PROSPECT CAPITAL CORP - FORM 10-Q

Attached files

file	filename
EX-32.2 - EX-32.2 - PROSPECT CAPITAL CORP	psec10-qq32021ex322.htm
EX-32.1 - EX-32.1 - PROSPECT CAPITAL CORP	psec10-qq32021ex321.htm
EX-31.2 - EX-31.2 - PROSPECT CAPITAL CORP	psec10-qq32021ex312.htm
EX-31.1 - EX-31.1 - PROSPECT CAPITAL CORP	psec10-qq32021ex311.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 March 31, 2021
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 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 May 7, 2021, there were 387,758,075 shares of the registrant’s common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
	Forward-Looking Statements	3
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of March 31, 2021 (unaudited) and June 30, 2020	4
	Consolidated Statements of Operations for the three and nine months ended March 31, 2021 and March 31, 2020 (unaudited)	5
	Consolidated Statements of Changes in Net Assets for the three and nine months ended March 31, 2021 and March 31, 2020 (unaudited)	6
	Consolidated Statements of Cash Flows for the three and nine months ended March 31, 2021 and March 31, 2020 (unaudited)	8
	Consolidated Schedules of Investments as of March 31, 2021 (unaudited) and June 30, 2020	9
	Notes to Consolidated Financial Statements	48
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	111
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	153
Item 4.	Controls and Procedures	155
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	156
Item 1A.	Risk Factors	156
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	160
Item 3.	Defaults Upon Senior Securities	160
Item 4.	Mine Safety Disclosures	160
Item 5.	Other Information	161
Item 6.	Exhibits	165
	Signatures

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.

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)


	March 31, 2021		June 30, 2020

	(Unaudited)		(Audited)
Assets
Investments at fair value:
Control investments (amortized cost of $2,425,409 and $2,286,725, respectively)	$	2,721,942	$	2,259,292
Affiliate investments (amortized cost of $168,350 and $163,484, respectively)	299,985		187,537
Non-control/non-affiliate investments (amortized cost of $3,321,382 and $3,332,509, respectively)	2,861,401		2,785,499
Total investments at fair value (amortized cost of $5,915,141 and $5,782,718, respectively)	5,883,328		5,232,328
Cash	100,989		44,561
Receivables for:
Interest, net	10,188		11,712
Other	285		106
Deferred financing costs on Revolving Credit Facility (Note 4)	7,510		9,145
Due from broker	2,955		1,063
Prepaid expenses	195		1,248
Due from Affiliate (Note 13)	38		—
Total Assets	6,005,488		5,300,163
Liabilities
Revolving Credit Facility (Notes 4 and 8)	343,537		237,536
Prospect Capital InterNotes® (less unamortized debt issuance costs of $12,307 and $12,802, respectively) (Notes 7 and 8)	660,973		667,427
Public Notes (less unamortized discount and debt issuance costs of $14,259 and $11,613, respectively) (Notes 6 and 8)	892,342		782,106
Convertible Notes (less unamortized debt issuance costs of $4,518 and $8,892, respectively) (Notes 5 and 8)	262,755		450,598
Due to broker	48,669		1
Due to Prospect Capital Management (Note 13)	47,441		42,481
Dividends payable	23,249		22,412
Interest payable	16,731		29,066
Due to Prospect Administration (Note 13)	3,745		7,000
Accrued expenses	3,431		3,648

Other liabilities	775		2,027
Total Liabilities	2,303,648		2,244,302
Commitments and Contingencies (Note 3)
Net Assets	$	3,701,840	$	3,055,861

