ACAS American Capital, Ltd.

American Capital Invests $13 Million in Leading Interior Design Service Provider BETHESDA, Md., April 1 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. announced today it has invested $13 million in Interior Specialists Inc. ("ISI"), a leading provider of outsourced interior design and installation services for homebuilders in the Southwestern U.S. American Capital's investment takes the form of senior subordinated debt. The investment supports the acquisition of Interior Specialists by KRG Capital Partners LLC. The revolving credit facility and senior term loans were provided by Madison Capital Funding LLC and Harris Bank. KRG Capital, Madison Capital, and ISI management are also investing in redeemable preferred equity. "We are excited to have the opportunity to invest in our eighth KRG Capital platform, supporting the growth of ISI, a leader in the highly fragmented interior design services industry," said American Capital COO Ira Wagner. "With increasing activity in the M&A market, private equity funds are turning to reliable and experienced investment partners for mezzanine funding. We believe our strong market position, funding capability and investment expertise in a wide range of industries placesus in an excellent position to capitalize on this trend." American Capital has invested more than $1.1 billion in the last twelve months and over $100 million year to date. For more information about American Capital's portfolio, go to http://www.americancapital.com/our_portfolio/our_portfolio.cfm. "ISI is one of the five largest independent interior design service providers in the U.S., with strong market share in some of the most attractive regional markets in the country and benefiting from favorable demographic trends," said American Capital Principal and Managing Director Darin Winn. "ISI's success can be attributed to its strong delivery and installation performance, the high level of service it provides to home buyers, and the overall value proposition it offers to both home builders and home buyers alike. ISI allows homebuilders to focus more upon their core competencies, such as land acquisition and project management, while ensuring that the homebuilders' customers are pleased with their new homes, bolstering the homebuilders' performance ratings and reputation in the marketplace. ISI also allows the homebuilder to maximize their return on investment through increased sales of upgraded home interior products, while providing the homebuilder access to the highest quality labor, minimizing time to closing and funding of the home sale. We know from past investments with KRG that ISI will build upon its customer-centric business model and identify areas to further enhance its product and service offering to the customer, the homebuilder and homebuyer." Founded in 1983, Carlsbad, CA-headquartered Interior Specialists is one of the largest interior design service providers in the United States. Through its professional designersand installers, ISI provides homebuyers with the entire "colorized" design service, including professional assistance on style and pattern selection, access to instant diagrams and real time pricing on interior selections. ISI then provides homebuilders with material sourcing, complete installation and inspection. ISI also provides homebuyers interior products including flooring, window coverings, countertops and other interior options such as entertainment centers and lighting systems. With 16 strategically located design centers in Southern California, Las Vegas and Arizona and over 200 employees, ISI has seen sales increase more than 20% in the past year. "Having worked with American Capital on previous investments, we knew we could once again turn to them for their flexible financing, highly-regarded investment expertise and capability to quickly bring a transaction to close," said KRG Capital Partners Managing Director Chuck Hamilton. "With the strong backing of all our investment partners, we can support ISI as it expands its product and service offerings and enters new geographic markets." As of March 31, 2003, American Capital shareholders have enjoyed a total return of 296% since the Company's IPO -- an annualized return of 23%, assuming reinvestment of dividends. American Capital has declared a total of $13.82 per share in dividends since its August 1997 IPO. American Capital is a publicly traded buyout and mezzanine fund with capital resources in excess of $2.5 billion. American Capital is an investor in and sponsor of management and employee buyouts; invests in private equity sponsored buyouts, and provides capital directly to private and small public companies. American Capital provides senior debt, mezzanine debt andequity to fund growth, acquisitions and recapitalizations. Companies interested in learning more about American Capital's flexible financing should contact Mark Opel, Principal, at (800) 248-9340, or visit our website at http://www.americancapital.com/. KRG Capital specializes in acquiring and recapitalizing unique and profitable middle-market companies. Through its $450 million Fund II, KRG seeks investment opportunities where the KRG professionals can work in concert with the owners and operating managers who are committed to expanding their companies and becoming industry leaders. 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 or national economic conditions, or changes in the conditions of the industriesin which American Capital has made investments. DATASOURCE: American Capital Strategies Ltd. CONTACT: Darin Winn, Principal and Managing Director, +1-214-273-6650, 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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