Allied Capital Invests $52 Million in Leading National Security Contractor

WASHINGTON--(BUSINESS WIRE)--Allied Capital Corporation (NYSE:ALD) announced today that it has invested $52 million of debt in Abraxas Corporation, a leading provider of risk mitigation technologies for the U.S. national security community. Allied Capital’s investment took the form of a senior secured debt facility. The capital was used by the company to support an acquisition, to refinance existing indebtedness and to provide working capital.

Abraxas was founded in 2001 as a specialized contractor with highly skilled capabilities in collection, analysis and technical support to operations. Today, through both organic growth and strategic acquisitions, the company has grown its service offerings to include mission-critical software solutions; design and testing of custom computer chips for unique national security applications; and engineering and technical aviation consulting for unmanned aircraft systems. The company’s latest acquisition, Anonymizer, Inc., is the leading provider of high-end solutions that secure outbound Information Operations for clients within the national security community.

“We have been exploring investment opportunities in the government contracting sector for quite some time,” said John Fruehwirth, Managing Director and Deputy Head of Private Finance for Allied Capital. “Abraxas is an attractive opportunity because of its strong relationships within the national security community and its highly skilled and specialized workforce,” he added.

“We are pleased to have Allied Capital as our new financial partner,” said Richard Helms, Founder and CEO of Abraxas. “Their knowledge of the government contracting space, their partnership approach to investing and their financial strength and commitment to middle market companies make them the ideal partner for us,” he added.

About Allied Capital

Allied Capital is a leading business development company (BDC) in the U.S. that invests private debt and equity capital in middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital is celebrating 50 years of investing in and supporting the U.S. entrepreneurial economy.

Allied Capital provides long-term debt and equity capital for management and sponsor-led buyouts, and for recapitalizations, acquisitions and growth of middle market companies. Allied Capital’s one-stop financing capabilities include first and second lien senior loans, unitranche debt, junior or subordinated debt and equity. Allied Capital seeks to invest in stable, less cyclical companies that produce significant free cash flow and high returns on invested capital. At March 31, 2008, the company’s private finance portfolio included investments in 124 companies that generate aggregate revenues of over $13 billion and employ more than 98,000 people.

Allied Capital provides flexible, competitive debt and equity capital for management and sponsor-led buyouts, recapitalizations, acquisitions and growth of middle market companies. Allied Capital’s seamless, one-stop financing capabilities include first and second lien senior loans, unitranche debt, junior or mezzanine debt and equity.

Headquartered in Washington, DC, Allied Capital offers shareholders the opportunity to participate in the private equity industry through an investment in the company’s New York Stock Exchange-listed stock, which is traded under the symbol ALD. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at (888) 818-5298, or e-mail us at ir@alliedcapital.com.

About Abraxas, Inc.

Abraxas develops special technology and implements trusted unique technical solutions to address the global challenges faced by the National Security community today and those that it will face in the future. Abraxas employs recognized experts to resolve those challenges and skilled engineers to address the product needs working across all technology domains to ensure the delivery of the most advanced comprehensive solutions. For more information, please visit www.abraxascorp.com.

Forward-Looking Statements

The information contained in this press release includes forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated in Allied Capital’s filings with the Securities and Exchange Commission. This press release should be read in conjunction with the company’s recent SEC filings.