PROSPECT CAPITAL CORP - FORM 10-Q - November 6, 2014

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 814-00659 
PROSPECT CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland
43-2048643
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
10 East 40th Street, 42nd Floor
 
New York, New York
10016
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 448-0702
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes o    No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 (Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.
Class of Common Stock
 
Outstanding at November 5, 2014
$0.001 par value
 
352,597,291


PROSPECT CAPITAL CORPORATION
Table of Contents
 
 
Page
 
PART I
FINANCIAL INFORMATION
 
 
 
 
 
 
 
PART II
OTHER INFORMATION
 
 


FORWARD-LOOKING STATEMENTS
This report contains information that may constitute "forward-looking statements." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future—including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results—are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended June 30, 2014, and those described from time to time in our future reports filed with the Securities and Exchange Commission.


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share and per share data)
 
September 30, 2014
 
June 30, 2014
 
(Unaudited)
 
(Audited)
Assets
 

 
 

Investments at fair value:
 

 
 

Control investments (amortized cost of $1,721,493 and $1,719,242, respectively)
$
1,659,997

 
$
1,640,454

Affiliate investments (amortized cost of $46,659 and $31,829, respectively)
46,456

 
32,121

Non-control/non-affiliate investments (amortized cost of $4,590,568 and $4,620,451, respectively)
4,547,040

 
4,581,164

Total investments at fair value (amortized cost of $6,358,720 and $6,371,522, respectively)
6,253,493

 
6,253,739

Cash and cash equivalents
488,106

 
134,225

Receivables for:
 
 
 
Interest, net
20,523

 
21,997

Other
2,765

 
2,587

Prepaid expenses
2,805

 
2,828

Deferred financing costs
65,373

 
61,893

Total Assets 
6,833,065

 
6,477,269

 
 
 
 
Liabilities 
 

 
 

Revolving Credit Facility (Notes 4 and 8)
411,000

 
92,000

Convertible Notes (Notes 5 and 8)
1,247,500

 
1,247,500

Public Notes (Notes 6 and 8)
647,950

 
647,881

Prospect Capital InterNotes® (Notes 7 and 8)
784,305

 
785,670

Due to broker
1,787

 
—

Dividends payable
38,518

 
37,843

Due to Prospect Administration (Note 13)
2,272

 
2,208

Due to Prospect Capital Management (Note 13)
3,915

 
3

Accrued expenses
5,877

 
4,790

Interest payable
35,950

 
37,459

Other liabilities
6,232

 
3,733

Total Liabilities 
3,185,306

 
2,859,087

Net Assets 
$
3,647,759

 
$
3,618,182

 
 
 
 
Components of Net Assets 
 

 
 

Common stock, par value $0.001 per share (1,000,000,000 common shares authorized; 348,504,375 and 342,626,637 issued and outstanding, respectively) (Note 9)
$
349

 
$
343

Paid-in capital in excess of par (Note 9)
3,883,527

 
3,814,634

Undistributed net investment income
17,966

 
42,086

Accumulated realized losses on investments
(148,856
)
 
(121,098
)
Unrealized depreciation on investments
(105,227
)
 
(117,783
)
Net Assets 
$
3,647,759

 
$
3,618,182

 
 
 
 
Net Asset Value Per Share (Note 16) 
$
10.47

 
$
10.56



2
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)

 
Three Months Ended September 30,
 
2014
 
2013
Investment Income
 

 
 

Interest income:
 

 
 

Control investments
$
45,128

 
$
32,633

Affiliate investments
837

 
1,496

Non-control/non-affiliate investments
98,778

 
78,112

CLO fund securities
39,397

 
26,180

Total interest income
184,140

 
138,421

Dividend income:
 
 
 
Control investments
759

 
7,075

Affiliate investments
1,429

 
—

Non-control/non-affiliate investments
22

 
3

Money market funds
15

 
11

Total dividend income
2,225

 
7,089

Other income:
 
 
 
Control investments
5,663

 
9,221

Affiliate investments
226

 
2

Non-control/non-affiliate investments
9,767

 
6,301

Total other income (Note 10)
15,656

 
15,524

Total Investment Income
202,021

 
161,034

 
 
 
 
Operating Expenses
 
 
 
Investment advisory fees:
 
 
 
Base management fee (Note 13)
33,165

 
23,045

Income incentive fee (Note 13)
23,616

 
20,584

Total investment advisory fees
56,781

 
43,629

Interest and credit facility expenses
42,914

 
27,407

Legal fees
1,163

 
219

Valuation services
450

 
439

Audit, compliance and tax related fees
667

 
623

Allocation of overhead from Prospect Administration (Note 13)
2,416

 
3,986

Insurance expense
131

 
93

Directors’ fees
94

 
75

Excise tax
—

 
1,000

Other general and administrative expenses
2,942

 
1,226

Total Operating Expenses
107,558

 
78,697

Net Investment Income
94,463

 
82,337

 
 
 
 
Net realized (loss) gain on investments
(22,911
)
 
3,789

Net change in unrealized appreciation (depreciation) on investments
12,556

 
(6,226
)
Net Increase in Net Assets Resulting from Operations
$
84,108

 
$
79,900

 
 
 
 
Net increase in net assets resulting from operations per share
$
0.24

 
$
0.31

Dividends declared per share
$
(0.33
)
 
$
(0.33
)


See notes to consolidated financial statements.
3

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands, except share data)
(Unaudited)

 
Three Months Ended September 30,
 
2014
 
2013
Operations
 

 
 

Net investment income
$
94,463

 
$
82,337

Net realized (loss) gain on investments
(22,911
)
 
