PROSPECT CAPITAL CORP - FORM 10-Q - November 9, 2020

Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - PROSPECT CAPITAL CORPpsec10-qq12021ex322.htm
EX-32.1 - EXHIBIT 32.1 - PROSPECT CAPITAL CORPpsec10-qq12021ex321.htm
EX-31.2 - EXHIBIT 31.2 - PROSPECT CAPITAL CORPpsec10-qq12021ex312.htm
EX-31.1 - EXHIBIT 31.1 - PROSPECT CAPITAL CORPpsec10-qq12021ex311.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbols
Name of each exchange on which registered
Common Stock, $0.001 par value
PSEC
NASDAQ Global Select Market
6.25% Notes due 2024, par value $25
PBB
New York Stock Exchange
6.25% Notes due 2028, par value $25
PBY
New York Stock Exchange
6.875% Notes due 2029, par value $25
PBC
New York Stock Exchange
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 every Interactive Data File required to be submitted 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 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý
 
Accelerated filer o
Non-accelerated filer o
 
Smaller reporting company o
 
 
Emerging growth company o
 (Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý
As of November 6, 2020, there were 380,592,543 shares of the registrant’s common stock, $0.001 par value per share, outstanding.


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,” “should,” “could,” “may,” “plan” 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. We undertake 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 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, 2020, and those described from time to time in reports that we have filed or in the future may file with the Securities and Exchange Commission.

The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

•
our future operating results;
•
our business prospects and the prospects of our portfolio companies;
•
the impact of investments that we expect to make;
•
our contractual arrangements and relationships with third parties;
•
the dependence of our future success on the general economy and its impact on the industries in which we invest;
•
the impact of global health epidemics, including, but not limited to, the recent and ongoing novel coronavirus (“Wuhan Virus”) pandemic, on our and our portfolio companies’ business and the global economy;
•
uncertainty surrounding the financial stability of the United States, Europe, and China;
•
the ability of our portfolio companies to achieve their objectives;
•
difficulty in obtaining financing or raising capital, especially in the current credit and equity environment, and the impact of a protracted decline in the liquidity of credit markets on our and our portfolio companies’ business;
•
the level and volatility of prevailing interest rates and credit spreads, magnified by the current turmoil in the credit markets;
•
the impact of changes in London Interbank Offered Rate (“LIBOR”) on our operating results;
•
adverse developments in the availability of desirable loan and investment opportunities whether they are due to competition, regulation or otherwise;
•
a compression of the yield on our investments and the cost of our liabilities, as well as the level of leverage available to us;
•
our regulatory structure and tax treatment, including our ability to operate as a business development company and a regulated investment company;
•
the adequacy of our cash resources and working capital;
•
the timing of cash flows, if any, from the operations of our portfolio companies;
•
the ability of the Investment Adviser to locate suitable investments for us and to monitor and administer our investments; and
•
authoritative generally accepted accounting principles or policy changes from such standard-setting bodies as the Financial Accounting Standards Board, the Securities and Exchange Commission, Internal Revenue Service, the NASDAQ Global Select Market, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business.


3

PART I
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, 2020
 
June 30, 2020
 
 
 
(Unaudited)
 
(Audited)
Assets
 
 
 

Investments at fair value:
 

 
 

Control investments (amortized cost of $2,321,471 and $2,286,725, respectively)
$
2,307,572

 
$
2,259,292

Affiliate investments (amortized cost of $171,649 and $163,484, respectively)
262,175

 
187,537

Non-control/non-affiliate investments (amortized cost of $3,335,811 and $3,332,509, respectively)
2,816,638

 
2,785,499

Total investments at fair value (amortized cost of $5,828,931 and $5,782,718, respectively)
5,386,385

 
5,232,328

Cash
28,303

 
44,561

Receivables for:
 
 
 
Interest, net
11,011

 
11,712

Other
938

 
106

Deferred financing costs on Revolving Credit Facility (Note 4)
8,596

 
9,145

Due from broker
1,892

 
1,063

Prepaid expenses
907

 
1,248

Due from Affiliate (Note 13)
38

 
—

Total Assets 
5,438,070

 
5,300,163

Liabilities 
 

 
 

Revolving Credit Facility (Notes 4 and 8)
250,993

 
237,536

Public Notes (less unamortized discount and debt issuance costs of $11,011 and $11,613,
  respectively) (Notes 6 and 8)
782,708

 
782,106

Prospect Capital InterNotes® (less unamortized debt issuance costs of $12,959 and $12,802,
respectively) (Notes 7 and 8)
705,362

