FOR IMMEDIATE RELEASE:
August 8, 2007

Contact
Bowen Diehl, Managing Director, Sponsor Finance (214) 273-6630
John Drennan, Vice President, Sponsor Finance (214) 273-6630
Brian Maney, Director, Corporate Communications (301) 951-6122

AMERICAN CAPITAL INVESTS $160 MILLION IN THE ACQUISITION OF SPRING AIR COMPANY BY CONSOLIDATED BEDDING

Bethesda, MD – August 8, 2007 – American Capital Strategies Ltd. (Nasdaq:ACAS) announced today that on June 25 it invested $160 million in Consolidated Bedding Inc. to support its acquisition and consolidation of The Spring Air Company (“TSAC”) and six of TSAC’s licensees, including eight manufacturing facilities.  Systemwide Spring Air sales are over $400 million, making it one of the largest innerspring mattress brands in the U.S.  Spring Air sells through most major department stores, furniture stores and mattress retailers under brand names including Spring Air Back Supporter®, Nature’s Rest®, Chattam & Wells®, and Four Seasons®.  Prior to the transaction, Consolidated Bedding was the largest licensee of The Spring Air Company.  American Capital’s investment takes the form of a senior unirate term loan and junior PIK notes.  American Capital is also providing a revolving credit facility.  H.I.G. Capital LLC, the equity sponsor and majority owner of Consolidated Bedding, is investing in subordinated debt and preferred equity.

“We are pleased to have the opportunity to partner again with H.I.G. Capital, which brings to this transaction its extensive knowledge of the bedding industry,” said Darin Winn, American Capital Regional Managing Director.  “Our complete one stop financing package supports the consolidation of one of the premier mattress brands.  This transaction is one of 31 financings completed by our Sponsor Finance Group in 2007 and represents a further step in our effort to grow our business of supporting the acquisition efforts and growth of portfolio companies of strong financial sponsors like H.I.G Capital.”

American Capital has invested directly and through its funds under management over $11 billion in the last twelve months, over $7.6 billion year to date and approximately $1.4 billion quarter to date.  Not including funds under management, American Capital has invested over $8 billion in the last twelve months, over $5.7 billion year to date and approximately $1.2 billion quarter to date.  For more information about American Capital’s portfolio, click here.

“Spring Air is a leading brand in an industry driven by population growth and largely insulated from economic cycles by consumers’ continuing mattress replacement needs and their persistent desire to upgrade,” said Bowen Diehl, American Capital Managing Director, Sponsor Finance.  “Spring Air’s management team, with decades of experience in the bedding industry, is ideally qualified to maximize the potential of this strategic merger and consolidation.”

“This merger enables Spring Air to realize compelling synergies in operations, manufacturing, purchasing and logistics.  Consolidating the franchisor/franchisee structure will bring more consistent quality and service to customers and consumers across the nation,” said John Drennan, American Capital Vice President, Sponsor Finance.  “In addition, the Company will benefit from a new unified and coordinated marketing and sales effort and a streamlining of the Company’s product offerings in each of the industry categories.”

Established in 2005 with the merger of Spring Air Partners-North America and American Bedding Industries, two TSAC licensees, Consolidated Bedding is a leading manufacturer and distributor of mattresses and the largest TSAC licensee worldwide.  Consolidated Bedding manufactures innerspring mattresses in plants in Florida, Texas, California, Ohio and New Jersey.  The merger adds factories in Washington, Utah, Arizona, Colorado, Missouri, Massachusetts, Alabama and Georgia.  Its broad range of mattresses at all price points are sold through four primary channels—furniture, department, specialty sleep and club stores.  Spring Air will be headquartered in Chicago, IL and will employ nearly 1,150 employees.

“We are delighted that American Capital is investing in our portfolio company, Consolidated Bedding,” said Peter Cornetta, H.I.G. Capital Principal.  “American Capital, again, demonstrated the ability to understand the key merits of a complex strategic transaction, move rapidly to close and deliver on its proposed financing package.  Its one stop financing solution provides efficient support that will enable our management team to concentrate on its highest priority—optimally integrating the Spring Air Company and its licensees and delivering excellent products and service to our customers and consumers.”

ABOUT AMERICAN CAPITAL

American Capital is the only alternative asset management company that is a member of the S&P 500. With $16 billion in assets under management ¹, American Capital is the largest U.S. publicly traded private equity fund and one of the largest publicly traded alternative asset managers.  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 $800 million per company in North America and €5 million to €500 million per company in Europe.

As of July 31, 2007, American Capital shareholders have enjoyed a total return of 505% since the Company's IPO—an annualized return of 20%, assuming reinvestment of dividends.  American Capital has paid a total of $1.7 billion in dividends and paid or declared $25.16 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.

ABOUT H.I.G. CAPITAL LLC

H.I.G. Capital LLC (“H.I.G.”) is a leading private investment firm with over $4 billion of capital under management. H.I.G.’s family of funds includes private equity, venture capital, distressed debt, and public equities. H.I.G. has invested in and managed more than 100 companies worldwide since its founding in 1993, with combined sales in excess of $7 billion. H.I.G. has offices in Miami, Atlanta, Boston, San Francisco, London, Hamburg and Paris.

¹ Includes American Capital’s investment in externally managed funds

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.