American Capital Invests $160 Million in the Acquisition of Spring Air Company by Consolidated Bedding

    BETHESDA, Md., Aug. 8 /PRNewswire-FirstCall/ -- American Capital
 Strategies Ltd. ( ACAS) announced today that on June 25 it invested
 $160 million in Consolidated Bedding Inc. to support its acquisition and
 consolidation of The Spring Air Company ("TSAC") and six of TSAC's
 licensees, including eight manufacturing facilities. Systemwide Spring Air
 sales are over $400 million, making it one of the largest innerspring
 mattress brands in the U.S. Spring Air sells through most major department
 stores, furniture stores and mattress retailers under brand names including
 Spring Air Back Supporter(R), Nature's Rest(R), Chattam & Wells(R), and
 Four Seasons(R). Prior to the transaction, Consolidated Bedding was the
 largest licensee of The Spring Air Company. American Capital's investment
 takes the form of a senior unirate term loan and junior PIK notes. American
 Capital is also providing a revolving credit facility. H.I.G. Capital LLC,
 the equity sponsor and majority owner of Consolidated Bedding, is investing
 in subordinated debt and preferred equity.
     "We are pleased to have the opportunity to partner again with H.I.G.
 Capital, which brings to this transaction its extensive knowledge of the
 bedding industry," said Darin Winn, American Capital Regional Managing
 Director. "Our complete one stop financing package supports the
 consolidation of one of the premier mattress brands. This transaction is
 one of 31 financings completed by our Sponsor Finance Group in 2007 and
 represents a further step in our effort to grow our business of supporting
 the acquisition efforts and growth of portfolio companies of strong
 financial sponsors like H.I.G. Capital."
     American Capital has invested directly and through its funds under
 management over $11 billion in the last twelve months, over $7.6 billion
 year to date and approximately $1.4 billion quarter to date. Not including
 funds under management, American Capital has invested over $8 billion in
 the last twelve months, over $5.7 billion year to date and approximately
 $1.2 billion quarter to date. For more information about American Capital's
 portfolio, go to http://www.acas.com/our_portfolio/our_portfolio.html .
     "Spring Air is a leading brand in an industry driven by population
 growth and largely insulated from economic cycles by consumers' continuing
 mattress replacement needs and their persistent desire to upgrade," said
 Bowen Diehl, American Capital Managing Director, Sponsor Finance. "Spring
 Air's management team, with decades of experience in the bedding industry,
 is ideally qualified to maximize the potential of this strategic merger and
 consolidation."
     "This merger enables Spring Air to realize compelling synergies in
 operations, manufacturing, purchasing and logistics. Consolidating the
 franchisor/franchisee structure will bring more consistent quality and
 service to customers and consumers across the nation," said John Drennan,
 American Capital Vice President, Sponsor Finance. "In addition, the Company
 will benefit from a new unified and coordinated marketing and sales effort
 and a streamlining of the Company's product offerings in each of the
 industry categories."
     Established in 2005 with the merger of Spring Air Partners-North
 America and American Bedding Industries, two TSAC licensees, Consolidated
 Bedding is a leading manufacturer and distributor of mattresses and the
 largest TSAC licensee worldwide. Consolidated Bedding manufactures
 innerspring mattresses in plants in Florida, Texas, California, Ohio and
 New Jersey. The merger adds factories in Washington, Utah, Arizona,
 Colorado, Missouri, Massachusetts, Alabama and Georgia. Its broad range of
 mattresses at all price points are sold through four primary
 channels-furniture, department, specialty sleep and club stores. Spring Air
 will be headquartered in Chicago, IL and will employ nearly 1,150
 employees.
     "We are delighted that American Capital is investing in our portfolio
 company, Consolidated Bedding," said Peter Cornetta, H.I.G. Capital
 Principal. "American Capital, again, demonstrated the ability to understand
 the key merits of a complex strategic transaction, move rapidly to close
 and deliver on its proposed financing package. Its one stop financing
 solution provides efficient support that will enable our management team to
 concentrate on its highest priority-optimally integrating the Spring Air
 Company and its licensees and delivering excellent products and service to
 our customers and consumers."
     ABOUT AMERICAN CAPITAL
     American Capital is the only alternative asset management company that
 is a member of the S&P 500. With $16 billion in assets under management(1),
 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 euro 5 million to euro 500 million per company in Europe.
     As of July 31, 2007, American Capital shareholders have enjoyed a total
 return of 505% since the Company's IPO -- an annualized return of 20%,
 assuming reinvestment of dividends. American Capital has paid a total of
 $1.7 billion in dividends and paid or declared $25.16 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 http://www.AmericanCapital.com or
 http://www.EuropeanCapital.com .
     ABOUT H.I.G. CAPITAL LLC
     H.I.G. Capital LLC ("H.I.G.") is a leading private investment firm with
 over $4 billion of capital under management. H.I.G.'s family of funds
 includes private equity, venture capital, distressed debt, and public
 equities. H.I.G. has invested in and managed more than 100 companies
 worldwide since its founding in 1993, with combined sales in excess of $7
 billion. H.I.G. has offices in Miami, Atlanta, Boston, San Francisco,
 London, Hamburg and Paris.
     (1) Includes American Capital's investment in externally managed funds.
     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.
 
 

SOURCE American Capital Strategies Ltd.