 
667,427

Convertible Notes (less unamortized debt issuance costs of $7,899 and $8,892,
respectively) (Notes 5 and 8)
422,171

 
450,598

Due to Prospect Capital Management (Note 13)
41,232

 
42,481

Interest payable
17,374

 
29,066

Dividends payable
22,727

 
22,412

Accrued expenses
5,654

 
3,648

Due to Prospect Administration (Note 13)
8,164

 
7,000

Due to broker
—

 
1

Other liabilities
658

 
2,027

Total Liabilities 
2,257,043

 
2,244,302

Commitments and Contingencies (Note 3)


 
 
Net Assets 
$
3,181,027

 
$
3,055,861

 
 
 
 
Components of Net Assets 
 

 
 

Common stock, par value $0.001 per share (1,880,000,000 common shares authorized; 378,776,958 and 373,538,499 issued and outstanding, respectively) (Note 9)
$
379

 
$
374

Paid-in capital in excess of par (Note 9)
4,096,150

 
4,070,874

Total distributable loss
(915,502
)
 
(1,015,387
)
Net Assets 
$
3,181,027

 
$
3,055,861

Net Asset Value Per Share (Note 16) 
$
8.40

 
$
8.18


See notes to consolidated financial statements.
4

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

 
Three Months Ended September 30,
 
2020
 
2019
Investment Income
 
 
 
Interest income:
 
 
 
Control investments
$
48,727

 
$
50,866

Affiliate investments
7,362

 
239

Non-control/non-affiliate investments
51,250

 
61,950

Structured credit securities
24,900

 
32,901

Total interest income
132,239

 
145,956

Dividend income:
 
 
 
Control investments
—

 
3,800

Non-control/non-affiliate investments
25

 
454

Total dividend income
25

 
4,254

Other income:
 
 
 
Control investments
9,071

 
11,383

Non-control/non-affiliate investments
1,545

 
290

Total other income (Note 10)
10,616

 
11,673

Total Investment Income
142,880

 
161,883

Operating Expenses
 
 
 
Base management fee (Note 13)
26,850

 
28,463

Income incentive fee (Note 13)
14,386

 
17,765

Interest and credit facility expenses
34,049

 
38,898

Allocation of overhead from Prospect Administration (Note 13)
4,657

 
3,494

Audit, compliance and tax related fees
938

 
375

Directors’ fees
113

 
113

Other general and administrative expenses
4,342

 
1,715

Total Operating Expenses
85,335

 
90,823

Net Investment Income
57,545

 
71,060

Net Realized and Net Change in Unrealized Gains (Losses) from Investments
 
 
 
Net realized gains (losses)
 
 
 
Control investments
2,832

 
—

Non-control/non-affiliate investments
11

 
(2,198
)
Net realized gains (losses)
2,843

 
(2,198
)
Net change in unrealized gains (losses)
 
 
 
Control investments
13,535

 
(39,021
)
Affiliate investments
66,473

 
18,020

Non-control/non-affiliate investments
27,836

 
(27,458
)
Net change in unrealized gains (losses)
107,844

 
(48,459
)
Net Realized and Net Change in Unrealized Gains (Losses) from Investments
110,687

 
(50,657
)
Net realized losses on extinguishment of debt
(486
)
 
(2,338
)
Net Increase in Net Assets Resulting from Operations
$
167,746

 
$
18,065

Net increase in net assets resulting from operations per share
$
0.45

 
$
0.05

Dividends declared per share
$
(0.18
)
 
$
(0.18
)

See notes to consolidated financial statements.
5

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

 
 
Common Stock
 
 
 
 
Three Months Ended September 30, 2019
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)
 
Total Net Assets
Balance as of June 30, 2019
 
367,131,025


$
367


$
4,039,872


$
(733,964
)

$
3,306,275

Net Increase in Net Assets resulting from Operations:
 














Net investment income
 








71,060


71,060

Net realized losses
 








(4,536
)

(4,536
)
Net change in unrealized losses
 








(48,459
)

(48,459
)
Distributions to Shareholders
 














Distributions from earnings
 








(66,111
)

(66,111
)
Shares issued through reinvestment of dividends
 
232,847





1,544





1,544

Tax reclassifications of net assets (Note 12)
 






(78
)

78


—

Total increase (decrease) for the three months ended September 30, 2019
 
232,847


—


1,466


(47,968
)

(46,502
)
Balance as of September 30, 2019
 
367,363,872


$
367


$
4,041,338


$
(781,932
)

$
3,259,773


 
 
