NEW YORK, NY — (MARKET WIRE) — 09/28/05 — Prospect Energy Corporation (NASDAQ: PSEC)(“Prospect”) announced today that it has provided $10.75 million of seniorsecured debt financing to Worcester Energy Partners, Inc. (“WECO”), a woodprocessing and biomass power generation business based in Deblois, Maine.
WECO is a privately owned renewable energy company that operates a woodharvesting and chipping business as well as a newly refurbished 25.85megawatt wood-fired power plant. Built in 1988, the plant has operatedintermittently over the past decade and recently has been recommissionedfor baseload operations. The wood harvesting and chipping business hasaccess to more than 16,000 acres of wood fuel, and the plant has long-termcontracts for the sale of electricity as well as renewable energy credits.
Prospect’s funding has been utilized to refinance existing debt and toprovide working capital to re-initiate plant operations. Prospect isreceiving a significant equity ownership position in WECO as part of theinvestment, including a minimum internal rate of return on Prospect’sinvestment.
“We are pleased to be embarking on a business relationship with Prospect’sprofessionals, who have significant experience in the energy and renewablepower generation markets,” said Morrill Worcester, CEO of WECO.
“The WECO investment reflects our strong interest in the renewable powergeneration sector, which is currently experiencing significant growth,”said Jim Flores, a senior investment professional who assisted Prospectwith the WECO investment. “In addition to biomass, we are also interestedin other renewable power sectors, including wind, solar, geothermal, hydro,and waste-to-energy. WECO, as well as other future possible downstreampower investments, will further diversify Prospect’s portfolio.”
With the WECO investment, as well as a recently completed follow-oninvestment of $300,000 of senior secured debt financing to Whymore CoalCompany (“Whymore”), for which we received additional equity, we areapproximately 76% invested in our target long-term investments. We expectthat these transactions, together with our other investments announced inthe present quarter, including a previous follow-on investment in Whymore,a follow-on investment in Stryker Energy II, LLC, and an investment inArctic Acquisition Corp., in the aggregate will add approximately $0.12 pershare contribution to Interest Income on a quarterly basis, provided allinterest payments are made on a timely basis in accordance with the termsand conditions of the agreements with these four companies, and notincluding the monetization of or dividends from any equity positions inthese investments.
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-based oil and gas productioncompany; Stryker Energy II, LLC, an Appalachian oil and gas productioncompany based in Cleveland, Ohio; Whymore Coal, a Kentucky coal miningoperator; Miller Petroleum, a Tennessee oil and gas production company;Arctic Acquisition Corp., a Texas-based oilfield services company; andWorcester Energy Company, Inc., a Maine wood processing and biomass powergeneration company.
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