NEW YORK, NY — (MARKET WIRE) — 12/02/09 — Prospect Capital Corporation (NASDAQ: PSEC)(“Prospect,” “we,” “us” or “our”) announced today that it has completed theacquisition of Patriot Capital Funding, Inc. (“Patriot”) whereby Patriotmerged with and into Prospect, pursuant to the Agreement and Plan of Merger(the “Merger Agreement”) by and between Prospect and Patriot, dated August3, 2009 (the “Merger”).
Immediately prior to the consummation of the Merger, Patriot paid a finaldistribution to its shareholders in an amount equal to its undistributednet ordinary income and capital gains through December 2, 2009, pursuant tothe terms of the Merger Agreement. The amount of the final dividend was$0.38 per share and was paid 10% in cash and 90% in newly issued shares ofPatriot common stock. The total cash distributed was $821,000 and anadditional 1,862,862 shares of Patriot common stock were issued. The sharesof Patriot common stock issued in connection with the final distributionwere converted into shares of Prospect common stock in accordance with theterms of the Merger Agreement.
Also immediately prior to the consummation of the Merger, outstandingshares of Patriot restricted stock became fully vested and all restrictionswith respect to such shares of restricted stock lapsed. A number of sharesof restricted stock were cancelled in exchange for a cash payment byProspect in an amount to cover tax obligations of the holders of therestricted stock. All shares of restricted stock participated in the Mergeron the same basis as all outstanding shares of Patriot common stock.
All outstanding Patriot stock options were cancelled in exchange for apayment in cash of $0.01 per share of common stock underlying the stockoptions.
Pursuant to the terms of the Merger, each outstanding share of common stockof Patriot, after adjusting for the restricted share cancellation and theshares issued in conjunction with distribution described above, wasconverted into the right to receive 0.363992 shares of Prospect commonstock, resulting in the conversion to approximately 8,444,000 newly issuedshares of Prospect common stock, subject to adjustment for fractionalshares to be paid in cash. Prospect now has approximately 63.35 millionshares outstanding.
At the Merger, Prospect repaid the outstanding amount of the Patriot creditfacility totaling $107.3 million through cash on hand and $60 million drawnon Prospect’s previously undrawn credit facility.
“We are delighted to close this acquisition for mutual benefit of Prospectand Patriot shareholders,” said Grier Eliasek, President and ChiefOperating Officer of Prospect. “As previously disclosed, we have an activepipeline of new originations as well as other potential portfolioacquisitions, including a sizeable portfolio under negotiation about whichwe hope to disclose more details in the weeks to come.”
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. Our investment objective is to generate both current income andlong-term capital appreciation through debt and equity investments.
We have elected to be treated as a business development company under theInvestment Company Act of 1940 (“1940 Act”). We are required to comply witha series of regulatory requirements under the 1940 Act as well asapplicable NASDAQ, federal and state rules and regulations. We have electedto be treated as a regulated investment company under the Internal RevenueCode of 1986. Failure to comply with any of the laws and regulations thatapply to us could have an adverse effect on us and our shareholders.
This press release contains forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995, whose safe harborfor forward-looking statements does not apply to business developmentcompanies. Any such statements, other than statements of historical fact,are highly likely to be affected by other unknowable future events andconditions, including elements of the future that are or are not under ourcontrol, and that we 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 we undertake noobligation to update any such statement now or in the future.