Common Stock
 
 
 
 
Three Months Ended September 30, 2020
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)
 
Total Net Assets
Balance as of June 30, 2020

373,538,499


$
374


$
4,070,874


$
(1,015,387
)

$
3,055,861

Net Increase in Net Assets resulting from Operations:















Net investment income









57,545


57,545

Net realized gains









2,357


2,357

Net change in unrealized gains









107,844


107,844

Distributions to Shareholders















Distributions from earnings









(67,861
)

(67,861
)
Shares issued through reinvestment of dividends

5,238,459


5


25,276





25,281

Total increase for the three months ended September 30, 2020

5,238,459


5


25,276


99,885


125,166

Balance as of September 30, 2020

378,776,958


$
379


$
4,096,150


$
(915,502
)

$
3,181,027






See notes to consolidated financial statements.
6

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

 
Three Months Ended September 30,
 
2020
 
2019
Operating Activities
 
 
 
Net increase in net assets resulting from operations
$
167,746

 
$
18,065

Net realized losses on extinguishment of debt
486

 
2,338

Net realized (gains) losses on investments
(2,843
)
 
2,198

Net change in unrealized (gains) losses on investments
(107,844
)
 
48,459

Amortization of (accretion of premiums) discounts, net
(14,482
)
 
1,704

Accretion of original issue discount
269

 
254

Amortization of deferred financing costs
1,921

 
2,241

Payment-in-kind interest
(20,341
)
 
(14,498
)
Structuring fees
(170
)
 
(612
)
Change in operating assets and liabilities:
 
 
 
Payments for purchases of investments
(156,630
)
 
(79,430
)
Proceeds from sale of investments and collection of investment principal
148,253

 
245,173

Decrease in due to broker
(1
)
 
—

Decrease in due to Prospect Capital Management
(1,249
)
 
(297
)
Decrease in interest receivable, net
701

 
13,978

Decrease in interest payable
(11,692
)
 
(11,740
)
Increase (decrease) in accrued expenses
2,006

 
(726
)
Increase in due from broker
(829
)
 
(4,121
)
(Decrease) increase in other liabilities
(1,369
)
 
39

(Increase) decrease in other receivables
(832
)
 
3,126

Increase in due from affiliate
(38
)
 
—

Decrease in prepaid expenses
341

 
281

Increase (decrease) in due to Prospect Administration
1,164

 
(1,374
)
Net Cash Provided by Operating Activities
4,567

 
225,058

Financing Activities
 
 
 
Borrowings under Revolving Credit Facility (Note 4)
212,900

 
211,000

Principal payments under Revolving Credit Facility (Note 4)
(199,443
)
 
(270,000
)
Redemptions of Convertible Notes, net (Note 5)
(29,420
)
 
(47,016
)
Issuances of Prospect Capital InterNotes® (Note 7)
38,657

 
95,135

Redemptions of Prospect Capital InterNotes®, net (Note 7)
(565
)
 
(145,459
)
Financing costs paid and deferred
(689
)
 
(5,088
)
Dividends paid
(42,265
)
 
(64,554
)
Net Cash Used in Financing Activities
(20,825
)
 
(225,982
)
Net Decrease in Cash
(16,258
)
 
(924
)
Cash at beginning of period
44,561

 
107,098

Cash at End of Period
$
28,303

 
$
106,174

Supplemental Disclosures
 
 
 
Cash paid for interest
$
43,551

 
$
48,143

Non-Cash Financing Activities
 
 
 
Value of shares issued through reinvestment of dividends
$
25,281

 
$
1,544

Cost basis of investments written off as worthless
$
—

 
$
2,420


See notes to consolidated financial statements.
7

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF SEPTEMBER 30, 2020 (Unaudited)
(in thousands, except share data)





 
 
 

September 30, 2020 (Unaudited)
 
 
Portfolio Company
Industry
Investments(1)(37)
Acquisition Date(44)
Coupon/Yield
Floor
Legal Maturity
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(40)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CP Energy Services Inc. (20)
Energy Equipment & Services
Senior Secured Term Loan
10/1/2017
12.00% (3ML+ 11.00%)
1.00

12/29/2022
$
37,870

$
37,870

$
34,894

1.1
%
(10)(39)
Senior Secured Term Loan A to Spartan Energy Services, LLC
10/20/2014
9.00% (1ML+ 8.00%)
1.00

12/31/2022
13,156

13,156

13,156

0.3
%
(10)
Series A Preferred Units to Spartan Energy Holdings, Inc. (10,000 shares)
9/25/2020