3,789

Net change in unrealized appreciation (depreciation) on investments
12,556

 
(6,226
)
Net Increase in Net Assets Resulting from Operations 
84,108

 
79,900

 
 
 
 
Distributions to Shareholders
 
 
 
Distribution from net investment income
(114,266
)
 
(86,676
)
Distribution of return of capital
—

 
—

Net Decrease in Net Assets Resulting from Distributions to Shareholders
(114,266
)
 
(86,676
)
 
 
 
 
Common Stock Transactions 
 
 
 
Issuance of common stock, net of underwriting costs
56,305

 
235,830

Less: Offering costs from issuance of common stock
(210
)
 
(793
)
Value of shares issued to acquire controlled investments
—

 
21,006

Value of shares issued through reinvestment of dividends
3,640

 
3,994

Net Increase in Net Assets Resulting from Common Stock Transactions 
59,735

 
260,037

 
 
 
 
Total Increase in Net Assets 
29,577

 
253,261

Net assets at beginning of period
3,618,182

 
2,656,494

Net Assets at End of Period
$
3,647,759

 
$
2,909,755

 
 
 
 
Common Stock Activity
 
 
 
Shares sold
5,536,780

 
21,293,338

Shares issued to acquire controlled investments
—

 
1,918,342

Shares issued through reinvestment of dividends
340,958

 
355,644

Total shares issued due to common stock activity
5,877,738

 
23,567,324

Shares issued and outstanding at beginning of period
342,626,637

 
247,836,965

Shares Issued and Outstanding at End of Period
348,504,375

 
271,404,289

 


See notes to consolidated financial statements.
4

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
(Unaudited)


 
Three Months Ended September 30,
 
2014
 
2013
Operating Activities
 
 
 
Net increase in net assets resulting from operations
$
84,108

 
$
79,900

Net realized loss (gain) on investments
22,911

 
(3,789
)
Net change in unrealized (appreciation) depreciation on investments
(12,556
)
 
6,226

Amortization of discounts and premiums, net
13,952

 
9,954

Accretion of discount on Public Notes (Note 6)
69

 
36

Amortization of deferred financing costs
3,829

 
2,435

Payment-in-kind interest
(5,887
)
 
(4,581
)
Structuring fees
(10,515
)
 
(8,660
)
Change in operating assets and liabilities:
 
 
 
Payments for purchases of investments
(870,803
)
 
(522,595
)
Proceeds from sale of investments and collection of investment principal
863,144

 
164,167

Decrease in interest receivable, net
1,474

 
1,393

(Increase) decrease in other receivables
(178
)
 
2,402

Decrease in prepaid expenses
23

 
158

Increase in due to broker
1,787

 
44,074

Increase (decrease) in due to Prospect Administration
64

 
(1,311
)
Increase (decrease) in due to Prospect Capital Management
3,912

 
(3,590
)
Increase in accrued expenses
1,087

 
655

Decrease in interest payable
(1,509
)
 
(5,697
)
Increase in other liabilities
2,499

 
2,108

Net Cash Used in Operating Activities 
97,411

 
(236,715
)
 
 
 
 
Financing Activities
 
 
 
Borrowings under Revolving Credit Facility (Note 4)
547,000

 
96,000

Principal payments under Revolving Credit Facility (Note 4)
(228,000
)
 
(151,000
)
Issuance of Prospect Capital InterNotes® (Note 7)
—

 
98,255

Redemptions of Prospect Capital InterNotes® (Note 7)
(1,365
)
 
(55
)
Financing costs paid and deferred
(7,309
)
 
(2,300
)
Proceeds from issuance of common stock, net of underwriting costs
56,305

 
235,830

Offering costs from issuance of common stock
(210
)
 
(793
)
Dividends paid
(109,951
)
 
(80,064
)
Net Cash Provided by Financing Activities
256,470

 
195,873

 
 
 
 
Total Increase (Decrease) in Cash and Cash Equivalents
353,881

 
(40,842
)
Cash and cash equivalents at beginning of period
134,225

 
203,236

Cash and Cash Equivalents at End of Period
$
488,106

 
$
162,394

 
 
 
 
Supplemental Disclosures
 
 
 
Cash paid for interest
$
40,524

 
$
30,165

 
 
 
 
Non-Cash Financing Activities
 
 
 
Value of shares issued through reinvestment of dividends
$
3,640

 
$
3,994

Value of shares issued to acquire controlled investments
$
—

 
$
21,006

 

See notes to consolidated financial statements.
5

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS
(in thousands, except share data)


 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(44)
 
 
 
 
 
 
 
 
 
 
 
American Property
REIT Corp.(32)
Various /
Real Estate
Senior Term Loan (6.00% (LIBOR + 4.00% with 2.00% LIBOR floor) plus 5.50% PIK, due 4/1/2019)(4)
$
169,511

$
169,511

$
169,511

4.6%
Common Stock (272,116 shares)
 
35,006

28,178

0.8%
 
 
 
 
204,517

197,689

5.4%
Arctic Energy
Services, LLC(30)
Wyoming / Oil & Gas Production
Senior Secured Term Loan (12.00% (LIBOR + 9.00% with 3.00% LIBOR floor), due 5/5/2019)(3)(4)
31,640

31,640

31,640

0.9%
Senior Subordinated Term Loan (14.00% (LIBOR + 11.00% with 3.00% LIBOR floor), due 5/5/2019)(3)(4)
20,230

20,230

20,230

0.5%
Class A Units (700 units)
 
9,006

9,505

0.3%
 
 
 
