Prospect Capital Announces 31% IRR Monetization of Cougar Pressure Control

NEW YORK, NY--(Marketwire - May 2, 2008) - Prospect Capital Corporation (NASDAQ: PSEC) ("Prospect") announced today that Prospect has now fully exited its investment in Arctic Acquisition Corp., dba Cougar Pressure Control ("Cougar").

Prospect initially invested $9.25 million in Cougar in July 2005 in the form of a senior secured loan, and that loan was subsequently increased by $6.0 million. Prospect received a minority equity interest in Cougar as additional consideration for making the secured loan. In August 2007, Cougar repaid in full the Prospect loan, and Prospect retained its equity interest in Cougar.

Cougar has now acquired Prospect's equity interest in Cougar for $3.4 million. With this further monetization, Prospect exits its Cougar investment entirely with a 31% cash on cash internal rate of return on its combined debt and equity investment, representing an approximately 1.5 times cash on cash multiple.

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. Prospect Capital's investment objective is to generate both current income and capital appreciation through debt and equity investments.

Prospect Capital 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 Capital could have a material adverse effect on Prospect Capital 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.

Contact Information: Please send investment proposals to: Grier Eliasek President and Chief Operating Officer grier@prospectstreet.com (212) 448-9577