Components of Net Assets
Convertible Preferred Stock, par value $0.001 per share (140,000,000 shares authorized, with 40,000,000 shares of preferred stock authorized for each of the Series A1, Series M1, and Series M2 shares and 20,000,000 shares of preferred stock authorized for the Series AA1 shares; 2,654,253 and 0 Series A1 shares issued and outstanding, respectively; 0 and 0 Series AA1 shares issued and outstanding, respectively; 21,760 and 0 Series M1 shares issued and outstanding, respectively; and 0 and 0 Series M2 shares issued and outstanding, respectively) (Note 9)	$	66,900	$	—
Common stock, par value $0.001 per share (1,860,000,000 common shares authorized; 387,400,554 and 373,538,499 issued and outstanding, respectively) (Note 9)	387		374
Paid-in capital in excess of par (Note 9 and 12)	4,039,776		3,986,417
Total distributable loss (Note 12)	(405,223)		(930,930)
Net Assets	$	3,701,840	$	3,055,861
Net Asset Value Per Common Share (Note 16)	$	9.38	$	8.18

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2021		2020		2021		2020
Investment Income
Interest income:
Control investments	$	52,056	$	51,833	$	151,416	$	152,301
Affiliate investments	6,145		2,623		24,333		5,325
Non-control/non-affiliate investments	52,846		57,960		156,125		179,062
Structured credit securities	28,536		26,390		84,735		88,733
Total interest income	139,583		138,806		416,609		425,421
Dividend income:
Control investments	1,384		2,267		3,645		9,335

Non-control/non-affiliate investments	18		310		62		1,005
Total dividend income	1,402		2,577		3,707		10,340
Other income:
Control investments	15,877		9,440		45,493		34,012
Affiliate investments	38		—		102		—
Non-control/non-affiliate investments	2,556		3,678		8,717		8,528
Total other income (Note 10)	18,471		13,118		54,312		42,540
Total Investment Income	159,456		154,501		474,628		478,301
Operating Expenses
Base management fee (Note 13)	29,183		26,625		83,866		82,631
Income incentive fee (Note 13)	18,251		17,119		53,354		51,855
Interest and credit facility expenses	32,773		37,646		100,549		113,603
Allocation of overhead from Prospect Administration (Note 13)	2,685		4,096		10,768		13,601
Audit, compliance and tax related fees	989		421		2,267		2,729
Directors’ fees	113		113		339		339

Other general and administrative expenses	2,060		5		10,977		6,122
Total Operating Expenses	86,054		86,025		262,120		270,880
Net Investment Income	73,402		68,476		212,508		207,421
Net Realized and Net Change in Unrealized Gains (Losses) from Investments
Net realized gains (losses)
Control investments	121		—		2,953		—
Affiliate investments	745		—		4,469		—
Non-control/non-affiliate investments	15		26		29		(263)
Net realized gains (losses)	881		26		7,451		(263)
Net change in unrealized gains (losses)
Control investments	142,379		(97,444)		323,967		(172,328)
Affiliate investments	21,876		(9,516)		107,582		20,746
Non-control/non-affiliate investments	20,705		(150,037)		87,028		(231,766)
Net change in unrealized gains (losses)	184,960		(256,997)		518,577		(383,348)
Net Realized and Net Change in Unrealized Gains (Losses) from Investments	185,841		(256,971)		526,028		(383,611)
Net realized (losses) gains on extinguishment of debt	(12,835)		2,796		(18,415)		(2,647)
Net Increase (Decrease) in Net Assets Resulting from Operations	246,408		(185,699)		720,121		(178,837)
Preferred stock dividend	400		—		446		—
Net Increase (Decrease) in Net Assets Resulting from Operations attributable to Common Stockholders	$	246,008	$	(185,699)	$	719,675	$	(178,837)
Basic and diluted earnings (loss) per common share (Note 11)
Basic	$	0.64	$	(0.51)	$	1.89	$	(0.49)
Diluted	$	0.63	$	(0.51)	$	1.88	$	(0.49)
Weighted-average shares of common stock outstanding (Note 11)
Basic	385,996,921		367,685,511		380,985,329		367,460,412
Diluted	389,420,855		367,685,511		382,259,257		367,460,412

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(in thousands, except share data)

(Unaudited)


