NEW YORK, NY — (MARKET WIRE) — 06/10/08 — Prospect Capital Corporation (NASDAQ: PSEC)(“Prospect”) announced today that Deep Down, Inc. (“Deep Down”) has repaidProspect’s $12 million loan.
Prospect has realized to date an approximately 29% cash-on-cash internalrate of return (“IRR”) on the Deep Down investment, representing a 1.2times cash-on-cash multiple, from a prepayment premium of approximately$450 thousand, upfront fees, and interest. In addition, Prospect still ownsa warrant to purchase approximately 5.0 million shares of Deep Down commonstock at an exercise price of $0.507 per share. If Prospect were toexercise the warrant and sell those shares at the June 6, 2008, $1.20 pershare closing stock price of Deep Down, representing an in-the-money valueof approximately $3.5 million, Prospect would have a total cash-on-cashinternal rate of return (“IRR”) of approximately 83%, representing a 1.4times cash-on-cash multiple.
Deep Down represents the eighth successful realization to date inProspect’s portfolio. These eight realizations have averaged anapproximately 53% IRR and 1.5 timescash-on-cash multiple for Prospect. These returns do not include equityinterests still held by Prospect in three of the eight portfolio companiesthat have yet to be monetized.
“The Deep Down investment is a great example of how Prospect can providetime-sensitive capital to world-class management teams at growingcompanies,” said Mark Hull, a Vice President at Prospect CapitalManagement. “We look forward to more successful relationships andinvestments like Deep Down.”
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