 
60,876

61,375

1.7%
ARRM Services, Inc.(42)
South Carolina / Manufacturing
Senior Secured Note to Ajax Rolled Ring & Machine, LLC (10.50% (LIBOR + 7.50% with 3.00% LIBOR floor), due 3/30/2018)(4)
19,337

19,337

19,337

0.5%
Series B Preferred Stock (25,000 shares)
 
21,156

9,399

0.3%
Series A Convertible Preferred Stock (6,142.60 shares)
 
6,057

—

—%
Common Stock (6.00 shares)
 
—

—

—%
 
 
 
 
46,550

28,736

0.8%
CCPI Inc.(33)
Ohio / Manufacturing
Senior Secured Term Loan A (10.00%, due 12/31/2017)(3)
17,100

17,100

17,100

0.5%
Senior Secured Term Loan B (12.00% plus 7.00% PIK, due 12/31/2017)
8,390

8,390

8,390

0.2%
Common Stock (14,857 shares)
 
8,553

7,143

0.2%
 
 
 
 
34,043

32,633

0.9%
Change Clean Energy Company, LLC(8)
Maine / Energy
Membership Interest (100%)
 
—

—

—%
 
 
 
 
—

—

—%
Coalbed, LLC(12)
Tennessee / Oil & Gas Production
Senior Secured Note (8.00%, in non-accrual status effective 1/19/2010, past due)(6)
8,771

5,991

—

—%
Membership Interest (100%)
 
—

—

—%
 
 
 
 
5,991

—

—%
CP Energy
Services Inc.(38)
Oklahoma / Oil & Gas Production
Senior Secured Term Loan A to CP Well Testing, LLC (7.00% (LIBOR + 5.00% with 2.00% LIBOR floor), due 4/1/2019)(4)
11,035

11,035

11,035

0.3%
Senior Secured Term Loan B to CP Well Testing, LLC (10.00% (LIBOR + 8.00% with 2.00% LIBOR floor) plus 7.50% PIK, due 4/1/2019)(4)
72,238

72,238

72,238

2.0%
Second Lien Term Loan to CP Well Testing, LLC (9.00% (LIBOR + 7.00% with 2.00% LIBOR floor) plus 9.00% PIK, due 4/1/2019)(4)
15,000

15,000

15,000

0.4%
Common Stock (2,924 shares)
 
15,227

30,913

0.8%
 
 
 
 
113,500

129,186

3.5%
Credit Central Loan
Company, LLC(22)(34)
Ohio / Consumer Finance
Subordinated Term Loan (10.00% plus 10.00% PIK, due 6/26/2019)
36,333

36,333

36,333

1.0%
Class A Shares (7,500,000 shares)
 
11,632

10,548

0.3%
 
 
 
 
47,965

46,881

1.3%
Echelon Aviation LLC
New York / Aerospace & Defense
Senior Secured Revolving Credit Facility – $150,000 Commitment (11.75% (LIBOR + 9.75% with 2.00% LIBOR floor) plus 2.25% PIK, due 3/31/2022)(4)(25)
40,808

40,808

40,808

1.1%
Class A Shares (11,335,318 shares)
 
19,907

10,896

0.3%
 
 
 
 
60,715

51,704

1.4%

See notes to consolidated financial statements.
6

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(44)
 
 
 
 
 
 
 
 
 
 
 
First Tower Finance Company LLC(22)(29)
Mississippi / Consumer Finance
Subordinated Term Loan to First Tower, LLC (10.00% plus 7.00% PIK, due 6/24/2019)
$
251,246

$
251,246

$
251,246

6.9%
Class A Shares (83,729,323 shares)
 
64,544

73,729

2.0%
 
 
 
 
315,790

324,975

8.9%
Freedom Marine Solutions, LLC(8)
Louisiana / Energy
Senior Secured Note to Vessel Company, LLC (18.00%, due 12/12/2016)
3,500

3,500

3,500

0.1%
Senior Secured Note to Vessel Company II, LLC (13.00%, due 11/25/2018)
13,000

12,504

12,504

0.3%
Senior Secured Note to Vessel Company III, LLC (13.00%, due 12/3/2018)
16,000

16,000

16,000

0.4%
Membership Interest (100%)
 
7,807

2,905

0.1%
 
 
 
 
39,811

34,909

0.9%
Gulf Coast Machine & Supply Company
Texas / Manufacturing
Senior Secured Term Loan (10.50% (LIBOR + 8.50% with 2.00% LIBOR floor), due 10/12/2017)(4)
19,500

19,500

13,674

0.4%
Series A Convertible Preferred Stock (99,900 shares)
 
25,950

—

—%
 
 
 
 
45,450

13,674

0.4%
Harbortouch
Payments, LLC(43)
Pennsylvania / Business Services
Senior Secured Term Loan A (9.00% (LIBOR + 7.00% with 2.00% LIBOR floor), due 9/30/2017)(4)
130,589

130,589

130,589

3.6%
Senior Secured Term Loan B (5.50% (LIBOR + 4.00% with 1.50% LIBOR floor) plus 5.50% PIK, due 3/31/2018)(4)
137,226

137,226

137,226

3.8%
Senior Secured Term Loan C (13.00% (LIBOR + 9.00% with 4.00% LIBOR floor), due 9/29/2018)(4)
26,431

26,431

26,431

0.7%
Class A Shares (535 shares)
 
7,489

24,005

0.6%
 
 
 
 
301,735

318,251

8.7%
The Healing Staff, Inc.(9)
North Carolina / Contracting
Secured Promissory Notes to The Healing Staff, Inc. and Vets Securing America, Inc. (15.00%, in non-accrual status effective 12/22/2010, past due)
1,688