	Common Stock
Nine Months Ended March 31, 2020	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 Decrease in Net Assets resulting from Operations:
Net investment income						207,421		207,421
Net realized losses						(2,910)		(2,910)
Net change in unrealized losses						(383,348)		(383,348)
Distributions to Shareholders(1)
Distributions from earnings						(150,392)		(150,392)
Return of capital to common stockholders				(48,063)				(48,063)
Capital Transactions
Shares issued through reinvestment of dividends	686,901	1		4,391				4,392
Tax reclassifications of net assets (Note 12)				(78)		78		—
Total increase (decrease) for the nine months ended March 31, 2020	686,901	1		(43,750)		(329,151)		(372,900)
Balance as of March 31, 2020(1)	367,817,926	$	368	$	3,996,122	$	(1,063,115)	$	2,933,375


	Convertible Preferred Stock		Common Stock
Nine Months Ended March 31, 2021			Shares	Par		Paid-in capital in excess of par		Distributable earnings (loss)		Total Net Assets
Balance as of June 30, 2020(1)	$	—	373,538,499	$374		$	3,986,417	$	(930,930)	$	3,055,861
Net Increase in Net Assets resulting from Operations:
Net investment income								212,508		212,508
Net realized losses								(10,964)		(10,964)
Net change in unrealized gains								518,577		518,577
Distributions to Shareholders(1)
Distributions from earnings								(194,471)		(194,471)
Return of capital to common stockholders (Note 12)						(12,263)				(12,263)
Capital Transactions
Issuance of preferred stock	66,971					(7,610)				59,361
Shares issued through reinvestment of dividends	9		13,852,073	13		73,209				73,231
Conversion of preferred stock to common stock	(80)		9,982			80				—
Tax reclassifications of net assets (Note 12)						(57)		57		—
Total increase for the nine months ended March 31, 2021	66,900		13,862,055	13		53,359		525,707		645,979
Balance as of March 31, 2021	$	66,900	387,400,554	$	387	$	4,039,776	$	(405,223)	$	3,701,840

(1) Certain reclassifications have been made in the presentation of prior year and prior quarter amounts to conform to the presentation for the current fiscal year. In addition, we have not yet finalized return of capital estimates for the current period. See Note 2 and Note 12 within the accompanying notes to consolidated financial statements for further discussion.

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

(in thousands, except share data)

(Unaudited)


	Common Stock
Three Months Ended March 31, 2020	Shares	Par		Paid-in capital in excess of par		Distributable earnings (loss)		Total Net Assets
Balance as of December 31, 2019	367,584,244	$367		$	4,030,773	$	(847,275)	$	3,183,865
Net Decrease in Net Assets resulting from Operations:
Net investment income						68,476		68,476
Net realized gains						2,822		2,822
Net change in unrealized losses						(256,997)		(256,997)
Distributions to Shareholders(1)
Distributions from earnings						(30,141)		(30,141)
Return of capital to common stockholders				(36,051)				(36,051)
Capital Transactions
Shares issued through reinvestment of dividends	233,682	1		1,400				1,401
Total increase (decrease) for the three months ended March 31, 2020	233,682	1		(34,651)		(215,840)		(250,490)
Balance as of March 31, 2020	367,817,926	$	368	$	3,996,122	$	(1,063,115)	$	2,933,375


	Convertible Preferred Stock		Common Stock
Three Months Ended March 31, 2021			Shares	Par		Paid-in capital in excess of par		Distributable earnings (loss)		Total Net Assets
Balance as of December 31, 2020(1)	$	13,786	384,097,645	$384		$	4,023,978	$	(581,628)	$	3,456,520
Net Increase in Net Assets resulting from Operations:
Net investment income								73,402		73,402
Net realized losses								(11,954)		(11,954)
Net change in unrealized gains								184,960		184,960
Distributions to Shareholders
Distributions from earnings								(70,003)		(70,003)

Capital Transactions
Issuance of preferred stock	53,185					(5,579)				47,606
Shares issued through reinvestment of dividends	9		3,292,927	3		21,297				21,309
Conversion of preferred stock to common stock	(80)		9,982			80				—

Total increase for the three months ended March 31, 2021	53,114		3,302,909	3		15,798		176,405		245,320
Balance as of March 31, 2021	$	66,900	387,400,554	$	387	$	4,039,776	$	(405,223)	$	3,701,840

(1) Certain reclassifications have been made in the presentation of prior year to conform to the presentation for the current fiscal year. In addition, we have not yet finalized return of capital estimates for the current period. See Note 2 and Note 12 within the accompanying notes to consolidated financial statements for further discussion.

