Prospect Capital Announces Full Repayment of $20 Million Subordinated Term Loan to PMFG, Producing a 19% Realized Cash-on-Cash IRR

NEW YORK, NY--(Marketwire - September 8, 2009) - Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that PMFG, Inc. ("PMFG"), parent of Peerless Mfg. Co., has repaid to Prospect the entire balance of its $20 million acquisition loan. With this repayment, Prospect has realized an approximately 19% cash-on-cash internal rate of return on the PMFG investment.

"The PMFG repayment of our junior debt position at an attractive return profile validates our strategy of conservative multiple of cash flow lending structures," said David Belzer, a Managing Director at Prospect Capital. "The repayment of this energy-related loan also reflects the continued diversification of our portfolio, and we look forward to redeploying the proceeds in this opportunity-rich investment environment."

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.

Contact Information: For further information, contact: Grier Eliasek President and Chief Operating Officer grier@prospectstreet.com (212) 448-9577