WASHINGTON--(BUSINESS WIRE)--Jan. 22, 2007--Allied Capital commented today on a letter that was sent to Allied Capital's Board of Directors by short-seller David Einhorn. Allied Capital believes that Mr. Einhorn and his hedge fund, Greenlight Capital, are not shareholders of the Company but have for a long time maintained a large short position in Allied Capital. Today's letter is yet another example of his long-running attempts to manipulate the price of Allied Capital's stock to increase the value of Greenlight Capital's short position.

Allied Capital's Board of Directors is keenly aware of its fiduciary responsibilities to the Company's shareholders. Allied Capital finds it ironic that Mr. Einhorn claims to be speaking on behalf of shareholders' interests, when he continues to work against those interests and may profit from declines in the Company's stock price.

Throughout the nearly five years of attacks, Mr. Einhorn has made numerous misleading allegations, typified by today's letter. The financial performance of Allied Capital over the past five years is the most eloquent response to Mr. Einhorn's allegations. Allied Capital generated an average annual total return for shareholders for the five years ended December 31, 2006 of 14.3% including dividends to shareholders totaling $1.46 billion over the same period. While Mr. Einhorn busied himself with repeated attacks against Allied Capital over the last five years, Allied Capital's Board of Directors and management have maintained their focus on creating shareholder value and building the Company.

Allied Capital requests that Mr. Einhorn publicly come forward with full disclosure of his financial interests in the Company over the last five years, so that his financial incentive behind his attacks is known. Allied Capital and its Board of Directors are exploring potential alternatives to address the damage caused by Mr. Einhorn to this Company and its shareholders.

About Allied Capital

Allied Capital Corporation, a leading business development company with total assets of more than $4 billion, has paid regular, quarterly cash dividends to shareholders since 1963. Allied Capital invests in the American entrepreneurial economy by providing capital to companies seeking a long-term financial partner and access to managerial resources often unavailable to smaller companies. Since its IPO in 1960, Allied Capital has provided long-term debt and equity financing to thousands of middle market companies. In serving its shareholders, Allied Capital helps build middle market businesses and support American jobs. The Company's private finance portfolio includes investments in over 100 companies that generate aggregate revenues of more than $12 billion and employ more than 85,000 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.

Forward-Looking Statements

The information contained in this press release contains 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 some of these factors are enumerated in Allied Capital's periodic filings with the Securities and Exchange Commission.

CONTACT: Investor Relations:
Allied Capital Corporation
Dale Lynch, 202-721-6100
or
Media:
Sitrick and Company Inc.
Tom Becker, 212-573-6100

SOURCE: Allied Capital Corporation