FOR IMMEDIATE RELEASE:
January 25, 2008

Contact
Tom McHale, Senior Vice President, Finance (301) 951-6122
Amanda Cuthbertson, Director, Investor Relations (301) 951-6122

AMERICAN CAPITAL ANNOUNCES TAX STATUS OF 2007 DIVIDENDS

Bethesda, MD – January 25, 2008 – American Capital Strategies Ltd. (Nasdaq: ACAS) announced today that its 2007 dividends of $3.72 per share were a distribution of ordinary income for federal income tax purposes.  American Capital also announced that of its 2007 ordinary dividends, $3.59 per share were non-qualifying dividends and $0.13 per share were qualified dividends. The $0.13 per share of qualified dividends reflect qualified dividend income received by American Capital from portfolio companies in 2007.  Qualified dividend income is dividend income received from qualified domestic and foreign corporations.  Qualified dividend income is taxed to stockholders at the rates that apply to capital gains.

American Capital stockholders should receive IRS Form 1099-DIV containing this information from their brokers, transfer agents or other institutions.

American Capital must make certain distributions of its taxable income in order to maintain its tax status as a regulated investment company.  Investors can refer to the Company's most recent report on SEC Form 10-K for more information about its tax status.  American Capital reports the estimated tax characteristics of each dividend when announced, while the actual tax characteristics of each year's dividends are reported annually to stockholders on Form 1099-DIV.

Information on dividends paid by American Capital for 2007 is provided below.

A summary of American Capital's dividend history follows.

ABOUT AMERICAN CAPITAL

American Capital is the only alternative asset management company in the S&P 500. With $20 billion in capital resources under management¹, 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 December 31, 2007, American Capital shareholders have enjoyed a total return of 452% since the Company's IPO, an annualized return of 18%, assuming reinvestment of dividends.  American Capital has paid a total of $2.1 billion in dividends and paid $26.16 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.

¹Capital resources under management is an estimate of internally and externally managed assets and available capital resources as of November 30, 2007 and does not include any fair value adjustments subsequent to September 30, 2007.

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.