1,687

—

—%
Senior Demand Note to The Healing Staff, Inc. (15.00%, in non-accrual status effective 11/1/2010, past due)
1,170

1,170

—

—%
Common Stock of The Healing Staff, Inc. (1,000 shares)
 
—

—

—%
Common Stock of Vets Securing America, Inc. (1 share)
 
975

—

—%
 
 
 
 
3,832

—

—%
Manx Energy, Inc.(6)(12)
Kansas / Oil & Gas Production
Senior Secured Note (13.00%, in non-accrual status effective 1/19/2010, past due)
50

50

—

—%
Series A-1 Preferred Stock (6,635 shares)
 
—

—

—%
Common Stock (17,082 shares)
 
—

—

—%
 
 
 
 
50

—

—%
MITY, Inc.(17)
Utah / Durable Consumer Products
Revolving Line of Credit – $7,500 Commitment (9.50% (LIBOR + 7.00% with 2.50% LIBOR floor), due 12/23/2014)(4)(25)
500

500

500

—%
Senior Secured Note A (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor), due 3/19/2019)(3)(4)
18,250

18,250

18,250

0.5%
Senior Secured Note B (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor) plus 10.00% PIK, due 3/19/2019)(4)
15,769

15,769

15,769

0.4%
Subordinated Unsecured Note to Broda Enterprises ULC (10.00%, due on demand)
6,593

6,593

6,593

0.2%
Common Stock (42,053 shares)
 
7,456

11,415

0.3%
 
 
 
 
48,568

52,527

1.4%
 
 
 
 
 
 
 

See notes to consolidated financial statements.
7

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(44)
 
 
 
 
 
 
 
 
 
 
 
National Property
REIT Corp.(40)
Various /
Real Estate
Senior Term Loan (6.00% (LIBOR + 4.00% with 2.00% LIBOR floor) plus 5.50% PIK, due 4/1/2019)(4)
$
138,367

$
138,367

$
138,367

3.8%
Common Stock (84,567 shares)
 
26,913

28,463

0.8%
 
 
 
 
165,280

166,830

4.6%
Nationwide Acceptance LLC(22)(36)
Illinois / Consumer Finance
Subordinated Term Loan (10.00% plus 10.00% PIK, due 6/18/2019)
14,820

14,820

14,820

0.4%
Class A Shares (24,029,326 shares)
 
12,248

13,012

0.4%
 
 
 
 
27,068

27,832

0.8%
NMMB, Inc.(24)
New York / Media
Senior Secured Note (14.00%, due 5/6/2016)
3,714

3,714

1,864

0.1%
Senior Secured Note to Armed Forces Communications, Inc. (14.00%, due 5/6/2016)
7,000

7,000

3,514

0.1%
Series A Preferred Stock (7,200 shares)
 
12,486

—

—%
 
 
 
 
23,200

5,378

0.2%
R-V Industries, Inc.
Pennsylvania / Manufacturing
Senior Subordinated Note (10.00% (LIBOR + 9.00% with 1.00% LIBOR floor), due 6/12/2018)(3)(4)
30,411

30,411

30,411

0.8%
Common Stock (545,107 shares)
 
5,087

18,876

0.5%
Warrant (to purchase 200,000 shares of Common Stock, expires 6/30/2017)
 
1,682

6,926

0.2%
 
 
 
 
37,180

56,213

1.5%
United Property
REIT Corp.(41)
Various /
Real Estate
Senior Term Loan (6.00% (LIBOR + 4.00% with 2.00% LIBOR floor) plus 5.50% PIK, due 4/1/2019)(4)
66,704

66,704

66,704

1.8%
Common Stock (70,689 shares)
 
13,421

12,930

0.4%
 
 
 
 
80,125

79,634

2.2%
Valley Electric
Company, Inc.(35)
Washington / Construction & Engineering
Senior Secured Note to Valley Electric Co. of Mt. Vernon, Inc. (8.00% (LIBOR + 5.00% with 3.00% LIBOR floor) plus 2.50% PIK, due 12/31/2017)(3)(4)
10,146

10,146

10,146

0.3%
Senior Secured Note (10.00% plus 8.50% PIK, due 12/31/2018)
20,935

20,935

19,285

0.5%
Common Stock (50,000 shares)
 
26,205

—

—%
 
 
 
 
57,286

29,431

0.8%
Wolf Energy, LLC(12)
Kansas / Oil & Gas Production
Senior Secured Promissory Note secured by assets formerly owned by H&M (18.00%, in non-accrual status effective 4/15/2013, due 4/15/2018)(37)
26,966

—

2,110

0.1%
Membership Interest (100%)
 
512

—

—%
Net Profits Interest (8% of Equity Distributions)(7)
 
—

29

—%
 
 
 
 
512

2,139

0.1%
Yatesville Coal
Company, LLC(8)
Kentucky / Energy
Senior Secured Note (in non-accrual status effective 1/1/2009)
1,449

1,449

—

—%
Membership Interest (100%)
 
—

—

—%
 
 
 
 
1,449

—

—%
Total Control Investments
 
$
1,721,493

$
1,659,997

45.5%
Affiliate Investments (5.00% to 24.99% voting control)(45)
 
 
 
 
 
 
 
 
 
 
 
BNN Holdings Corp.
Michigan / Healthcare
Senior Term Loan A (6.50% (LIBOR + 5.50% with 1.00% LIBOR floor), due 8/29/2019)(3)(4)
21,835

