SOURCE: Prospect Energy Corporation

August 28, 2006 09:15 ET

Prospect Energy Corporation Closes Public Offering of Common Stock Including Over-Allotment Option

NEW YORK, NY -- (MARKET WIRE) -- August 28, 2006 -- Prospect Energy Corporation (NASDAQ: PSEC) ("Prospect") announced that it has completed a public offering of 5,716,650 shares of common stock (including 745,650 shares pursuant to the exercise in full by the underwriters of their over-allotment option) at $15.30 per share, raising $87,464,745 in gross proceeds. Prospect expects to use the net proceeds of this offering to repay outstanding indebtedness, to fund investments in portfolio companies and for general corporate purposes.

Morgan Keegan & Company, Inc. managed the offering, with the following co-managers: Ferris, Baker Watts, Incorporated, Oppenheimer & Co. Inc., D.A. Davidson & Co., and Sterne, Agee & Leach, Inc.

ABOUT PROSPECT ENERGY CORPORATION

Prospect Energy Corporation (www.prospectenergy.com) is a closed-end investment company that lends to and invests in energy-related businesses. Prospect Energy's investment objective is to generate both current income and capital appreciation through debt and equity investments.

Prospect Energy has 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 laws 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 Prospect Energy could have a material adverse effect on Prospect Energy and its shareholders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company 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 the Company undertakes no obligation to update any such statement now or in the future.

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