NEW YORK, NY — (MARKET WIRE) — 04/25/06 — Prospect Energy Corporation (NASDAQ: PSEC)(“Prospect”) announced today that it has made an $8 million senior secureddebt investment in Central Illinois Energy, LLC (“CIE”), an ethanolproduction company based in Buckheart Township in Fulton County, Illinois.
CIE is constructing a 37 million gallon per year ethanol and distillersgrain production facility, expected to go into service in 2007. Themajority equity owner of the project is an agricultural cooperative of cornfarmers, who have agreed to subordinate their future corn prices to theproject in favor of debt service to the lenders. In addition, the projectwill be a low-cost facility with energy requirements met with contractedwaste coal in the vicinity of the plant. CIE has negotiated turn-key,fixed-price, date-certain engineering, procurement, and constructioncontracts for the facility. The project has an excellent location withaccess to the Illinois River, roads, and rail, as well as more than 85million bushels of corn harvested annually in the three countiessurrounding the project.
Prospect’s investment, together with other co-investors, is part of anapproximately $88 million senior secured facility, secured by equipment,contracts, and other assets. Approximately $29 million of junior equity isalso being invested into the CIE project.
CIE is led by its General Manager, Michael W. Smith. Mr. Smith, who hassponsored the project development for several years, has been activelyinvolved in farming in the vicinity of the facility since 1984. Hepreviously worked at MidAmerican National Bank in agriculture and othercommercial lending.
“The Prospect team impressed us with their deep knowledge regarding theethanol and clean fuels markets,” said Smith.
“The CIE investment represents our second clean energy investment,” saidRichard Brand, a senior investment professional with Prospect CapitalManagement. “We recognize the rapid growth in the clean energy market andare actively reviewing other transactions in the ethanol, biodiesel, wind,solar, geothermal, hydroelectric, energy efficiency, advanced battery, andother clean energy markets.”
ABOUT PROSPECT ENERGY CORPORATION
Prospect Energy Corporation (www.prospectenergy.com) is a closed-endinvestment company that lends to and invests in energy-related businesses.Prospect Energy’s investment objective is to generate both current incomeand capital appreciation through debt and equity investments.
Prospect Energy has elected to be treated as a business development companyunder the Investment Company Act of 1940 (“1940 Act”). We are required tocomply with a series of regulatory requirements under the 1940 Act as wellas applicable NASDAQ, federal and state laws and regulations. We haveelected to be treated as a regulated investment company under the InternalRevenue Code of 1986. Failure to comply with any of the laws andregulations that apply to Prospect Energy could have a material adverseeffect on Prospect Energy 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:Prospect Energy CorporationJohn BarryChairman and Chief Executive Officerjbarry@prospectstreet.comGrier EliasekPresident and Chief Operating Officergrier@prospectstreet.com(212) 448-0702