21,835

21,835

0.6%
Senior Term Loan B (11.50% (LIBOR + 10.50% with 1.00% LIBOR floor), due 8/29/2019)(3)(4)
21,945

21,945

21,945

0.6%
Series A Preferred Stock (9,925.455 shares)(13)
 
2,879

2,676

0.1%
Series B Preferred Stock (1,753.636 shares)(13)
 
—

—

—%
 
 
 
 
46,659

46,456

1.3%
Total Affiliate Investments
 
$
46,659

$
46,456

1.3%

See notes to consolidated financial statements.
8

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
Aderant North America, Inc.(16)
Georgia / Software & Computer Services
Second Lien Term Loan (10.00% (LIBOR + 8.75% with 1.25% LIBOR floor), due 6/20/2019)(4)
$
7,000

$
6,917

$
7,000

0.2%
 
 
 
 
6,917

7,000

0.2%
AFI Shareholder, LLC
(f/k/a Aircraft Fasteners International, LLC)
California / Machinery
Class A Units (32,500 units)
 
396

498

—%
 
 
 
 
396

498

—%
Airmall Inc.(27)
Pennsylvania / Property Management
Escrow Receivable
 
5,881

3,601

0.1%
 
 
 
 
5,881

3,601

0.1%
ALG USA Holdings, LLC(16)
Pennsylvania / Hotels, Restaurants & Leisure
Second Lien Term Loan (10.25% (LIBOR + 9.00% with 1.25% LIBOR floor), due 2/28/2020)(4)
12,000

11,799

12,000

0.3%
 
 
 
 
11,799

12,000

0.3%
Allied Defense Group, Inc.
Virginia / Aerospace & Defense
Common Stock (10,000 shares)
 
5

—

—%
 
 
 
 
5

—

—%
American Broadband Holding Company and Cameron Holdings of NC, Inc.
North Carolina / Telecommunication Services
Senior Secured Term Loan B (11.00% (LIBOR + 9.75% with 1.25% LIBOR floor), due 9/30/2018)(3)(4)
74,654

74,654

74,654

2.0%
 
 
 
 
74,654

74,654

2.0%
American Gilsonite Company
Utah / Metal Services & Minerals
Second Lien Term Loan (11.50%, due 9/1/2017)
38,500

38,500

38,500

1.1%
Membership Interest (99.9999%)(15)
 
—

4,018

0.1%
 
 
 
 
38,500

42,518

1.2%
Apidos CLO IX(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 17.90%)(11)
20,525

18,324

19,659

0.5%
 
 
 
 
18,324

19,659

0.5%
Apidos CLO XI(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 14.79%)(11)
38,340

33,440

36,790

1.0%
 
 
 
 
33,440

36,790

1.0%
Apidos CLO XII(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 16.16%)(11)
44,063

40,964

42,344

1.2%
 
 
 
 
40,964

42,344

1.2%
Apidos CLO XV(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 14.43%)(11)
36,515

36,403

36,496

1.0%
 
 
 
 
36,403

36,496

1.0%
Arctic Glacier U.S.A., Inc.
Minnesota / Food Products
Second Lien Term Loan (10.50% (LIBOR + 9.25% with 1.25% LIBOR floor), due 11/10/2019)(3)(4)
150,000

150,000

150,000

4.1%
 
 
 
 
150,000

150,000

4.1%
Ark-La-Tex Wireline Services, LLC
Louisiana / Oil and Gas Production
Senior Secured Term Loan A (6.50% (LIBOR + 5.50% with 1.00% LIBOR floor), due 4/8/2019)(4)
26,831

26,831

26,831

0.7%
Senior Secured Term Loan B (10.50% (LIBOR + 9.50% with 1.00% LIBOR floor), due 4/8/2019)(4)
26,831

26,831

26,831

0.7%
Delayed Draw Term Loan – $5,000 Commitment (due 4/8/2019)(25)
—

—

—

—%
 
 
 
 
53,662

53,662

1.4%

See notes to consolidated financial statements.
9

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
Armor Holding II LLC(16)
New York / Diversified Financial Services
Second Lien Term Loan (10.25% (LIBOR + 9.00% with 1.25% LIBOR floor), due 12/26/2020)(3)(4)
$
7,000

$
6,878

$
6,878

0.2%
 
 
 
 
6,878

6,878

0.2%
Atlantis Health Care Group (Puerto Rico), Inc.
Puerto Rico / Healthcare
Revolving Line of Credit – $4,000 Commitment (13.00% (LIBOR + 11.00% with 2.00% LIBOR floor), due 8/21/2015)(4)(25)(26)
2,350

2,350

2,350

0.1%
Senior Term Loan (10.00% (LIBOR + 8.00% with 2.00% LIBOR floor), due 2/21/2018)(3)(4)
38,858

38,858

34,128

0.9%
 
 
 
 
41,208

36,478

1.0%
Babson CLO Ltd. 2011-I(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 5.76%)(11)
35,000

34,541

31,433

0.9%
 
 
 
 
34,541

31,433

0.9%
Babson CLO Ltd. 2012-I(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 13.60%)(11)
29,075

22,950

25,167

0.7%
 
 
 
 
22,950

25,167

0.7%
Babson CLO Ltd. 2012-II(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 11.71%)(11)
27,850

26,329

27,113

0.7%
 
 
 
 
26,329

27,113

0.7%
Blue Coat Systems, Inc.(16)
Massachusetts / Software & Computer Services
Second Lien Term Loan (9.50% (LIBOR + 8.50% with 1.00% LIBOR floor), due 6/28/2020)(3)(4)
11,000