—

N/A
—

26,193

6,259

0.2
%
(16)
Series B Convertible Preferred Stock (790 shares)
10/30/2015

—

N/A
—

63,225

—

—
%
(16)
Common Stock (102,924 shares)
8/2/2013

—

N/A
—

86,240

—

—
%
(16)








  

226,684

54,309

1.6
%

Credit Central Loan Company, LLC (21)
Consumer Finance
Subordinated Term Loan
12/28/2012
10.00% plus 10.00% PIK
—

6/26/2024
66,126

63,239

66,126

2.1
%
(14)(39)
Class A Units (14,867,312 units)
12/28/2012

—

N/A
—

19,331

12,198

0.4
%
(14)(16)
Net Revenues Interest (25% of Net Revenues)
1/28/2015

—

N/A
—

—

—

—
%
(14)(16)








  

82,570

78,324

2.5
%

Echelon Transportation, LLC
Aerospace & Defense
Senior Secured Term Loan
3/31/2014
11.75% (1ML+ 9.75%) plus 2.25% PIK
2.00

3/31/2022
48,160

48,160

48,160

1.5
%
(10)(39)
Senior Secured Term Loan
12/9/2016
11.00% (1ML+ 9.00%) plus 1.00% PIK
2.00

12/7/2024
21,637

21,637

21,637

0.7
%
(10)(39)
Membership Interest (100%)
3/31/2014

—

N/A
—

22,738

22,327

0.7
%
(16)








  

92,535

92,124

2.9
%

First Tower Finance Company LLC (23)
Consumer Finance
Subordinated Term Loan to First Tower, LLC
6/24/2014
10.00% plus 12.00% PIK
—

6/24/2024
272,158

272,158

272,158

8.6
%
(14)(39)
Class A Units (95,709,910 units)
6/14/2012

—

N/A
—

81,146

237,942

7.5
%
(14)(16)








  

353,304

510,100

16.1
%

Freedom Marine Solutions, LLC (24)
Energy Equipment & Services
Membership Interest (100%)
11/9/2006

—

N/A
—

43,892

12,351

0.4
%
(16)








  

43,892

12,351

0.4
%

InterDent, Inc. (29)
Health Care Providers & Services
Senior Secured Term Loan A/B
8/1/2018
11.85% (1ML+ 9.85%)
2.00

9/5/2022
14,250

14,249

14,249

0.4
%
(10)(39)
Senior Secured Term Loan A
8/3/2012
6.50% (1ML+ 5.50%)
1.00

9/5/2022
79,242

79,242

79,242

2.5
%
-10
Senior Secured Term Loan B
8/3/2012
10.00% PIK
—

9/5/2022
131,725

131,725

131,725

4.1
%

Common Stock (99,900 shares)
5/3/2019

—

N/A
—

45,118

11,768

0.4
%
(16)








  

270,334

236,984

7.4
%

Kickapoo Ranch Pet Resort
Diversified Consumer Services
Membership Interest (100%)
8/26/2019

—

N/A
—

2,378

3,000

0.1
%
(16)








  

2,378

3,000

0.1
%

MITY, Inc. (25)
Commercial Services & Supplies
Senior Secured Note A
9/19/2013
10.00% (3ML+ 7.00%)
3.00

4/30/2025
26,250

26,250

26,250

0.8
%
(10)
Senior Secured Note B
6/23/2014
10.00% (3ML+ 7.00%) plus 10.00% PIK
3.00

4/30/2025
33,859

33,859

22,729

0.7
%
(10)(39)
Subordinated Unsecured Note to Broda Enterprises ULC
9/19/2013
10.00%
—

1/1/2028
7,200

6,205

—

—
%
(14)
Common Stock (42,053 shares)
9/19/2013

—

N/A
—

6,849

—

—
%
(16)








  

73,163

48,979

1.5
%

National Property REIT Corp. (26)
Equity Real Estate Investment Trusts (REITs) / Online Lending / Structured Finance
Senior Secured Term Loan A
12/31/2018
4.44% (3ML+ 1.44%) plus 3.53% PIK
3.00

12/31/2023
319,379

319,379

319,379

10.0
%
(10)(39)
Senior Secured Term Loan B
12/31/2018
5.00% (3ML+ 2.00%) plus 5.50% PIK
3.00

12/31/2023
30,621

30,621

30,621

1.0
%
(10)(39)
Senior Secured Term Loan C
10/31/2019
11.00% (3ML+ 10.00%) plus 2.25% PIK
1.00

