SOURCE: Prospect Capital Corporation

Prospect Capital Corporation

June 18, 2010 17:45 ET

Prospect Capital Closes Additional Senior Secured Debt Investment, Announces Change From Quarterly to Monthly Cash Distributions to Shareholders, and Declares the 23rd, 24th, and 25th Consecutive Distributions of the Company

NEW YORK, NY--(Marketwire - June 18, 2010) -  Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect" or "Company") announced today that Prospect has made a senior secured investment of $6 million in a leading private-equity-owned provider of services to the steel products industry.

In addition, Prospect announced today a change from quarterly to monthly cash distributions to shareholders. The Company has declared monthly cash distributions in the following amounts and with the following dates:

10.000 cents per share for June 2010 (record date of June 30, 2010 and payment date of July 30, 2010);

10.025 cents per share for July 2010 (record date of July 30, 2010 and payment date of August 31, 2010); and

10.050 cents per share for August 2010 (record date of August 31, 2010 and payment date of September 30, 2010).

These distributions mark the Company's 23rd, 24th, and 25th consecutive distributions.

In addition, due to prior distributions and the accretion generated from the tax-free stock merger with Patriot Capital Funding, Inc. in December 2009, the Company currently expects more than 20% of distributions in calendar year 2010 to be characterized as distributions without income tax liability for shareholders.

"Given the attractive environment for investment opportunities, we are adjusting our distributions to retain capital for reinvestment," said John F. Barry III, Chairman and Chief Executive Officer of Prospect. "We have closed numerous transactions in the past several weeks, and we currently enjoy a pipeline of term sheets and other future potential opportunities more robust than in the past."

ABOUT PROSPECT CAPITAL CORPORATION

Prospect Capital Corporation (www.prospectstreet.com) is a closed-end investment company that lends to and invests in private and microcap public businesses. Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

We have elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). We are required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state rules and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to us could have an adverse effect on us and our shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under our control, and that we may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future. Such statements speak only as of the time when made, and we undertake no obligation to update any such statement now or in the future.