10,905

11,000

0.3%
 
 
 
 
10,905

11,000

0.3%
Broder Bros., Co.
Pennsylvania / Textiles, Apparel & Luxury Goods
Senior Secured Notes (10.25% (LIBOR + 9.00% with 1.25% LIBOR floor), due 4/8/2019)(3)(4)
256,275

256,275

256,275

7.0%
 
 
 
 
256,275

256,275

7.0%
Brookside Mill CLO Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 19.56%)(11)
26,000

22,677

25,139

0.7%
 
 
 
 
22,677

25,139

0.7%
Caleel + Hayden, LLC(14)(31)
Colorado / Personal & Nondurable Consumer Products
Membership Interest
 
—

183

—%
 
 
 
 
—

183

—%
Cent CLO 17 Limited(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 10.40%)(11)
24,870

21,569

23,720

0.7%
 
 
 
 
21,569

23,720

0.7%
Cent CLO 20 Limited(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 10.90%)(11)
40,275

38,140

39,310

1.1%
 
 
 
 
38,140

39,310

1.1%
Cent CLO 21 Limited(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 15.07%)(11)
48,528

47,070

46,287

1.3%
 
 
 
 
47,070

46,287

1.3%
CIFC Funding 2011-I, Ltd.(22)
Cayman Islands / Diversified Financial Services
Class D Senior Secured Notes (5.32% (LIBOR + 5.00%, due 1/19/2023)(4)
19,000

15,377

18,048

0.5%
Class E Subordinated Notes (7.32% (LIBOR + 7.00%, due 1/19/2023)(4)
15,400

12,862

15,171

0.4%
 
 
 
 
28,239

33,219

0.9%

See notes to consolidated financial statements.
10

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
CIFC Funding 2013-III, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 13.96%)(11)
$
44,100

$
38,415

$
42,745

1.2%
 
 
 
 
38,415

42,745

1.2%
CIFC Funding 2013-IV, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 12.66%)(11)
45,500

39,150

40,625

1.1%
 
 
 
 
39,150

40,625

1.1%
CIFC Funding 2014-IV Investor, Ltd.(22)
Cayman Islands / Diversified Financial Services
Income Notes (Residual Interest, current yield 13.98%)(11)
41,500

39,505

39,222

1.1%
 
 
 
 
39,505

39,222

1.1%
Cinedigm DC Holdings, LLC
New York / Software & Computer Services
Senior Secured Term Loan (11.00% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 2.50% PIK, due 3/31/2021)(4)
68,975

68,925

68,975

1.9%
 
 
 
 
68,925

68,975

1.9%
The Copernicus Group, Inc.
North Carolina / Healthcare
Escrow Receivable
 
—

117

—%
 
 
 
 
—

117

—%
Coverall North America, Inc.
Florida / Commercial Services
Senior Secured Term Loan (11.50% (LIBOR + 8.50% with 3.00% LIBOR floor), due 12/17/2017)(3)(4)
50,888

50,888

50,888

1.4%
 
 
 
 
50,888

50,888

1.4%
Crosman Corporation
New York / Manufacturing
Second Lien Term Loan (12.00% (LIBOR + 10.50% with 1.50% LIBOR floor), due 12/30/2019)(3)(4)
40,000

40,000

39,245

1.1%
 
 
 
 
40,000

39,245

1.1%
CRT MIDCO, LLC
Wisconsin / Media
Senior Secured Term Loan (10.50% (LIBOR + 7.50% with 3.00% LIBOR floor), due 6/30/2017)(3)(4)
47,129

47,129

47,129

1.3%
 
 
 
 
47,129

47,129

1.3%
Deltek, Inc.(16)
Virginia / Software & Computer Services
Second Lien Term Loan (10.00% (LIBOR + 8.75% with 1.25% LIBOR floor), due 10/10/2019)(3)(4)
12,000

11,857

12,000

0.3%
 
 
 
 
11,857

12,000

0.3%
Diamondback Operating, LP
Oklahoma / Oil & Gas Production
Net Profits Interest (15% of Equity Distributions)
 
—

—

—%
 
 
 
 
—

—

—%
Edmentum, Inc.(16)
Minnesota / Consumer Services
Second Lien Term Loan (11.25% (LIBOR + 9.75% with 1.50% LIBOR floor), due 5/17/2019)(3)(4)
50,000

48,499

50,000

1.4%
 
 
 
 
48,499

50,000

1.4%
Empire Today, LLC
Illinois / Durable Consumer Products
Senior Secured Note (11.375%, due 2/1/2017)
15,700

15,443

15,700

0.4%
 
 
 
 
15,443

15,700

0.4%
Fischbein, LLC
North Carolina / Machinery
Escrow Receivable
 
—

118

—%
 
 
 
 
—

118

—%
Fleetwash, Inc.
New Jersey / Business Services
Senior Secured Term Loan A (6.50% (LIBOR + 5.50% with 1.00% LIBOR floor), due 4/30/2019)(4)
24,875

24,875

24,875

0.7%
Senior Secured Term Loan B (10.50% (LIBOR + 9.50% with 1.00% LIBOR floor), due 4/30/2019)(4)
25,000

25,000

25,000

0.7%
Delayed Draw Term Loan – $15,000 Commitment (9.50% (LIBOR + 8.50% with 1.00% LIBOR floor), due 4/30/2019)(4)(25)
—

—

—

—%
 
 
 
 
49,875

49,875

1.4%
 
 
 
 
 
 
 

