Prospect Capital Announces an 83% Unrealized IRR and 29%Realized-to-Date Cash-on-Cash IRR Monetization of Deep Down, Inc.
Jun 10, 2008 09:02:07 (ET)
NEW YORK, NY, Jun 10, 2008 (MARKET WIRE via COMTEX) -- Prospect Capital Corporation (PSEC, Trade ) ("Prospect") announced today that Deep Down, Inc. ("Deep Down") has repaid Prospect's $12 million loan.
Prospect has realized to date an approximately 29% cash-on-cash internal rate of return ("IRR") on the Deep Down investment, representing a 1.2 times cash-on-cash multiple, from a prepayment premium of approximately $450 thousand, upfront fees, and interest. In addition, Prospect still owns a warrant to purchase approximately 5.0 million shares of Deep Down common stock at an exercise price of $0.507 per share. If Prospect were to exercise the warrant and sell those shares at the June 6, 2008, $1.20 per share closing stock price of Deep Down, representing an in-the-money value of approximately $3.5 million, Prospect would have a total cash-on-cash internal rate of return ("IRR") of approximately 83%, representing a 1.4 times cash-on-cash multiple.
Deep Down represents the eighth successful realization to date in Prospect's portfolio. These eight realizations have averaged an approximately 53% IRR and 1.5 times cash-on-cash multiple for Prospect. These returns do not include equity interests still held by Prospect in three of the eight portfolio companies that have yet to be monetized.
"The Deep Down investment is a great example of how Prospect can provide time-sensitive capital to world-class management teams at growing companies," said Mark Hull, a Vice President at Prospect Capital Management. "We look forward to more successful relationships and investments like Deep Down."
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.
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