Ciena Capital LLC Voluntarily Files for Bankruptcy Protection

Allied Capital (NYSE: ALD) announced that Ciena Capital LLC, a portfolio company of Allied Capital, voluntarily filed for bankruptcy protection today. Ciena has continued to experience significant deterioration in the value of its assets as a result of increasing uncertainty in the financial markets, decreasing bid prices and a reduction in the number of loan buyers. Ciena, therefore, believes that the value of its assets is insufficient to cover all of its liabilities and it is insolvent. Ciena believes that by filing for bankruptcy protection it will be able to proceed with an orderly sale of its assets over time in more favorable market conditions in the future and thereby maximize the value of its assets and reduce costs in order to repay its debts.

Ciena filed a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Court”). Ciena will continue to operate its servicing business and manage its assets as a “debtor-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Court.

As a result of Ciena’s decision to file for bankruptcy protection, Allied Capital’s unconditional guaranty of the obligations outstanding under Ciena’s revolving credit facility may become due. Allied Capital intends to pay approximately $320 million to the lenders in connection with Ciena’s revolving credit facility and will continue to guarantee a remaining balance of approximately $10 million. To fund the payment, Allied Capital intends to use cash resources of approximately $150 million and may borrow approximately $170 million on its unsecured revolving line of credit. Allied Capital will become a senior secured lender to Ciena.

At September 30, 2008 and after giving effect to money paid in connection with the guarantee, Allied Capital estimates that it will maintain approximately $200 million in cash and other liquid securities and will have borrowings of approximately $170 million under its line of credit. In addition, Allied Capital has approximately $124 million in standby letters of credit under its line of credit, including standby letters of credit totaling approximately $103 million in connection with term securitization transactions completed by Ciena. Allied Capital is currently in negotiations regarding the provision of a debtor-in-possession credit facility for Ciena.

The values of Ciena’s assets have continued to decline as credit markets and the economy have deteriorated. As a result, Allied Capital currently expects that it will record substantial further unrealized depreciation in the value of its investment in Ciena for the quarter ending September 30, 2008. Allied Capital believes that through the bankruptcy process Ciena will avoid having to sell its assets in today’s unfavorable market conditions, and will instead be able to service and maximize the sales value of its assets, which in turn will allow for a maximum recovery for all creditors, including Allied Capital for any amounts paid under the guaranty. Allied Capital will not realize a loss on its investment in Ciena solely as a result of the bankruptcy filing; however, the amount and timing of any future realized loss on its investment in Ciena will depend on future asset sales, future market conditions and the outcome of Ciena’s bankruptcy proceedings.

About Allied Capital

Allied Capital (NYSE: ALD) is a leading business development company (BDC) in the U.S. that invests long-term 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 the U.S. entrepreneurial economy. With approximately $5 billion in total balance sheet assets at June 30, 2008, Allied Capital is among the largest BDCs with a diverse portfolio of investments in 120 companies across a variety of industries. These companies generate aggregate revenues of over $13 billion and employ more than 98,000 people. In addition to its own balance sheet assets, Allied Capital manages private funds with committed capital totaling $5 billion, and has investments in portfolio companies that manage assets totaling approximately $6 billion. For more information, please visit www.alliedcapital.com, call Allied Capital investor relations toll-free at (888) 818-5298, or e-mail us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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.

Investor Relations Inquiries:
Allied Capital Corporation
Shelley Huchel, 202-721-6100
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