See notes to consolidated financial statements.
11

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
Focus Brands, Inc.(16)
Georgia / Consumer Services
Second Lien Term Loan (10.25% (LIBOR + 9.00% with 1.25% LIBOR floor), due 8/21/2018)(4)
$
18,000

$
17,787

$
18,000

0.5%
 
 
 
 
17,787

18,000

0.5%
Focus Products Group International, LLC
Illinois / Durable Consumer Products
Senior Secured Term Loan (12.00% (LIBOR + 11.00% with 1.00% LIBOR floor), due 1/20/2017)(3)(4)
20,021

20,021

17,805

0.5%
Common Stock (5,638 shares)
 
27

—

—%
 
 
 
 
20,048

17,805

0.5%
Galaxy XII CLO, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 13.50%)(11)
22,000

19,238

20,427

0.6%
 
 
 
 
19,238

20,427

0.6%
Galaxy XV CLO, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 14.80%)(11)
35,025

29,152

31,835

0.9%
 
 
 
 
29,152

31,835

0.9%
Galaxy XVI CLO, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 13.06%)(11)
22,575

20,407

20,818

0.6%
 
 
 
 
20,407

20,818

0.6%
Galaxy XVII CLO, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 14.76%)(11)
39,905

38,194

36,485

1.0%
 
 
 
 
38,194

36,485

1.0%
Global Employment Solutions, Inc.
Colorado / Business Services
Senior Secured Term Loan (10.00% (LIBOR + 9.00% with 1.00% LIBOR floor), due 3/25/2019)(3)(4)
28,429

28,429

28,429

0.8%
 
 
 
 
28,429

28,429

0.8%
Grocery Outlet, Inc.(16)
California / Retail
Second Lien Term Loan (11.50% (PRIME + 8.25% with 3.25% PRIME floor), due 6/17/2019)(4)
14,457

14,179

14,746

0.4%
 
 
 
 
14,179

14,746

0.4%
GTP Operations, LLC(10)
Texas / Software & Computer Services
Senior Secured Term Loan (10.00% (LIBOR + 5.00% with 5.00% LIBOR floor), due 12/11/2018)(3)(4)
112,258

112,258

112,258

3.1%
 
 
 
 
112,258

112,258

3.1%
Halcyon Loan Advisors Funding 2012-1 Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 24.62%)(11)
23,188

20,376

22,889

0.6%
 
 
 
 
20,376

22,889

0.6%
Halcyon Loan Advisors Funding 2013-1 Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 18.47%)(11)
40,400

37,466

41,136

1.1%
 
 
 
 
37,466

41,136

1.1%
Halcyon Loan Advisors Funding 2014-1 Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 14.45%)(11)
24,500

23,685

23,025

0.6%
 
 
 
 
23,685

23,025

0.6%
Halcyon Loan Advisors Funding 2014-2 Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 16.07%)(11)
41,164

39,174

38,900

1.1%
 
 
 
 
39,174

38,900

1.1%
Harley Marine Services, Inc.(16)
Washington / Transportation
Second Lien Term Loan (10.50% (LIBOR + 9.25% with 1.25% LIBOR floor), due 12/20/2019)(3)(4)
9,000

8,832

8,832

0.2%
 
 
 
 
8,832

8,832

0.2%
ICON Health & Fitness, Inc.
Utah / Durable Consumer Products
Senior Secured Note (11.875%, due 10/15/2016)
21,850

21,986

21,850

0.6%
 
 
 
 
21,986

21,850

0.6%

See notes to consolidated financial statements.
12

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
ICV-CSI Holdings, LLC
New York / Transportation
Membership Units (1.6 units)
 
$
1,639

$
1,789

—%
 
 
 
 
1,639

1,789

—%
IDQ Holdings, Inc.
Texas / Automobile
Senior Secured Note (11.50%, due 4/1/2017)
$
12,500

12,356

12,500

0.3%
 
 
 
 
12,356

12,500

0.3%
Ikaria, Inc.(16)
New Jersey / Healthcare
Second Lien Term Loan (8.75% (LIBOR + 7.75% with 1.00% LIBOR floor), due 2/12/2022)(4)
25,000

24,443

25,000

0.7%
 
 
 
 
24,443

25,000

0.7%
Instant Web, LLC
Minnesota / Media
Senior Secured Term Loan A (5.50% (LIBOR + 4.50% with 1.00% LIBOR floor), due 3/28/2019)(4)
125,929

125,929

125,929

3.5%
Senior Secured Term Loan B (12.00% (LIBOR + 11.00% with 1.00% LIBOR floor), due 3/28/2019)(3)(4)
128,000

128,000

128,000

3.5%
Senior Secured Term Loan C (12.75% (LIBOR + 11.75% with 1.00% LIBOR floor), due 3/28/2019)(4)
12,500

12,500

12,500

0.3%
 
 
 
 
266,429

266,429

7.3%
InterDent, Inc.
California / Healthcare
Senior Secured Term Loan A (7.25% (LIBOR + 5.75% with 1.50% LIBOR floor), due 8/3/2017)(4)
62,881

62,881

62,881

1.7%
Senior Secured Term Loan B (12.25% (LIBOR + 9.25% with 3.00% LIBOR floor), due 8/3/2017)(3)(4)
67,625

67,625

67,625

1.9%
 
 
 
 
130,506

130,506

3.6%
JAC Holding Corporation(16)
Michigan / Transportation
Senior Secured Note (11.50%, due 10/1/2019)
3,000

3,000

3,000

0.1%
 
 
 
 
3,000

3,000

0.1%
JHH Holdings, Inc.
Texas / Healthcare
Second Lien Term Loan (11.25% (LIBOR + 10.00% with 1.25% LIBOR floor) plus 0.50% PIK, due 3/30/2019)(3)(4)
35,164

