NEW YORK, NY — (MARKET WIRE) — 10/01/08 — Prospect Capital Corporation (NASDAQ: PSEC)(“Prospect”) announced today that IEC Systems LP (“IEC”) and Advanced RigServices LLC (“ARS”) have purchased Prospect’s net profits interests(“NPIs”) in IEC and ARS for a combined $12.6 million, equivalent toapproximately 43 cents per Prospect share of incremental revenue toProspect. As of September 30, 2008, Prospect has earned an 86% internalrate of return on its combined investments in IEC and ARS.
IEC and ARS originally issued these NPIs to Prospect when Prospect loaned acombined $25.6 million to IEC and ARS on November 20, 2007. In conjunctionwith yesterday’s NPI realization, Prospect simultaneously reinvested the$12.6 million as incremental senior secured debt in IEC and ARS. Theincremental debt will amortize over the period ending November 20, 2010,thereby allowing for continued growth of these two companies. Prospect’sloans to IEC and ARS are cross-collateralized and cross-guaranteed.
“The IEC and ARS management teams have more than doubled combined operatingcash flow since our November 2007 investment,” said Bart J. de Bie,Managing Director of Prospect Capital Management. “We are impressed withthis performance, and look forward to continuing to support that growth asa lender to these companies.”
Founded in 1991, IEC provides a full suite of electrical products andservices to the drilling rig industry. Primary activities for IEC includeelectrical system design, installation, and repair; silicon controllerrectifier and variable frequency drive system manufacturing and repair; andelectrical parts distribution. Founded in 2005, ARS provides completerig-up services, including fabrication and procurement of rig components aswell as assembly and testing of rigs. Both IEC and ARS have significant andgrowing sales in offshore and international markets. IEC and ARS are led byStephen Cope, founder and Chief Executive Officer of both companies.
ABOUT PROSPECT CAPITAL CORPORATION
Prospect Capital Corporation (www.prospectstreet.com/) is a closed-endinvestment company that lends to and invests in private and microcap publicbusinesses. Prospect Capital’s investment objective is to generate bothcurrent income and capital appreciation through debt and equityinvestments.
Prospect Capital has elected to be treated as a business developmentcompany under the Investment Company Act of 1940 (“1940 Act”). We arerequired to comply with a series of regulatory requirements under the 1940Act as well as applicable NASDAQ, federal and state laws and regulations.We have elected to be treated as a regulated investment company under theInternal Revenue Code of 1986. Failure to comply with any of the laws andregulations that apply to Prospect Capital could have a material adverseeffect on Prospect Capital and its shareholders.
This press release contains forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. Any suchstatements, other than statements of historical fact, are likely to beaffected by other unknowable future events and conditions, includingelements of the future that are or are not under the Company’s control, andthat the Company may or may not have considered; accordingly, suchstatements cannot be guarantees or assurances of any aspect of futureperformance. Actual developments and results are highly likely to varymaterially from these estimates and projections of the future. Suchstatements speak only as of the time when made, and the Company undertakesno obligation to update any such statement now or in the future.
Please send investment proposals to:Grier EliasekPresident and Chief Operating OfficerEmail Contact(212) 448-9577