SOURCE: Prospect Capital Corporation

Prospect Capital Corporation

November 01, 2011 07:00 ET

Prospect Capital Announces Repayment of Senior Term Loans to Units of Integrated Drilling Equipment Company Generating a Realized IRR of 35%

NEW YORK, NY--(Marketwire - Nov 1, 2011) - Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that it has received full repayment of Prospect's remaining outstanding $20.9 million of senior term loans to IEC Systems LP ("IEC") and Advanced Rig Services LLC ("ARS"), the two wholly-owned operating subsidiaries of Integrated Drilling Equipment Company ("IDE"). Based in Houston, IDE is a manufacturer and servicer of oil and gas drilling rig systems and equipment.

Prospect made initial loans of $25.6 million to IEC and ARS on November 20, 2007. Prospect received as consideration for making its loans net profits interests ("NPIs") in the companies. As announced on October 1, 2008, Prospect sold those NPIs back to IEC and ARS for $12.6 million. Prospect reinvested the proceeds as incremental loans to each company. Today's repayment constitutes a complete exit by Prospect. Including the monetization of the NPIs, Prospect has earned a combined 2.2x cash-on-cash return and a 35% realized cash internal rate of return on its original $25.6 million of senior term loans to IEC and ARS.

"Our investment in IDE demonstrates Prospect's ability to provide creative financing solutions for middle market businesses in the oil and gas and other industries," said Bart J. de Bie, a Managing Director of Prospect Capital Management.

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.