HCD Highland Distressed Opportunities, Inc.

Highland Distressed Opportunities, Inc. (the �Company�) (NYSE: HCD) announced today that the Company entered into an amendment to its secured revolving credit facility. As amended, the credit facility expires on May 29, 2009, and the Company may borrow up to $60 million. The credit facility, as amended, requires generally that asset coverage be at least 350% after a borrowing. The credit facility is secured by substantially all of the assets in the Company�s portfolio. Generally, the interest rate charged is based on prevailing commercial paper rates plus commitment and utilization fees. However, if the Company is unable to borrow at commercial paper rates, the interest rate is based on the prevailing Eurodollar rate, Federal Funds rate or the agent�s reference rate, in each case plus an applicable spread and commitment and utilization fees. The Company pays a commitment fee at the annual rate of 1.25% on the total commitment amount, and a utilization fee at the annual rate of 0.75% on outstanding borrowings. About Highland Distressed Opportunities, Inc. Highland Distressed Opportunities, Inc. (the �Company,� �we,� �us� and �our�) is a recently-organized, non-diversified closed-end company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company�s investment objective is total return generated by both capital appreciation and current income. We intend to invest primarily in financially-troubled or distressed companies that are either middle-market companies or unlisted companies by investing in senior secured debt, mezzanine debt and unsecured debt, each of which may include an equity component, and in equity investments. Generally, distressed companies are those that (i) are facing financial or other difficulties and (ii) are or have been operating under the provisions of the U.S. Bankruptcy Code or other similar laws or, in the near future, may become subject to such provisions or otherwise be involved in a restructuring of their capital structure. This press release may contain forward-looking statements describing the Company�s future plans and objectives. These forward-looking statements, as well as future oral and written statements by the management of the Company, are subject to various risks and uncertainties, which could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, the future operating results of our portfolio companies, changes in regional, national, or international economic conditions and their impact on the industries in which we invest, or changes in the conditions of the industries in which we invest, and other factors enumerated in our filings with the Securities and Exchange Commission (�SEC�). We may use words such as �anticipates,� �believes,� �expects,� �intends,� �will,� �should,� �may,� �plans,� �could,� �estimates,� �potential,� �continue,� �target,� or the negative of these terms or other similar expressions to identify forward-looking statements. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Persons considering an investment in the Company should consider the investment objective, risks, and charges and expenses of the Company carefully before investing. Such information and other information about the Company will be available in our annual report on Form 10-K, in our quarterly reports on Form 10-Q and current reports on Form 8-K. Such materials are filed with the SEC and copies are available on the SEC�s website, www.sec.gov. Prospective investors should read such materials carefully before investing.