name. The Company sells to a well-diversified base of customers, including 78 of the top 100 furniture retail chains, as well as specialty retailers, wholesale clubs, department stores, lighting stores and other home décor stores throughout the United States and Canada. The Company produces over 750 SKUs through several accent furniture and lighting manufacturers in China. During the last four years, Stein World net sales grew at a compounded annual growth rate of approximately 69%.

"We are excited to close this transaction," said Goense Bounds Managing Director Mark Bounds. "American Capital was an instrumental partner in this transaction, providing a mezzanine financing package that met our needs as well as the Company's. With the combined financial support of American Capital and our other investors, Stein World is well positioned to continue its impressive growth."

For more information about Stein World's aesthetically unique offering of accent furniture and lightening click here.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $6.7 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to private and small public companies and through its asset management business is a manager of debt and equity investments in private companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

As of September 30, 2005, American Capital shareholders have enjoyed a total return of 407% since the Company's IPO - an annualized return of 22%, assuming reinvestment of dividends. American Capital has paid a total of $868 million in dividends and paid $18.29 dividends per share since its August 1997 IPO at $15 per share.

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

ABOUT GOENSE BOUNDS & PARTNERS

Goense Bounds & Partners is a private equity firm focused on investing in leading middle-market companies. Over 16 years of investing, the principals of Goense Bounds have made 26 platform acquisitions and 84 add-on acquisitions. Investing $10 million to $30 million in companies with $5 million or more of EBITDA, Goense Bounds focuses primarily on investing in the building materials and services, consumer products and business services industries. The firm's portfolio of investments include CrossCom National, leading provider of maintenance and installation services for voice, data, wireless, paging and point-of-sale systems for national retail chains; Dixie HomeCrafters, leading marketer and installer of residential rainwater gutter systems, windows and siding; and L&S Plumbing, leading provider of plumbing contracting services to the Dallas/Ft. Worth residential housing market.

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 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, national or international 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.