FOR IMMEDIATE RELEASE:
January 17, 2007

Contact
Dean Anderson, Managing Director, Special Situations Group (312) 334-1446
Myung Yi, Managing Director, Special Situations Group; (301) 951-6122
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL APPOINTS DEAN ANDERSON MANAGING DIRECTOR, SPECIAL SITUATIONS GROUP

Bethesda, MD – January 17, 2007 – American Capital Strategies Ltd. (Nasdaq: ACAS) announced today the appointment of Dean Anderson as Managing Director in the Special Situations Group.  Mr. Anderson brings over 12 years of investment and acquisition experience in the turnaround and distressed arena.  He will be building a team of investment professionals within the Special Situations Group out of American Capital’s Chicago office to complement the existing team in American Capital’s Bethesda, Maryland office.

“We are pleased to announce that Dean Anderson has joined the American Capital Special Situations Group, further enriching this effort,” said American Capital Managing Director Gordon O’Brien.  “Dean, with his exceptional experience investing in the turnaround sector, will play a key role in the Special Situations Group’s growth and development.”

American Capital has invested directly and through its funds under management approximately $6.3 billion in 2006, $1.8 billion in the fourth quarter of 2006 and $93 million year to date.  Not including funds under management, American Capital has invested approximately $4.8 billion in 2006, $1.3 billion in the fourth quarter of 2006 and $69 million year to date.  Since its inception in early 2005, the Special Situations Group has invested $290 million in 6 portfolio companies, including nearly $100 million in the fourth quarter of 2006.  The Special Situations Group has led buyouts, invested alongside other sponsors, provided debtor-in-possession financing and provided direct recapitalization financing.  For more information about American Capital’s portfolio, click here.

“Since the establishment of the American Capital Special Situations Group, we have been focused on building a team of investment professionals,” said American Capital Managing Director Myung Yi, who leads the Special Situations Group in the Bethesda office.  “We now have broad investment capabilities in the Special Situations Group and Dean is a valued addition.  He brings a wealth of investment experience with underperforming and distressed companies in a wide range of industries for us to leverage as we pursue a robust pipeline of investment opportunities.  Our strategy is to evaluate and invest in a broad range of turnaround, distressed and other complex acquisition opportunities, while leveraging American Capital’s significant financial and operational capabilities.”

“I am delighted to be joining the outstanding American Capital organization and excited about being part of expanding this important initiative within the firm,” said American Capital Managing Director Dean Anderson.  “We believe that the combination of American Capital’s substantial and experienced Operations Team, one-stop equity and debt capabilities and access to deal flow create a powerful platform for successful turnaround investing.”

Prior to joining American Capital, Mr. Anderson was a Managing Director and Investment Committee member of Questor Management Company, a $1.1 billion private equity firm focused on turnarounds and distressed investments.  Mr. Anderson holds a B.S. degree in mathematics from Vanderbilt University and an MBA with High Distinction from the Ross School of Business at the University of Michigan.

ABOUT THE AMERICAN CAPITAL SPECIAL SITUATIONS GROUP

American Capital’s Special Situations Group has the flexibility to invest from $20 million to $500 million per transaction in a variety of investments.  The Special Situations Group targets distressed, turnaround and other complex investments, providing flexible capital and a wealth of turnaround experience to middle market companies.  It targets buyouts across all industries involving: operational turnarounds, 363 auctions, corporate orphans, portfolio add-ons, and complex management buyouts.  It also provides financings for: DIP loans, exit financings, mezzanine financings for sponsored buyouts, second lien refinancings and direct lending to distressed companies.  Companies interested in learning more about American Capital's Special Situations Group should contact Dean Anderson, Managing Director at (312) 334-1446 or Myung Yi, Managing Director at 301-951-6122.

ABOUT AMERICAN CAPITAL

American Capital is the largest U.S. publicly traded alternative asset manager with $12 billion in capital resources under management.  American Capital invests directly and through its asset management business and is a global investor in management and employee buyouts, private equity buyouts, and early stage and mature private and public companies.  American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations.  American Capital invests from $5 million to $500 million in North America and €5 million to €400 million in Europe.

As of December 31, 2006, American Capital shareholders have enjoyed a total return of 617% since the Company's IPO - an annualized return of 23%, assuming reinvestment of dividends.* American Capital has paid a total of $1.3 billion in dividends and paid or declared $22.44 in dividends per share since going public in August 1997 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 www.AmericanCapital.com or www.EuropeanCapital.com.

*Including reinvestment of Q4 2006 dividend, which will be paid on 1/18/2007.  Q4 dividend reinvestment amount is estimated based on the 12/31/2006 close price less a 5% discount.

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 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.

Do not reply to this message. To unsubscribe, click here or send an email to: unsubscribe-461@elabs7.com