ACAS American Capital, Ltd.

American Capital Invests $60 Million in The Hilsinger Company, Leading Provider of Eyecare Accessories and Supplies BETHESDA, Md., May 12 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. announced today it has invested $60 million in the recapitalization of The Hilsinger Company Inc., the leading provider of eye care accessories and supplies in the U.S. and United Kingdom. American Capital's investment takes the form of senior term debt, a senior secured acquisition line and senior and junior subordinated debt. American Capital is also providing a revolving credit facility. ICV Capital Partners and Palladium Equity Partners LLC are the majority owners of Hilsinger. "The Hilsinger investment is an example of American Capital's ability to provide a cost effective one-stop debt facility in a timely manner," said American Capital COO Ira Wagner. "We look forward to working with ICV and Palladium, both new sponsor relationships for American Capital." American Capital has invested over $1.1 billion in the last twelve months and over $250 million year to date. For more information about American Capital's portfolio, go to http://www.americancapital.com/datacenter/portfolio.html. "Hilsinger markets the industry's broadest line of optical and ophthalmic products," said American Capital Managing Director Robert Klein. "The company is the primary supplier of optical products to major big-box retailers and national optical chains while continuing to maintain low customer concentration, a high degree of geographic diversity and a highly diversified supplier base. In addition, we are backing a management team with a successful growth and acquisition track record." Headquartered in Plainville, MA, and with more than 200 employees, Hilsinger markets and distributes more than 20,000 optical products and accessories to more than 50,000 customers in the US and Europe. The company sells eyewear replacement parts such as nose pads and screws; optical-related consumer products such as lens cleaning and care products; eyewear such as sun clips, sports goggles, and safety glasses; and eyewear dispensing products. In addition, through its Wilson Ophthalmic Inc. subsidiary, the company distributes manufacturer-branded and generic ophthalmic pharmaceuticals, examination products, and surgical products in the U.S. Customers include ophthalmologists, optometrists, opticians, optical distributors, retail optical chains, hospitals and other health care institutions. The company reported revenues last year of approximately $44 million. "Since our acquisition of Hilsinger in May 2003, the company has exceeded our performance expectations. This transaction with American Capital allows us to establish a significantly enhanced capital structure for the company and provides our management team the financial flexibility to pursue future growth," said Tarrus L. Richardson, Managing Director of ICV. "The new facilities we are announcing today will provide the Hilsinger management team with expanded resources to pursue both organic and acquisitive growth," said Marcos A. Rodriguez, a founder and Managing Member of Palladium. "In addition, we are pleased to be returning capital to our limited partners through this transaction, a testament to the strength of Hilsinger's performance. American Capital's diligence, speed, flexibility and creativity made a significant contribution to this transaction, and we look forward to working with American Capital as Hilsinger builds a future of growth." As of April 30, 2004, American Capital shareholders have enjoyed a total return of 213% since the Company's IPO -- an annualized return of 19%, assuming reinvestment of dividends. American Capital has declared a total of $14.52 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 $2.7 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 and equity 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/. ICV Capital Partners is a private investment firm with $130 million of committed capital. ICV focuses on making equity investments in companies with revenues between $25 million and $150 million that have strong market positions and experienced management teams. Portfolio companies include Hilsinger, Sterling Foods Inc., the leader in shelf-stable bakery products for the military and commercial markets, and AAMP of America Inc., a leading developer, marketer, and distributor in the 12-volt mobile audio after-market accessory industry. Additional information about ICV can be found at http://www.icv.com/. Palladium Equity Partners, LLC, is a New York-based private equity firm founded in 1997 by an experienced team of investment professionals and operating executives. The Principals of Palladium have invested over $1 billion of equity capital in over 30 companies in the business services, consumer/retail, food, manufacturing and media industries. Currently the firm manages $231 million of equity capital through Palladium Equity Partners II, L.P. Additional information about Palladium can be found at http://www.palladiumequity.com/. 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 industries in which American Capital has made investments. DATASOURCE: American Capital Strategies Ltd. CONTACT: Robert Klein, Managing Director, +1-212-213-2009; or Brian Maney, Director, Corporate Communications, +1-301-951-6122, both of American Capital Strategies Ltd. Web site: http://www.americancapital.com/ http://www.icv.com/ http://www.palladiumequity.com/

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