12/31/2023
101,200

101,200

101,200

3.2
%
(10)(39)
Senior Secured Term Loan D
6/19/2020
3.50% (3ML+ 0.50%) plus 2.50% PIK
3.00

12/31/2023
183,425

183,425

183,425

5.8
%
(10)(39)
Residual Profit Interest
12/31/2018

—

N/A
—

—

—

—
%
(35)
Common Stock (3,254,594 shares)
12/31/2013

—

N/A
—

210

278,955

8.8
%
(45)








  

634,835

913,580

28.8
%


See notes to consolidated financial statements.
8

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF SEPTEMBER 30, 2020 (Unaudited)
(in thousands, except share data)




 
 
 

September 30, 2020 (Unaudited)
 
 
Portfolio Company
Industry
Investments(1)(37)
Acquisition Date(44)
Coupon/Yield
Floor
Legal Maturity
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(40)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nationwide Loan Company LLC (27)
Consumer Finance
Senior Subordinated Term Loan to Nationwide Acceptance LLC
6/18/2014
10.00% plus 10.00% PIK
—

6/18/2021
$
20,260

$
20,260

$
20,260

0.6
%
(14)(39)
Class A Units (38,550,460 units)
1/31/2013

—

N/A
—

20,462

16,836

0.5
%
(14)(16)








  

40,722

37,096

1.1
%

NMMB, Inc. (28)
Media
Delayed Draw Term Loan - $10,000 Commitment
3/25/2020
10.50% (3ML+ 8.50%)
2.00

12/30/2024
—

—

—

—
%
(10)(15)
Senior Secured Note
12/30/2019
10.50% (3ML+ 8.50%)
2.00

12/30/2024
4,987

4,987

4,987

0.2
%
(3)(10)
Common Stock (21,419 shares)
12/30/2019

—

N/A
—

12,869

23,113

0.7
%









  

17,856

28,100

0.9
%

Pacific World Corporation (36)
Personal Products
Revolving Line of Credit - $26,000 Commitment
9/26/2014
8.25% (1ML+ 7.25%)
1.00

9/26/2025
20,825

20,825

20,825

0.7
%
(10)(15)
Senior Secured Term Loan A
12/31/2014
6.25% PIK (1ML+ 5.25%)
1.00

9/26/2025
39,716

39,716

39,716

1.2
%
(10)(39)
Convertible Preferred Equity (273,400 shares)
6/15/2018

—

N/A
—

186,795

6,433

0.2
%
(16)
Common Stock (6,778,414 shares)
9/29/2017

—

N/A
—

—

—

—
%
(16)








  

247,336

66,974

2.1
%

R-V Industries, Inc.
Machinery
Senior Subordinated Note
6/12/2013
10.00% (3ML+ 9.00%)
1.00

3/31/2022
28,623

28,623

28,622

0.9
%
(3)(10)
Common Stock (745,107 shares)
6/26/2007

—

N/A
—

6,866

12,477

0.4
%
(16)








  

35,489

41,099

1.3
%

Universal Turbine Parts, LLC (34)
Trading Companies & Distributors
Delayed Draw Term Loan - $5,000 Commitment
2/28/2019
10.25% (1ML+ 7.75%)
2.50

7/22/2021
2,880

2,880

2,880

0.1
%
(10)(15)
Senior Secured Term Loan A
7/22/2016
6.75% (3ML+ 5.75%)
1.00

7/22/2021
29,900

29,900

25,586

0.8
%
(10)
Senior Secured Term Loan B
7/22/2016
12.75% PIK (3ML+ 11.75%)
1.00

7/22/2021
44,340

32,500

—

—
%
(9)(10)
Common Stock (10,000 units)
12/10/2018

—

N/A
—

—

—

—
%
(16)








  

65,280

28,466

0.9
%

USES Corp. (30)
Commercial Services & Supplies
Senior Secured Term Loan A
3/31/2014
9.00% PIK
—

7/29/2022
51,493

30,651

22,462

0.7
%
(9)
Senior Secured Term Loan B
3/31/2014
15.50% PIK
—

7/29/2022
68,943

35,568

—

—
%
(9)
Common Stock (268,962 shares)
6/15/2016

—

N/A
—

—

—

—
%
(16)








  

66,219

22,462

0.7
%

Valley Electric Company, Inc. (31)
Construction & Engineering
Senior Secured Note to Valley Electric Co. of Mt. Vernon, Inc.
12/31/2012
8.00% (3ML+ 5.00%) plus 2.50% PIK
3.00