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share data)

(Unaudited)


	Nine Months Ended March 31,
	2021		2020
Operating Activities
Net increase (decrease) in net assets resulting from operations	$	720,121	$	(178,837)
Net realized losses on extinguishment of debt	18,415		2,647
Net realized (gains) losses on investments	(7,451)		263
Net change in unrealized (gains) losses on investments	(518,577)		383,348
Amortization of (accretion of premiums) discounts, net	(17,163)		5,750
Accretion of original issue discount	903		775
Amortization of deferred financing costs	5,527		6,342
Payment-in-kind interest	(58,750)		(35,134)
Structuring fees	(20,620)		(5,562)
Change in operating assets and liabilities:
Payments for purchases of investments	(701,768)		(721,764)
Proceeds from sale of investments and collection of investment principal	673,329		882,111
Increase in due to broker	48,668		—
Increase (decrease) in due to Prospect Capital Management	4,960		(2,781)
Decrease in interest receivable, net	1,524		10,851
Decrease in interest payable	(12,335)		(14,154)
Increase in preferred dividend payable	5		—
Decrease in accrued expenses	(217)		(222)
Increase in due from broker	(1,892)		—

Decrease in other liabilities	(1,252)		(212)
(Increase) decrease in other receivables	(179)		2,603

(Increase) decrease in due from affiliate	(38)		38
Decrease in prepaid expenses	1,053		709
(Decrease) Increase in due to Prospect Administration	(3,255)		6,597
Net Cash Provided by Operating Activities	131,008		343,368
Financing Activities
Borrowings under Revolving Credit Facility (Note 4)	668,000		990,000
Principal payments under Revolving Credit Facility (Note 4)	(561,999)		(991,400)
Issuances of Public Notes, net of original issue discount (Note 6)	395,781		—
Redemptions of Public Notes (Note 6)	(290,419)		(446)
Redemptions of Convertible Notes, net (Note 5)	(199,626)		(165,159)


Issuances of Prospect Capital InterNotes® (Note 7)	109,562		224,934
Redemptions of Prospect Capital InterNotes®, net (Note 7)	(116,511)		(260,074)
Financing costs paid and deferred	(6,053)		(7,651)



Proceeds from issuance of preferred stock, net of underwriting costs	61,823		—
Offering costs from issuance of preferred stock	(2,462)		—
Dividends paid	(132,676)		(194,024)
Net Cash Used in Financing Activities	(74,580)		(403,820)
Net Increase (Decrease) in Cash	56,428		(60,452)
Cash at beginning of period	44,561		107,098
Cash at End of Period	$	100,989	$	46,646
Supplemental Disclosures
Cash paid for interest	$	106,454	$	120,640
Purchases of investments settled net of proceeds from sale of investments	$	—	$	61,086
Non-Cash Financing Activities
Value of shares issued through reinvestment of dividends	$	73,231	$	4,392
Cost basis of investments written off as worthless	$	—	$	2,420

