NEW YORK, NY — (MARKET WIRE) — 05/22/06 — Prospect Energy Corporation (NASDAQ: PSEC)(“Prospect”) announced today that Vastardis Compliance Services (“VastardisCompliance”) has informed Prospect that Vastardis Compliance is windingdown its outsourced Chief Compliance Officer (“CCO”) business line to focuson its fund administration and financial reporting businesses. Accordingly,William E. Vastardis will continue as Prospect’s Chief Financial Officer,and Vastardis Compliance will continue providing fund administration andfinancial reporting services to Prospect, but Mr. Vastardis has requestedthat Prospect seek a replacement CCO, preferably targeted to assumecompliance duties by August 1, 2006.
“The CCO roles demand a lot of time and resources and the recent growth ofour fund administration business has been tremendous,” commented Mr.Vastardis. “But I look forward to continuing my relationship with Prospectin our other roles and as a shareholder in the Company, and I willcertainly make myself available to consult with the new CCO as needed,” headded. Mr. John Barry, Prospect CEO, noted that “Prospect will miss Mr.Vastardis’ leadership and performance as CCO, but understands theconstraints that a growing business places on his time. Further, givenProspect’s anticipated growth, it makes sense at this time to hire anin-house CCO to manage such an important function as compliance.”
Separately, Prospect announced that Unity Virginia Holdings, LLC andaffiliates (“Unity”) have filed voluntarily for reorganization underChapter 11 of Title 11 of the United States Code. Unity plans to continueits operations while a restructuring plan is finalized toward an eventualsale of the business. Unity has produced more than 225,000 tons ofmetallurgical and steam quality coal and has processed more than 215,000tons of third-party coal during the past twelve months. Prospect holds$3.58 million of second lien secured debt, representing approximately 3% ofProspect’s asset base. PlainsCapital Bank has provided $4.11 million ofsenior bank debt, which benefits from personal guarantees from Karl Singerand Keller Smith of Unity Platform LP (“Platform”), a Dallas investmentfirm, as well as Coalline, an affiliate of the Bass family. Platform andCoalline have provided more than $8 million of equity capital to Unity.Jim Flores, a senior investment professional with Prospect, said: “With arecent appraisal of $22 million for the properties, our lien on more than$17 million invested in the rampup of Unity’s coal mining operations sinceJanuary 2005, our lien on nearly 12 million tons of third-party engineeredrecoverable metallurgical and steam coal, our lien on a fully functional450 tons per hour preparation plant and loadout facility on the Norfolk &Southern Railway, and our lien on Platform’s nearby Unity Pound River LLCreserves, I am confident that these assets will enable Unity to payProspect full principal and interest.”
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