12/31/2024
10,430

10,430

10,430

0.3
%
(3)(10)(39)
Senior Secured Note
6/24/2014
8.00% plus 10.00% PIK
—

6/23/2024
33,301

33,301

33,301

1.0
%
(39)
Consolidated Revenue Interest (2.0%)
6/22/2018

—

N/A
—

—

2,332

0.1
%
(12)
Common Stock (50,000 shares)
12/31/2012

—

N/A
—

25,143

87,561

2.8
%




 
 
 

  

68,874

133,624

4.2
%
 
Total Control Investments (Level 3)
 
$
2,321,471

$
2,307,572

72.5
%
 


See notes to consolidated financial statements.
9

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF SEPTEMBER 30, 2020 (Unaudited)
(in thousands, except share data)

 
 
 
 
 
 
 
September 30, 2020 (Unaudited)
 
 
Portfolio Company
Industry
Investments(1)(37)
Acquisition Date(44)
Coupon/Yield
Floor
Legal Maturity
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments (5.00% to 24.99% voting control)(41)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC (22)
Diversified Consumer Services
Second Lien Revolving Credit Facility to Edmentum, Inc. - $7,834 Commitment
6/9/2015
5.00% PIK
—

12/9/2021
$
8,648

$
8,648

$
8,648

0.2
%
(15)(39)
Unsecured Senior PIK Note
6/9/2015
8.50% PIK
—

12/9/2021
9,114

9,114

9,114

0.3
%
(39)
Unsecured Junior PIK Note
6/9/2015
10.00% PIK
—

12/9/2021
44,148

32,875

44,148

1.4
%
(39)
Class A Units (370,964 units)
6/9/2015

—

N/A
—

6,577

5,698

0.2
%
(16)
 
 
 





 
57,214

67,608

2.1
%

 Nixon, Inc. (32)
 Textiles, Apparel & Luxury Goods
Common Stock (857 units)
5/12/2017

—

N/A
—

—

—

—
%
(16)
 
 
 





 
—

—

—
%

PGX Holdings, Inc. (6)
Diversified Consumer Services
1.5 Lien Term Loan
5/27/2020
11.50% PIK (12ML+ 10.50%)
1.00

3/29/2024
2,873

2,873

2,873

0.1
%
(10)(39)
Second Lien Term Loan
9/29/2014
15.75% PIK (1ML+ 14.75%)
1.00

9/29/2024
108,758

108,757

108,757

3.4
%
(10)(39)
Common Stock (40,780,359 shares)
5/27/2020

—

N/A
—

—

57,951

1.8
%
(16)
 
 
 





 
111,630

169,581

5.3
%

Targus Cayman HoldCo Limited (33)
Textiles, Apparel & Luxury Goods
Common Stock (7,383,395 shares)
2/12/2016

—

N/A
—

2,805

24,986

0.8
%
(16)
 
 
 
 
 
 
 
 
2,805

24,986

0.8
%
 
Total Affiliate Investments (Level 3)
 
$
171,649

$
262,175

8.2
%
 

See notes to consolidated financial statements.
10

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF SEPTEMBER 30, 2020 (Unaudited)
(in thousands, except share data)





 
 
 
September 30, 2020 (Unaudited)
 
 
Portfolio Company
Industry
Investments(1)(37)
Acquisition Date(44)
Coupon/Yield
Floor
Legal Maturity
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8th Avenue Food & Provisions, Inc.
Food Products
Second Lien Term Loan
10/10/2018
7.90% (1ML+ 7.75%)
—

10/1/2026
$
25,000

$
24,859

$
25,000

0.8
%
(3)(8)(10)



 
 
 
 
  

24,859

25,000

0.8
%

ACE Cash Express, Inc.
Consumer Finance
Senior Secured Note
12/15/2017
12.00%
—

12/15/2022
34,498

32,156

29,210

0.9
%
(8)(14)



 
 
 
 
  

32,156

29,210

0.9
%

Ahead Data Blue, LLC
IT Services
Second Lien Term Loan
12/13/2019
10.00% (1ML+ 8.50%)
1.50

11/8/2025
70,000

70,000

70,000

2.2
%
(3)(10)



 
 
 
 
  

70,000

70,000

2.2
%

AmeriLife Holdings, LLC
Insurance
Second Lien Term Loan
4/2/2020
9.50% (6ML+ 8.50%)
1.00

3/18/2028
14,250

13,978

13,978

0.4
%
(8)(10)



 
 
 
 
  

13,978

13,978

0.4
%

Apidos CLO XI
Structured Finance
Subordinated Structured Note
12/6/2012
Residual Interest, current yield 10.40%
—