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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	$	40,203	$	40,203	$	40,203	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		0.4	%	(10)
		Series A Preferred Units to Spartan Energy Holdings, Inc. (10,000 shares)	9/25/2020		—	N/A	—		26,193		8,837		0.2	%	(16)
		Series B Convertible Preferred Stock (790 shares)	10/30/2015		—	N/A	—		63,225		1,035		—	%	(16)
		Common Stock (102,924 shares)	8/2/2013		—	N/A	—		86,240		—		—	%	(16)
									229,017		63,231		1.7	%
Credit Central Loan Company, LLC (21)	Consumer Finance	Subordinated Term Loan	12/28/2012	10.00% plus 10.00% PIK	—	6/26/2024	68,137		65,473		68,137		1.8	%	(14)(39)
		Class A Units (14,867,312 units)	12/28/2012		—	N/A	—		19,331		3,007		0.1	%	(14)(16)
		Net Revenues Interest (25% of Net Revenues)	1/28/2015		—	N/A	—		—		—		—	%	(14)(16)
									84,804		71,144		1.9	%
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	52,457		52,457		52,457		1.4	%	(10)(39)
		Senior Secured Term Loan	12/9/2016	11.00% (1ML+ 9.00%) plus 1.00% PIK	2.00	12/7/2024	22,949		22,949		22,949		0.6	%	(10)(39)
		Membership Interest (100%)	3/31/2014		—	N/A	—		22,738		7,700		0.2	%	(16)
									98,144		83,106		2.2	%
First Tower Finance Company LLC (23)	Consumer Finance	First Lien Term Loan	6/24/2014	10.00% plus 12.00% PIK	—	6/24/2024	272,633		272,633		272,633		7.3	%	(14)(39)
		Class A Units (95,709,910 units)	6/14/2012		—	N/A	—		81,146		306,454		8.3	%	(14)(16)
									353,779		579,087		15.6	%
Freedom Marine Solutions, LLC (24)	Energy Equipment & Services	Membership Interest (100%)	11/9/2006		—	N/A	—		43,892		12,058		0.3	%	(16)
									43,892		12,058		0.3	%
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	14,249		14,249		14,249		0.4	%	(10)
		Senior Secured Term Loan A	8/3/2012	6.50% (1ML+ 5.50%)	1.00	9/5/2022	79,242		79,242		79,242		2.1	%	(10)
		Senior Secured Term Loan B	8/3/2012	12.00% PIK	—	9/5/2022	139,838		139,838		139,838		3.8	%	(39)
		Common Stock (99,900 shares)	5/3/2019		—	N/A	—		45,118		130,070		3.5	%	(16)
									278,447		363,399		9.8	%
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	29,125		29,125		29,125		0.8	%	(10)(39)
		Senior Secured Note B	6/23/2014	10.00% (3ML+ 7.00%) plus 10.00% PIK	3.00	4/30/2025	15,311		15,311		15,311		0.4	%	(10)(39)
		Subordinated Unsecured Note to Broda Enterprises ULC	9/19/2013	10.00%	—	1/1/2028	5,860		7,200		5,295		0.1	%	(14)
		Common Stock (42,053 shares)	9/19/2013		—	N/A	—		27,349		—		—	%	(16)
									78,985		49,731		1.3	%

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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)

