Bethesda, MD - December 30, 2004 - American Capital Strategies Ltd. (Nasdaq:ACAS) announced today it has invested $24 million in the recapitalization of its portfolio company, The Tensar Corporation ("Tensar"). American Capital's new investment takes the form of senior and junior subordinated debt. The company's existing lenders are participating in the recapitalization. In conjunction with this transaction, Tensar redeemed $1.2 million of American Capital's redeemable preferred stock plus $0.4 million in accrued dividends.

American Capital first invested $19.75 million in Tensar in December 2000 in support of the acquisition of Tensar (then known as Atlantech International), by KRG Capital Partners. In April 2004, American Capital was repaid its original $18.75 million senior subordinated debt investment while retaining its equity investments. KRG remains the lead investor.

"We are pleased to continue to support the robust growth of Tensar, an outstanding company that performs a critical role in the construction and maintenance of the nation's infrastructure," said American Capital COO Ira Wagner. "Our new investment in Tensar is also a sign of the excellent partnership we enjoy with KRG."

American Capital has invested approximately $1.9 billion year to date and approximately $600 million quarter to date. For more information about American Capital's portfolio, click here.

"Since our initial investment in Tensar, an increasing number of state governments have adopted geogrids as a standard, resulting in more opportunities for the company," said American Capital Managing Director Darin Winn. "In addition, the outlook for increased federal funding for highway construction and maintenance remains extremely positive. We are delighted to continue our support of the strong management team at Tensar as they continue to develop new markets and grow the company both organically and through acquisition."

Founded in 1983 and based in Atlanta, GA, Tensar is the largest manufacturer of polymeric earthwork geogrid reinforcement products in the world. Geogrids permit cheaper, faster and more durable construction of transportation and environmental infrastructure projects, including roadways, parking lots, retaining walls and coastal protection systems. Tensar holds over 70 patents, including a method of use patent that provides the Company exclusive rights for use of its UX™ and BX™ geogrids for all civil construction applications in the U.S. The company is also a full-service provider of specialty products and engineering services used for cost-effective site development of commercial, residential, industrial and municipal properties as well as in transportation and environmental infrastructure. Tensar's customers include municipal, county and state departments of transportation and environmental regulatory agencies, as well as customers from the commercial and industrial sectors.

"We appreciate American Capital's ongoing support of Tensar," said KRG Principal Howard Lipshutz. "Their understanding of both the company and KRG's needs makes American Capital a valued partner."

About American Capital

American Capital is a publicly traded buyout and mezzanine fund with capital resources of more than $4.8 billion. American Capital is an investor in and sponsor of management and employee buyouts, invests in private equity buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

As of November 30, 2004, American Capital shareholders have enjoyed a total return of 299% since the Company's IPO - an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $645 million in dividends and paid or declared $16.03 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.

Founded in 1996, KRG Capital Partners is a Denver based private equity buyout firm that currently manages over $1 billion of committed equity capital and equity co-investments. KRG specializes in acquiring and recapitalizing middle-market companies. Since inception, KRG has invested in 19 platform companies and has completed 57 add-on acquisitions for those platforms. American Capital has invested with KRG in 8 other portfolio companies: Case Logic Inc., a designer and manufacturer of storage products and accessories; Chronic Care Solutions Inc., doing business as CCS Medical, a leading national direct-to-consumer, mail-order chronic illness supply company focused primarily on diabetic supplies; CIVCO Holdings Inc., a global specialist in the design, manufacture and marketing of specialized medical products for ultrasound and minimally invasive surgical equipment and procedures;FMI International Inc., a third party logistics provider to the U.S. apparel industry; HMS Healthcare Inc., a holding company for non-risk access preferred provider organizations; Interior Specialists Inc., a leading provider of outsourced interior design and installation services for homebuilders in the Southwestern U.S.; TransCore Holdings Inc., a provider of transportation information management systems and service; and Trinity Hospice LLC, a provider of hospice care.

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.

Contact:
Darin Winn, Managing Director (214) 273-6650
Brian Maney, Director, Corporate Communications (301) 951-6122

SOURCE: American Capital Ltd.