American Capital Provides Up to $52.5 Million to Gibson Guitar

American Capital Provides Up to $52.5 Million to Gibson Guitar

BETHESDA, Md., Sept. 8 /PRNewswire-FirstCall/ -- American Capital Strategies Ltd. (NASDAQ:ACAS) announced today it has provided financing facilities of up to $52.5 million to Gibson Guitar Corp., a well-known designer, manufacturer, marketer and distributor of electric and acoustic guitars, bass guitars, banjos and mandolins, pianos, drums, keyboards, electronically synthesized instruments and a variety of instrument-related products and accessories, including amplifiers, speakers, string picks and straps. American Capital's financing facilities take the form of second lien notes and a second lien committed acquisition line. Bank of America is providing a revolving credit facility and investing in senior term debt. Gibson's current owners are maintaining their 100% equity ownership.

"We are delighted to support the development of a music industry icon," said American Capital Chief Operating Officer Ira Wagner. "Our ability to directly invest capital in middle market companies is critical to their success. At Gibson, we are backing an excellent management team with substantial company ownership that has produced an enviable track record of growth and strong cash flows."

American Capital has invested over $2.8 billion in the last twelve months, over $1.9 billion year to date and $636 million quarter to date. For more information about American Capital's portfolio, go to http://www.americancapital.com/our_portfolio/our_portfolio.cfm.

"Gibson sells some of the most recognized brand names in the musical instruments industry," said American Capital Managing Director Jeff MacDowell. "Both Henry Juszkiewicz, Chairman and CEO, and David Berryman, President, are highly motivated individuals, dedicated to maintaining the Company's leading position and taking it to another level by capitalizing on growth opportunities at home and abroad."

"Worldwide demand for Gibson products is extremely high. This financing will give Gibson flexibility as it continues to grow both organically and through acquisitions", said American Capital Vice President John Drennan.

Orville Gibson made his first guitar in 1894. Over 100 years later, the Company now employs approximately 1,750 people and has its headquarters in Nashville, TN. Gibson produces some of the most recognized guitar models in the world, including the Les Paul, Flying V, ES-175, ES-335, Explorer, Firebird and SG. Further, some of the most famous guitar players in history play Gibson guitars, including BB King, Jimmy Page, Chet Atkins, Slash and Joe Perry. The Company's product offering includes electric and acoustic guitars, specialty guitars and fretted instruments; string, pickups and accessories; and pianos. Through the Gibson product line the Company markets over 500 different models of premium-priced guitars and, through the Epiphone product line, over 140 different models of moderately priced guitars. The Company also markets over 50 different medium-priced models of guitars under the Kramer brand and over 75 specialty guitar models and other fretted instruments through its Steinberger, Toby, Flatiron and Dobro brands. In addition, Gibson markets grand pianos, vertical pianos and innovative computerized player piano systems under the Baldwin, Hamilton, Ellington, Wurlitzer and Chickering brand names. In 2005, Gibson began marketing over 20 youth-oriented, entry-level guitar models, other instruments and accessories through Gibson Baldwin Music Education under the brands Maestro, Signature and Genisis.

ABOUT AMERICAN CAPITAL

American Capital is a publicly traded buyout and mezzanine fund with capital resources of approximately $5.4 billion. American Capital invests in and sponsors management and employee buyouts, invests in private equity buyouts, and provides capital directly to private and small public companies. American Capital provides up to $250 million of senior debt, mezzanine debt and equity to fund growth, acquisitions and recapitalizations.

As of August 31, 2005, American Capital shareholders have enjoyed a total return of 411% since the Company's IPO -- an annualized return of 23%, assuming reinvestment of dividends. American Capital has paid a total of $787 million in dividends and paid $18.29 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.

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.

Source: American Capital Strategies Ltd.

CONTACT: Jeff MacDowell, Managing Director, +1-214-273-6633; John
Drennan, Vice President, +1-214-273-6636; or Brian Maney, Director, Corporate
Communications, +1-301-951-6122, all of American Capital Strategies Ltd.

Web site: http://www.americancapital.com/
http://www.americancapital.com/our_portfolio/our_portfolio.cfm

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