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	$	424,487	$	424,487	$	424,487	11.5	%	(10)(39)
		Senior Secured Term Loan B	12/31/2018	5.00% (3ML+ 2.00%) plus 5.50% PIK	3.00	12/31/2023	11,600		11,600		11,600		0.3	%	(10)(39)
		Senior Secured Term Loan C	10/31/2019	11.00% (3ML+ 10.00%) plus 2.25% PIK	1.00	12/31/2023	90,200		90,200		90,200		2.4	%	(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		5.0	%	(10)(39)
		Residual Profit Interest	12/31/2018		—	N/A	—		—		29,700		0.8	%	(35)
		Common Stock (3,254,594 shares)	12/31/2013		—	N/A	—		210		344,973		9.3	%	(45)
									709,922		1,084,385		29.3	%
Nationwide Loan Company LLC (27)	Consumer Finance	First Lien Term Loan	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	—		20,846		20,300		0.5	%	(14)(16)
									41,106		40,560		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	4,911		4,911		4,911		0.1	%	(3)(10)
		Common Stock (21,419 shares)	12/30/2019		—	N/A	—		12,869		37,744		1.1	%	(16)
									17,780		42,655		1.2	%
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		0.5	%	(10)(15)
		Senior Secured Term Loan A	12/31/2014	6.25% PIK (1ML+ 5.25%)	1.00	9/26/2025	40,953		40,953		40,953		1.1	%	(10)(39)
		Convertible Preferred Equity (282,407 shares)	6/15/2018		—	N/A	—		186,795		9,633		0.3	%	(16)
		Common Stock (6,778,414 shares)	9/29/2017		—	N/A	—		—		—		—	%	(16)
									248,573		71,411		1.9	%
R-V Industries, Inc.	Machinery	Senior Secured Term Loan	12/15/2020	10.00% (3ML+ 9.00%)	1.00	12/15/2028	28,622		28,622		28,622		0.8	%	(3)(10)
		Common Stock (745,107 shares)	6/26/2007		—	N/A	—		6,866		19,741		0.5	%	(16)
									35,488		48,363		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	4/5/2024	2,865		2,865		2,865		0.1	%	(10)(15)
		Senior Secured Term Loan A	7/22/2016	6.75% (3ML+ 5.75%)	1.00	4/5/2024	29,575		29,575		23,839		0.6	%	(10)
		Preferred Units (47,244,213 units)	3/31/2021		—	N/A	—		32,500		—		—	%	(16)
		Common Stock (10,000 units)	12/10/2018		—	N/A	—		—		—		—	%	(16)
									64,940		26,704		0.7	%
USES Corp. (30)	Commercial Services & Supplies	Senior Secured Term Loan A	3/31/2014	9.00% PIK	—	7/29/2024	53,882		30,651		35,401		1.0	%	(9)
		Senior Secured Term Loan B	3/31/2014	15.50% PIK	—	7/29/2024	74,525		35,568		—		—	%	(9)
		Senior Secured Term Loan	12/30/2020	10.00% (1ML+ 9.00%)	1.00	7/29/2024	2,000		2,000		2,000		0.1	%	(10)
		Common Stock (268,962 shares)	6/15/2016		—	N/A	—		—		—		—	%	(16)
									68,219		37,401		1.1	%
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		0.9	%	(39)
		Consolidated Revenue Interest (2.0%)	6/22/2018		—	N/A	—		—		1,989		0.1	%	(12)
		Common Stock (50,000 shares)	12/31/2012		—	N/A	—		26,204		99,987		2.7	%
									69,935		145,707		4.0	%
Total Control Investments (Level 3)									$	2,425,409	$	2,721,942	73.5	%

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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)

Nixon, Inc. (32)	Textiles, Apparel & Luxury Goods	Common Stock (857 units)	5/12/2017		—	N/A	$	—	$	—	$	—	—	%	(16)
									—		—		—	%
PGX Holdings, Inc. (6)	Diversified Consumer Services	First Lien Term Loan	11/13/2020	6.25% (12ML+ 5.25%) plus 4.25% PIK	1.00	9/29/2023	32,179		30,433		32,179		0.8	%	(3)(10)(39)
		1.5 Lien Term Loan	5/27/2020	14.50% PIK (12ML+ 13.50%)	1.00	6/28/2024	17,522		17,522		17,522		0.5	%	(10)(39)
		Second Lien Term Loan	9/29/2014	15.75% PIK (1ML+ 14.75%)	1.00	9/29/2024	117,590		117,590		117,590		3.2	%	(10)(39)
		Common Stock (40,780,359 shares)	5/27/2020		—	N/A	—		—		106,261		2.9	%	(16)
									165,545		273,552		7.4	%
Targus Cayman HoldCo Limited (33)	Textiles, Apparel & Luxury Goods	Common Stock (7,383,395 shares)	2/12/2016		—	N/A	—		2,805		26,433		0.7	%	(16)
									2,805		26,433		0.7	%
Total Affiliate Investments (Level 3)									$	168,350	$	299,985	8.1	%