10/17/2030
40,500

32,862

26,231

0.8
%
(5)(14)



 
 
 
 
  

32,862

26,231

0.8
%

Apidos CLO XII
Structured Finance
Subordinated Structured Note
3/15/2013
Residual Interest, current yield 14.79%
—

4/15/2031
52,203

39,315

30,351

1.0
%
(5)(14)



 
 
 
 
  

39,315

30,351

1.0
%

Apidos CLO XV
Structured Finance
Subordinated Structured Note
9/13/2013
Residual Interest, current yield 13.20%
—

4/21/2031
48,515

40,149

28,846

0.9
%
(5)(14)



 
 
 
 
  

40,149

28,846

0.9
%

Apidos CLO XXII
Structured Finance
Subordinated Structured Note
9/16/2015
Residual Interest, current yield 16.74%
—

4/21/2031
35,855

30,678

25,133

0.8
%
(5)(14)



 
 
 
 
  

30,678

25,133

0.8
%

Atlantis Health Care Group (Puerto Rico), Inc.
Health Care Providers & Services
Revolving Line of Credit - $3,000 Commitment
2/21/2013
10.75% (3ML+ 8.75%)
2.00

4/30/2021
—

—

—

—
%
(10)(15)
Senior Secured Term Loan
2/21/2013
10.75% (3ML+ 8.75%)
2.00

4/30/2021
71,205

71,205

71,205

2.2
%
(3)(10)



 
 
 
 
  

71,205

71,205

2.2
%

Barings CLO 2018-III
Structured Finance
Subordinated Structured Note
10/9/2014
Residual Interest, current yield 5.58%
—

7/20/2029
83,098

47,714

31,875

1.0
%
(5)(14)



 
 
 
 
  

47,714

31,875

1.0
%

Broder Bros., Co.
Textiles, Apparel & Luxury Goods
Senior Secured Note
12/4/2017
9.75% (3ML+ 8.50%)
1.25

12/2/2022
165,390

165,390

165,390

5.2
%
(3)(10)



 
 
 
 
  

165,390

165,390

5.2
%

Brookside Mill CLO Ltd.
Structured Finance
Subordinated Structured Note
4/25/2013
Residual Interest, current yield 0.00%
—

1/17/2028
36,300

17,033

12,204

0.4
%
(5)(14)(17)



 
 
 
 
  

17,033

12,204

0.4
%

California Street CLO IX Ltd.
Structured Finance
Subordinated Structured Note
4/19/2012
Residual Interest, current yield 8.25%
—

7/16/2032
58,915

41,677

27,920

0.9
%
(5)(14)



 
 
 
 
  

41,677

27,920

0.9
%

Candle-Lite Company, LLC
Household Products
Senior Secured Term Loan A
1/23/2018
6.75% (3ML+ 5.50%)
1.25

1/23/2023
11,875

11,875

11,875

0.4
%
(3)(10)
Senior Secured Term Loan B
1/23/2018
10.75% (3ML+ 9.50%)
1.25

1/23/2023
12,500

12,500

12,500

0.4
%
(3)(10)



 
 
 
 
  

24,375

24,375

0.8
%
 
Capstone Logistics Acquisition, Inc.
Commercial Services & Supplies
Second Lien Term Loan
10/7/2014
9.25% (1ML+ 8.25%)
1.00

10/7/2022
98,982

98,811

98,982

3.1
%
(3)(8)(10)



 
 
 
 
  

98,811

98,982

3.1
%
 
Carlyle C17 CLO Limited
Structured Finance
Subordinated Structured Note
1/24/2013
Residual Interest, current yield 19.82%
—

4/30/2031
24,870

15,599

13,480

0.4
%
(5)(14)



 
 
 
 
  

15,599

13,480

0.4
%
 
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.
Structured Finance
Subordinated Structured Note
4/7/2017
Residual Interest, current yield 16.36%
—

7/15/2030
25,534

19,436

16,156

0.5
%
(5)(14)



 
 
 
 
  

19,436

16,156

0.5
%
 
Carlyle Global Market Strategies CLO 2016-3, Ltd.
Structured Finance
Subordinated Structured Note
8/9/2016
Residual Interest, current yield 10.76%
—

10/22/2029
32,200

34,433

26,191

0.8
%
(5)(14)



 
 
 
 
  

34,433

26,191

0.8
%
 

See notes to consolidated financial statements.
11

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF SEPTEMBER 30, 2020 (Unaudited)
(in thousands, except share data)





 
 
 
September 30, 2020 (Unaudited)
 
