NEW YORK, NY — (MARKET WIRE) — 04/14/05 — Prospect Energy Corporation (NASDAQ: PSEC)(“Prospect”) announced today that it has provided $4.9 million of seniorsecured debt and preferred equity financing to Whymore Coal Company(“Whymore”), a coal production company based in London, Kentucky, throughWhymore’s affiliate C&A Construction Co., Inc. Whymore is a member ofKentucky’s Small Operator Assistance Program, which provides benefits tooperators with good reclamation histories.
Whymore owns more than 1.5 million tons of proven high quality surface coalreserves across 500 acres in the River Gem, DeWitt, Hubbs Creek, and HookerBranch mining areas of southern Kentucky in Knox and Whitley Counties.Whymore also has rights to mine on an additional 5,000 acres. Much of thereserve base is already permitted. Prospect’s investment is secured byequipment and mineral assets, has attached preferred equity participationrights, and will be used to repay an existing loan and to fund theacquisition of mining equipment required to produce from the target miningareas. Whymore has contractually arranged to sell all its coal for fixedprices through the first year of production.
Whymore is led by Bruce Davis and Edward Tincher, experienced coalprofessionals in Appalachia. Davis’s previous coal experience includesserving as President of Invesco International and President of Benafuels,Inc., while Tincher has run Whymore Coal since 1988 and is a director ofthe Kentucky Bond Pool.
“Given their coal industry expertise and responsiveness, Prospect is thepreferred partner for middle-market coal companies,” said Davis.
“We continue to perceive the coal sector to be an excellent place to investwithin the energy industry,” said John Barry, Prospect’s Chairman and CEO.”We have now closed two coal investments, and we welcome the opportunity toinvest in similarly attractive opportunities.”
About Prospect Energy Corporation
Prospect Energy Corporation (www.prospectenergy.com) is a closed-endinvestment company that lends to and invests in energy-related businessesand assets. Prospect Energy’s investment objective is to generate bothcurrent income and long-term capital appreciation through debt and equityinvestments. Since completing its initial public offering in July 2004, thecompany has invested in Gas Solutions, an East Texas gas gathering andprocessing business; Unity Virginia Holdings, a Virginia coal miningoperator; Natural Gas Systems, a Texas oil and gas production company;Stryker Energy II, LLC, an Appalachian oil and gas production company basedin Cleveland, Ohio; and Whymore Coal Company, a Kentucky coal miningoperator.
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 identifyforward-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.com(212) 448-0702Grier Eliasekgrier@prospectstreet.com(212) 448-0702