FOR IMMEDIATE RELEASE:
February 28, 2007

Contact
Kevin Kuykendall, Managing Director, Energy Group (214) 273-6634
John Capperella, Managing Director, Second Lien Group (212) 444-9320
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $37.5 MILLION IN FOREST ALASKA

Bethesda, MD - February 28, 2007 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that in the fourth quarter of 2006 it invested $37.5 million in Forest Alaska Operating LLC, a subsidiary of Forest Oil Corporation, an oil and gas company engaged in the acquisition, exploration, development and production of reserves primarily in North America.  American Capital’s investment supported the establishment of Forest Alaska as an unrestricted subsidiary of Forest Oil and took the form of participation in a second lien term loan facility.  Proceeds from the transaction are also being used to reduce Forest Oil’s outstanding borrowings under its credit facility.  Senior secured first and second lien term loan facilities were arranged by Credit Suisse Securities LLC and JPMorgan Inc.

“We are pleased to be making this investment in Forest Alaska, a subsidiary of Forest Oil, a longstanding North American oil and gas exploration and production company,” said Darin Winn, American Capital Regional Managing Director.  “This investment by our Energy Group in a second lien term loan facility resulted from the collaboration between the Energy Group and the Second Lien Group.  The combined efforts of both groups enabled American Capital to support the establishment of Forest Alaska as an unrestricted subsidiary and frees up capital for the further development of the Company’s reserves.”

American Capital invested directly and through its funds under management $6.7 billion in 2006 and $2.2 billion in the fourth quarter of 2006 and has invested $962 million in 2007 year to date.  Not including funds under management, American Capital invested $5.1 billion in 2006 and $1.7 billion in the fourth quarter of 2006 and has invested $710 million in 2007 year to date.  For more information about American Capital’s portfolio, click here.

“Forest Alaska, whose assets have a long track record of stable production, has substantial levels of proved reserves that continue to provide strong cash flows,” said Kevin Kuykendall, American Capital Managing Director, Energy Group.  “With Forest Alaska’s demonstrated ability to reduce operating expenses and its additional planned capital expenditures to increase production, cash flows are on track to grow over the next several years.  Continued rising oil and gas demand, low excess production capacity and geopolitical risk are expected to support continued high prices.”

“Forest Oil is a well established company and has a strong core of engineers and geoscientists with extensive knowledge of the reservoirs and operating environment in Forest Alaska’s areas of operation,” said John Capperella, American Capital Managing Director, Second Lien Group.  “Post-close, Forest Oil will continue to effectively operate and develop Forest Alaska’s assets under a service agreement with evergreen renewal at current pricing levels.”

Founded in 1916, Forest Oil Corporation is a large independent, oil and gas exploration and production company with operations primarily in North America.  Forest Oil and its subsidiaries are engaged in the exploration, acquisition, development, production and marketing of natural gas and crude oil in North America and some international locations.  Headquartered in Denver, CO, Forest Oil has principal reserves and producing properties in Alaska, Louisiana, Oklahoma, Texas, Utah, Wyoming and the Gulf of Mexico and in Alberta, British Columbia and the Northwest Territories of Canada.

Forest Alaska’s reserves and operations are located both onshore and offshore in the Cook Inlet area of Alaska. In addition to producing properties, Forest Alaska’s assets include three onshore facilities, seven platform rigs and a processing facility in Kustatan, Alaska.

ABOUT AMERICAN CAPITAL ENERGY GROUP

The American Capital Energy Group invests senior debt, subordinated debt and equity across all segments of the energy industry, including exploration and production, transportation, distribution, equipment manufacturing, services, power generation and renewables. Companies interested in learning more about American Capital's energy initiative should contact Kevin Kuykendall at (214) 273-6634, or visit the website at www.americancapital.com/energy.

ABOUT AMERICAN CAPITAL SECOND LIEN GROUP

The Second Lien Group offers secured and unsecured junior capital investments to support an array of financing needs across a variety of industries. With a nationwide focus, the Group brings a rich and successful heritage of junior capital investing to bear in all of its investments and a concentration on syndicated loans that are distributed through the loan sales desks of the market’s growing junior capital arranger community. For a prompt review and a committed financial partner, please contact John Capperella at (212) 444-9320.

ABOUT AMERICAN CAPITAL

American Capital is the second largest U.S. publicly traded alternative asset manager with approximately $11 billion in assets under management (second to Fortress (NYSE: FIG)).  American Capital, both directly and through its global asset management business, is an 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 and its affiliates invest from $5 million to $750 million per company in North America and €5 million to €400 million per company in Europe.

As of January 31, 2007, American Capital shareholders have enjoyed a total return of 655% since the Company's IPO - an annualized return of 24%, assuming reinvestment of dividends.  American Capital has paid a total of $1.4 billion in dividends and paid or declared $23.33 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.

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.

This announcement is neither an offer to sell nor a solicitation to buy securities.
This announcement appears as a matter of record only.

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