 
Portfolio Company
Industry
Investments(1)(37)
Acquisition Date(44)
Coupon/Yield
Floor
Legal Maturity
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CCS-CMGC Holdings, Inc.
Health Care Providers & Services
First Lien Term Loan
5/23/2019
5.76% (3ML+ 5.50%)
—

10/1/2025
$
3,615

$
3,568

$
3,615

0.1
%
(3)(8)(10)
First Lien Term Loan
5/23/2019
5.72% (3ML+ 5.50%)
—

10/1/2025
5,984

5,908

5,984

0.2
%
(3)(8)(10)
Second Lien Term Loan
10/12/2018
9.26% (3ML+ 9.00%)
—

10/1/2026
37,000

36,466

37,000

1.2
%
(3)(8)(10)



 
 
 
 
  

45,942

46,599

1.5
%
 
Cent CLO 21 Limited
Structured Finance
Subordinated Structured Note
5/15/2014
Residual Interest, current yield 7.79%
—

7/29/2030
49,552

39,083

27,016

0.8
%
(5)(14)



 
 
 
 
  

39,083

27,016

0.8
%
 
CIFC Funding 2013-III-R, Ltd.
Structured Finance
Subordinated Structured Note
8/2/2013
Residual Interest, current yield 12.54%
—

4/24/2031
44,100

30,064

22,175

0.7
%
(5)(14)



 
 
 
 
  

30,064

22,175

0.7
%
 
CIFC Funding 2013-IV, Ltd.
Structured Finance
Subordinated Structured Note
10/22/2013
Residual Interest, current yield 15.49%
—

4/28/2031
45,500

33,730

28,626

0.9
%
(5)(14)



 
 
 
 
  

33,730

28,626

0.9
%
 
CIFC Funding 2014-IV-R, Ltd.
Structured Finance
Subordinated Structured Note
8/5/2014
Residual Interest, current yield 10.76%
—

10/17/2030
44,467

31,478

21,047

0.7
%
(5)(14)



 
 
 
 
  

31,478

21,047

0.7
%
 
CIFC Funding 2016-I, Ltd.
Structured Finance
Subordinated Structured Note
12/9/2016
Residual Interest, current yield 9.78%
—

10/21/2031
34,000

30,301

27,045

0.9
%
(5)(14)



 
 
 
 
  

30,301

27,045

0.9
%
 
Cinedigm DC Holdings, LLC
Entertainment
Senior Secured Term Loan
2/28/2013
11.00% (3ML+ 9.00%) plus 2.50% PIK
2.00

3/31/2021
12,107

12,057

12,038

0.4
%
(10)(39)



 
 
 
 
  

12,057

12,038

0.4
%
 
Class Valuation, LLC
Real Estate Management & Development
Senior Secured Term Loan
3/12/2018
9.75% (3ML+ 8.25%)
1.50

3/10/2023
31,537

31,537

31,537

1.0
%
(3)(10)



 
 
 
 
  

31,537

31,537

1.0
%
 
Collections Acquisition Company, Inc.
Diversified Financial Services
Senior Secured Term Loan
12/3/2019
10.15% (3ML+ 7.65%)
2.50

6/3/2024
30,165

30,165

30,165

0.9
%
(3)(10)



 
 
 
 
  

30,165

30,165

0.9
%
 
Columbia Cent CLO 27 Limited
Structured Finance
Subordinated Structured Note
12/18/2013
Residual Interest, current yield 6.24%
—

10/25/2028
40,275

23,202

18,935

0.6
%
(5)(14)



 
 
 
 
  

23,202

18,935

0.6
%

Coverall North America, Inc.
Commercial Services & Supplies
Senior Secured Term Loan A
11/2/2015
7.00% (3ML+ 6.00%)
1.00

5/3/2021
—

—

—

—
%
(3)(10)
 
 
 
 
 
 
 
 
21,872

21,872

0.7
%
 
CP VI Bella Midco
IT Services
Second Lien Term Loan
2/26/2018
6.90% (1ML+ 6.75%)
—

12/29/2025
15,750

15,712

15,750

0.5
%
(3)(8)(10)



 
 
 
 
  

15,712

15,750

0.5
%

Curo Group Holdings Corp.
Consumer Finance
Second Lien Term Loan
7/30/2020
—
—

9/1/2025
3,421

2,757

2,870

0.1
%

 
 
 
 
 
 
 
 
2,757

2,870

0.1
%

Digital Room, LLC
Commercial Services & Supplies
First Lien Term Loan
5/29/2019</