NEW YORK, NY — (MARKET WIRE) — 02/01/05 — Prospect Energy Corporation (NASDAQ: PSEC)announced today that it has provided $3,900,000 in financing to UnityVirginia Holdings LLC (“UVH”). The financing is comprised of twofacilities — $3,315,000 in secured subordinated debt and $585,000 inredeemable preferred stock. UVH is a coal mining company located nearNorton, Virginia, owned by the principals of Unity Platform LLC (“Unity”),a Dallas-based coal management and private investment firm with interestsin operating US coal mines.
The funds are being utilized to support UVH’s acquisition and developmentof certain assets of Appalachian Resources, Inc. (“ARI”), including 6,800acres of mineral reserves which contain 11,000,000 estimated tons of coal,as well as a coal preparation plant and loadout facility on the Norfolk &Southern Railway. ARI has been in bankruptcy since early 2004 when theowners of ARI encountered difficulty developing the property due to lack ofaccess to capital and financing. In addition to $1,500,000 in commonequity from Unity and the financing from Prospect, PlainsCapital Bank ofDallas is providing senior secured financing totaling $4,500,000.
James Flores of Prospect Capital Management, investment adviser toProspect, said, “We think this subordinated financing hits Prospect’s sweetspot in terms of structure, yield, and creditworthiness.”
UVH intends to restart coal mining and processing within 90 days through avariety of surface and underground mining operations. The propertycontains significant quantities of low-sulfur and low-ash metallurgicalcoal, a product in high global demand with recently announced pricingsettlements in excess of $125 per ton.
“We are very comfortable to be partnering with Unity — an experienced,successful coal mining team — in this exciting opportunity, and we hope toexpand on this relationship by closing more coal deals with Unity in thefuture,” said John Barry, Prospect’s CEO. “We are looking to partner withmore management teams like Unity’s, management teams that meet ourstandards of excellence. We feel that our patience is rewarded when weclose an investment with a management team of this caliber. We are alsopleased to be making the first coal investment for Prospect. Coal is thelowest cost and most abundant hydrocarbon energy source in the UnitedStates, and, beginning with this initial investment, we at Prospect lookforward to playing a significant financing role in future coal developmentprojects with Unity and others.”
About Prospect Energy Corporation
Prospect Energy Corporation (www.prospectstreet.com/) is a financialservices company that lends to and invests in energy related businesses andassets. Prospect Energy’s investment objective is to generate both currentincome and long-term capital appreciation through debt and equityinvestments.
Prospect Energy has elected to be treated as a business development companyunder the Investment Company Act of 1940 (“1940 Act”). Accordingly, we arerequired to comply with a series of regulatory requirements under the 1940Act as well as applicable NASDAQ, state, and federal rules and regulations.In addition, we have elected to be treated as a regulated investmentcompany under the Internal Revenue Code of 1986 (“Code”). The Codespecifies certain quarterly asset diversification and annual source ofincome requirements. To the extent we remain in compliance with theapplicable provisions of the Code, we will not be required to paycorporate-level taxes on any income that we earn. To the extent we do notqualify as elected, corporate-level taxes may be imposed upon our netincome.
This press release contains forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. Forward-lookingstatements involve risks and uncertainties, including, but not limited to,statements as to our future operating results; our business prospects andthe prospects of our portfolio companies; the impact of investments that weexpect to make; the dependence of our future success on the general economyand its impact on the industries in which we invest; the ability of ourportfolio companies to achieve their objectives; our expected financingsand investments; the adequacy of our cash resources and working capital;and the timing of cash flows, if any, from the operations of our portfoliocompanies.
We may use words such as “anticipates,” “believes,” “expects,” “intends”,”will,” “should,” “may,” “hope” and similar expressions to identify forward-looking statements. Such statements are based on currentlyavailable operating, financial and competitive information and are subjectto various risks and uncertainties that could cause actual results todiffer materially from our historical experience and our presentexpectations. Undue reliance should not be placed on such forward-lookingstatements as such statements speak only as of the date on which they aremade. We do not undertake to update our forward-looking statements unlessrequired by law.
Contact:Please send investment proposals to:Prospect Energy CorporationJohn Barryjbarry@prospectstreet.com212-448-0702Grier Eliasekgrier@prospectstreet.com212-448-0702