ACAS American Capital, Ltd.

BETHESDA, Md., March 21 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. (NASDAQ:ACAS) announced today it has invested $79.5 million in the One Stop Buyout(TM) of Redwood Toxicology Laboratory Inc., Redwood Biotech Inc. and PerMaxim LLC (collectively, "The Redwood Companies" or "Redwood"). Redwood is a leading provider of drugs-of-abuse lab testing services and on-site test kits to the correctional, rehabilitation and point- of-care markets. American Capital's investment took the form of a revolving credit facility, senior term debt, senior subordinated debt and preferred and common equity. Post close, American Capital owns 67% of the Company, on a fully diluted basis, with members of Redwood's management team owning the remaining balance. "We are pleased to announce our One Stop Buyout(TM) of The Redwood Companies. Redwood is an excellent addition to American Capital's growing portfolio of investments; it is a leading company in a niche market segment with exciting growth opportunities," said American Capital Regional Managing Director Darin Winn. "Once again, we have demonstrated American Capital's ability to provide the entire financing package in a transaction, including senior debt, mezzanine debt and equity, and to quickly bring a transaction to close." American Capital has invested approximately $3.4 billion in the last twelve months and over $500 million year to date. These amounts do not include American Capital's unfunded equity commitment and debt funded to its portfolio company European Capital. For more information about American Capital's portfolio, go to http://www.americancapital.com/our_portfolio/our_portfolio.cfm. "Redwood's management team has guided the Company to leadership positions in providing testing services and products for detecting drugs-of-abuse to the rehabilitation and corrections channels," said American Capital Principal Steve Martinez. "The Company's success is a result of its highly accurate laboratory and on-site test results, exceptional customer support and competitively priced products and services." Headquartered in Santa Rosa, CA, The Redwood Companies consist of three operating entities: Redwood Toxicology Laboratory, Redwood Biotech and PerMaxim. Redwood Toxicology Laboratory is a provider of drugs-of-abuse laboratory testing services, primarily to correctional and rehabilitation centers. Redwood Biotech markets and distributes a variety of high-quality on-site disposable drug testing kits. PerMaxim distributes its RediScreen product line of rapid test kits to the point-of-care market for the detection of drugs-of-abuse and a variety of health-related conditions, including pregnancy and infectious diseases. Redwood provides its services and products to a highly diversified customer base in the correctional, rehabilitation and point-of-care markets. "American Capital is exactly the type of investment partner we were looking for. They were dedicated to understanding our business and objectives and the team operated with integrity throughout the transaction process," said The Redwood Companies President and CEO Bob Mount. "With the strong financial support of American Capital, we will be able to pursue our growth initiatives while continuing to provide outstanding services and products to our existing and future customers." ABOUT AMERICAN CAPITAL American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $7 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, provides capital directly to early stage and mature private and small public companies and through its asset management business is a manager of debt and equity investments in private companies and commercial loan obligations. American Capital provides senior debt, mezzanine debt and equity to fund growth, acquisitions, recapitalizations and securitizations. American Capital invests up to $300 million per transaction. As of February 28, 2006, American Capital shareholders have enjoyed a total return of 404% since the Company's IPO -- an annualized return of 21%, assuming reinvestment of dividends. American Capital has paid a total of $961 million in dividends and paid or declared $19.91 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 http://www.americancapital.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 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. DATASOURCE: American Capital Strategies Ltd. CONTACT: Steve Martinez, Principal, +1-415-591-0120, or Brian Maney, Director, Corporate Communications, +1-301-951-6122, both of American Capital Strategies Ltd. Web site: http://www.americancapital.com/

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