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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	7.86% (1ML+ 7.75%)	—	10/1/2026	$	27,133	$	26,973	$	27,133	0.7	%	(3)(8)(10)
									26,973		27,133		0.7	%
ACE Cash Express, Inc.	Consumer Finance	Senior Secured Note	12/15/2017	12.00%	—	12/15/2022	39,998		36,985		37,865		1.0	%	(8)(46)
									36,985		37,865		1.0	%
Ahead Data Blue, LLC	IT Services	Second Lien Term Loan	10/16/2020	9.50% (6ML+ 8.50%)	1.00	10/16/2028	57,500		57,500		57,500		1.6	%	(3)(10)
									57,500		57,500		1.6	%
AmeriLife Holdings, LLC	Insurance	Second Lien Term Loan	4/2/2020	9.50% (6ML+ 8.50%)	1.00	3/18/2028	21,750		21,371		21,723		0.6	%	(3)(8)(10)
									21,371		21,723		0.6	%
Apidos CLO XI	Structured Finance	Subordinated Structured Note	12/6/2012	Residual Interest, current yield 12.02%	—	10/17/2030	40,500		32,391		29,164		0.8	%	(5)(14)
									32,391		29,164		0.8	%
Apidos CLO XII	Structured Finance	Subordinated Structured Note	3/15/2013	Residual Interest, current yield 13.83%	—	4/15/2031	52,203		38,340		29,828		0.8	%	(5)(14)
									38,340		29,828		0.8	%
Apidos CLO XV	Structured Finance	Subordinated Structured Note	9/13/2013	Residual Interest, current yield 14.84%	—	4/21/2031	48,515		39,707		31,133		0.8	%	(5)(14)
									39,707		31,133		0.8	%
Apidos CLO XXII	Structured Finance	Subordinated Structured Note	9/16/2015	Residual Interest, current yield 17.16%	—	4/21/2031	35,855		30,717		25,733		0.7	%	(5)(14)
									30,717		25,733		0.7	%
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	4/29/2022	—		—		—		—	%	(10)(15)
		Senior Secured Term Loan	2/21/2013	10.75% (3ML+ 8.75%)	2.00	4/29/2022	70,797		70,797		70,797		1.9	%	(3)(10)
									70,797		70,797		1.9	%
Barings CLO 2018-III	Structured Finance	Subordinated Structured Note	10/9/2014	Residual Interest, current yield 9.88%	—	7/20/2029	83,098		45,804		31,925		0.9	%	(5)(14)
									45,804		31,925		0.9	%
Broder Bros., Co.	Textiles, Apparel & Luxury Goods	Senior Secured Note	12/4/2017	9.75% (3ML+ 8.50%)	1.25	12/2/2022	163,556		163,556		163,556		4.4	%	(3)(10)
									163,556		163,556		4.4	%
Brookside Mill CLO Ltd.	Structured Finance	Subordinated Structured Note	4/25/2013	Residual Interest, current yield 0.00%	—	1/17/2028	36,300		15,682		10,569		0.3	%	(5)(14)(17)
									15,682		10,569		0.3	%
California Street CLO IX Ltd.	Structured Finance	Subordinated Structured Note	4/19/2012	Residual Interest, current yield 12.31%	—	7/16/2032	58,915		42,195		29,668		0.8	%	(5)(14)
									42,195		29,668		0.8	%
Candle-Lite Company, LLC	Household Products	Senior Secured Term Loan A	1/23/2018	6.75% (3ML+ 5.50%)	1.25	1/23/2023	11,750		11,750		11,750		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		0.3	%	(3)(10)
									24,250		24,250		0.7	%
Capstone Logistics Acquisition, Inc.	Commercial Services & Supplies	Second Lien Delayed Draw Term Loan - $1,500 Commitment	11/19/2020	9.75% (1ML+ 8.75%)	1.00	11/13/2028	—		—		—		—	%	(8)(10)(15)
		Second Lien Term Loan	11/19/2020	9.75% (1ML+ 8.75%)	1.00	11/13/2028	8,500		8,196		8,477		0.2	%	(3)(8)(10)
									8,196		8,477		0.2	%
Carlyle C17 CLO Limited	Structured Finance	Subordinated Structured Note	1/24/2013	Residual Interest, current yield 18.76%	—	4/30/2031	24,870		15,809		13,575		0.4	%	(5)(14)
									15,809		13,575		0.4	%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.	Structured Finance	Subordinated Structured Note	4/7/2017	Residual Interest, current yield 18.38%	—	7/15/2030	25,534		20,119		17,206		0.5	%	(5)(14)
									20,119		17,206		0.5	%

