Prospect Capital and Other Shareholders Enter Into Definitive Agreement to Sell NRG, With Prospect Expected to Receive up to $114M in Cash

Prospect Capital Corporation PSEC announced today that Prospect and other third-party shareholders have executed a stock purchase agreement to sell their ownership interests in NRG Manufacturing Inc.. The transaction is subject to regulatory approval and is expected to close within the next 30 days. Such closing would also result in full repayment of Prospect's loan to NRG. Prospect expects to collect approximately $100 million in cash in the March 2012 quarter related to the sale of NRG. This $100 million would consist of approximately $30 million of investment income in the form of prepayment premium and structuring fee, with the remaining approximately $70 million related to debt repayment and equity proceeds. Additional amounts are expected to be escrowed for potential collection in future periods, resulting in potential incremental post-closing proceeds to Prospect of approximately $14 million. As a result, Prospect would receive a total of up to $114 million from the sale of NRG. Prospect initially invested approximately $12 million of debt and equity in September 2006 to help finance the acquisition of NRG. Including all cash flows over the life of the investment, but not including escrowed amounts, Prospect expects to realize at closing on its combined debt and equity investment a 59% annualized internal rate of return.