35,164

35,164

1.0%
 
 
 
 
35,164

35,164

1.0%
LaserShip, Inc.
Virginia / Transportation
Revolving Line of Credit – $5,000 Commitment (10.25% (LIBOR + 8.25% with 2.00% LIBOR floor), due 12/21/2014)(4)(25)
—

—

—

—%
Senior Secured Term Loan A (10.25% (LIBOR + 8.25% with 2.00% LIBOR floor), due 3/18/2019)(3)(4)
36,094

36,094

36,094

1.0%
Senior Secured Term Loan B (10.25% (LIBOR + 8.25% with 2.00% LIBOR floor), due 3/18/2019)(3)(4)
22,111

22,111

22,111

0.6%
Delayed Draw Term Loan – $6,000 Commitment (2.00%, due 12/31/2015)(4)(25)
—

—

—

—%
 
 
 
 
58,205

58,205

1.6%
LCM XIV Ltd.(22)
Cayman Islands / Diversified Financial Services
Income Notes (Residual Interest, current yield 15.39%)(11)
26,500

24,393

24,699

0.7%
 
 
 
 
24,393

24,699

0.7%
LHC Holdings Corp.
Florida / Healthcare
Revolving Line of Credit – $750 Commitment (8.50% (LIBOR + 6.00% with 2.50% LIBOR floor), due 5/31/2015)(4)(25)(26)
—

—

—

—%
Senior Subordinated Debt (10.50%, due 5/31/2015)(3)
1,565

1,565

1,565

—%
Membership Interest (125 units)
 
216

230

—%
 
 
 
 
1,781

1,795

—%
Madison Park Funding IX, Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 13.58%)(11)
31,110

24,271

27,127

0.7%
 
 
 
 
24,271

27,127

0.7%

See notes to consolidated financial statements.
13

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
September 30, 2014 (Unaudited)
Portfolio Company
Locale / Industry
Investments(1)
Principal Value
Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
Matrixx Initiatives, Inc.
New Jersey / Pharmaceuticals
Senior Secured Term Loan A (7.50% (LIBOR + 6.00% with 1.50% LIBOR floor) plus 2.00% PIK, due 8/9/2018)(3)(4)
$
37,233

$
37,233

$
36,141

1.0%
Senior Secured Term Loan B (12.50% (LIBOR + 11.00% with 1.50% LIBOR floor) plus 2.00% PIK, due 8/9/2018)(3)(4)
40,155

40,155

39,033

1.1%
 
 
 
 
77,388

75,174

2.1%
Maverick Healthcare Equity, LLC
Arizona / Healthcare
Preferred Units (1,250,000 units)
 
1,252

682

—%
Class A Common Units (1,250,000 units)
 
—

—

—%
 
 
 
 
1,252

682

—%
Mountain View CLO 2013-I Ltd.(22)
Cayman Islands / Diversified Financial Services
Subordinated Notes (Residual Interest, current yield 15.98%)(11)
43,650

39,935

43,468

1.2%
 
 
 
 
39,935

43,468

1.2%
NCP Finance Limited Partnership(16)(22)(23)
Ohio / Consumer Finance
Subordinated Secured Term Loan (11.00% (LIBOR + 9.75% with 1.25% LIBOR floor), due 9/30/2018)(3)(4)
13,694

13,457

13,694

0.4%
 
 
 
 
13,457

13,694

0.4%
New Century Transportation, Inc.
New Jersey / Transportation
Senior Subordinated Term Loan (12.00% (LIBOR + 10.00% with 2.00% LIBOR floor) plus 4.00% PIK, in non-accrual status effective 4/1/2014, due 2/3/2018)(4)
44,000

44,000

—

—%
 
 
 
 
44,000

—

—%
Nixon, Inc.(16)
California / Durable Consumer Products
Senior Secured Term Loan (8.75% plus 2.75% PIK, due 4/16/2018)
13,638

13,434

13,434

0.4%
 
 
 
 
13,434

13,434

0.4%
NRG Manufacturing, Inc.
Texas / Manufacturing
Escrow Receivable
 
—

1,128

—%
 
 
 
 
—

1,128

—%
Octagon Investment Partners XV, Ltd.(22)
Cayman Islands / Diversified Financial Services
Income Notes (Residual Interest, current yield 20.50%)(11)
26,901

24,071

26,616

0.7%
 
 
 
 
24,071

26,616

0.7%
Onyx Payments
Texas / Diversified Financial Services
Revolving Line of Credit – $5,000 Commitment (9.00% (LIBOR + 7.75% with 1.25% LIBOR floor), due 9/10/2015)(4)(25)
—

—

—

—%
Senior Secured Term Loan A (6.50% (LIBOR + 5.50% with 1.00% LIBOR floor), due 9/10/2019)(4)
39,950

39,950

39,950

1.1%
Senior Secured Term Loan B (13.50% (LIBOR + 12.50% with 1.00% LIBOR floor), due 9/10/2019)(4)
41,778

41,778

41,778

1.1%
 
 
 
 
81,728

81,728

2.2%
Pacific World Corporation
California / Personal & Nondurable Consumer Products
Revolving Line of Credit – $15,000 Commitment (8.00% (LIBOR + 7.00% with 1.00% LIBOR floor), due 9/26/2020)(4)(25)
2,500

2,500

2,500

0.1%
Senior Secured Term Loan (8.00% (LIBOR + 7.00% with 1.00% LIBOR floor), due 9/26/2020)(4)
200,000

200,000

200,000