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[ALLIED CAPITAL LETTERHEAD]
Allied Capital Corporation
Allied Capital Corporation II
Allied Capital Commercial Corporation
Allied Capital Lending Corporation
Allied Capital Advisers, Inc.
November 4, 1997
Dear Stockholder:
As you know, the Allied Capital companies listed above have agreed to merge,
and your Board of Directors has recommended that you vote to approve the
merger. The merger will create a company that is larger, more efficient and
more competitive, with greater potential to grow assets and earnings available
for dividends.
As of the date of this letter, the combined market value of the five companies
has increased by more than 20% since the date we announced the merger.
Management believes that the approval and completion of the merger, anticipated
to be on December 31, 1997, will enhance the company's market liquidity and
visibility.
A SPECIAL MEETING OF STOCKHOLDERS TO APPROVE THE MERGER PROPOSAL IS SCHEDULED
FOR NOVEMBER 26, 1997. A joint proxy statement/prospectus was delivered to you
recently, but to date we have not received your vote. YOUR VOTE IS VERY
IMPORTANT. If we do not receive your vote, your shares will be counted as
voting against the merger. THE BENEFITS OF THE MERGER WILL NOT OCCUR UNLESS
TWO-THIRDS OF THE SHARES OUTSTANDING OF EACH OF THE MERGING COMPANIES VOTE IN
FAVOR.
For your convenience, we have provided three easy methods by which you may
register your vote:
1. BY TELEPHONE: Simply call toll free (800) 733-8481, Extension
405. Operators are available to take your vote
Monday through Friday between the hours of 9:00
AM and 11:00 PM eastern time.
2. BY FAX: Fax your executed proxy card(s) to us toll free
at (800) 733-1885 anytime.
3. BY MAIL: Return your executed proxy card(s) in the
enclosed postage paid envelope.
I urge you to act promptly so that we may obtain a sufficient number of votes
to hold the meeting as scheduled and avoid any possible need to adjourn. Please
note that if you hold shares in more than one of the Allied Capital companies,
or in more than one account, you have received multiple proxy cards. PLEASE
VOTE WITH EACH PROXY CARD YOU HAVE RECEIVED.
If you have questions about the merger proposal, you are encouraged to contact
us toll free at (888) 818-5298. Your prompt attention to this matter benefits
all stockholders.
Sincerely,
/s/ Bill Walton
William L. Walton
Chief Executive Officer