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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)

Carlyle Global Market Strategies CLO 2016-3, Ltd.	Structured Finance	Subordinated Structured Note	8/9/2016	Residual Interest, current yield 11.89%	—	10/22/2029	$	32,200	$	33,461	$	26,949	0.7	%	(5)(14)
									33,461		26,949		0.7	%
CCS-CMGC Holdings, Inc.	Health Care Providers & Services	First Lien Term Loan	5/23/2019	5.61% (1ML+ 5.50%)	—	10/1/2025	9,550		9,440		9,550		0.3	%	(3)(8)(10)
		Second Lien Term Loan	10/12/2018	9.11% (1ML+ 9.00%)	—	10/1/2026	37,000		36,510		37,000		1.0	%	(3)(8)(10)
									45,950		46,550		1.3	%
Cent CLO 21 Limited	Structured Finance	Subordinated Structured Note	5/15/2014	Residual Interest, current yield 12.21%	—	7/29/2030	49,552		39,361		30,116		0.8	%	(5)(14)
									39,361		30,116		0.8	%
CIFC Funding 2013-III-R, Ltd.	Structured Finance	Subordinated Structured Note	8/2/2013	Residual Interest, current yield 14.21%	—	4/24/2031	44,100		29,613		20,096		0.5	%	(5)(14)
									29,613		20,096		0.5	%
CIFC Funding 2013-IV, Ltd.	Structured Finance	Subordinated Structured Note	10/22/2013	Residual Interest, current yield 17.14%	—	4/28/2031	45,500		33,401		31,069		0.8	%	(5)(14)
									33,401		31,069		0.8	%
CIFC Funding 2014-IV-R, Ltd.	Structured Finance	Subordinated Structured Note	8/5/2014	Residual Interest, current yield 13.29%	—	10/17/2030	44,467		31,395		22,342		0.6	%	(5)(14)
									31,395		22,342		0.6	%
CIFC Funding 2016-I, Ltd.	Structured Finance	Subordinated Structured Note	12/9/2016	Residual Interest, current yield 11.78%	—	10/21/2031	34,000		30,353		28,585		0.8	%	(5)(14)
									30,353		28,585		0.8	%
Cinedigm DC Holdings, LLC	Entertainment	Senior Secured Term Loan	2/28/2013	11.00% (3ML+ 9.00%) plus 2.50% PIK	2.00	3/31/2022	7,786		7,736		7,786		0.2	%	(10)(39)
									7,736		7,786		0.2	%
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		0.8	%	(3)(10)
									30,165		30,165		0.8	%
Columbia Cent CLO 27 Limited	Structured Finance	Subordinated Structured Note	12/18/2013	Residual Interest, current yield 7.94%	—	10/25/2028	40,275		22,978		18,456		0.5	%	(5)(14)
									22,978		18,456		0.5	%
Coverall North America, Inc.	Commercial Services & Supplies	Senior Secured Term Loan B	11/2/2015	12.00% (3ML+ 11.00%)	1.00	5/3/2022	10,872		10,872		10,872		0.3	%	(3)(10)
									10,872		10,872		0.3	%
CP VI Bella Midco	IT Services	Second Lien Term Loan	2/26/2018	6.86% (1ML+ 6.75%)	—	12/29/2025	15,750		15,716		15,750		0.4	%	(3)(8)(10)
									15,716		15,750		0.4	%
Curo Group Holdings Corp.	Consumer Finance	Second Lien Term Loan	7/30/2020	8.25%	—	9/1/2025	14,621		12,399		14,621		0.4	%	(14)(47)
									12,399		14,621		0.4	%
Digital Room, LLC	Commercial Services & Supplies	First Lien Term Loan	5/29/2019	5.20% (6ML+ 5.00%)	—	5/21/2026	9,825		9,735		9,825		0.3	%	(3)(8)(10)
		Second Lien Term Loan	5/30/2019	9.20% (6ML+ 9.00%)	—	5/21/2027	70,000		70,000		70,000		1.9	%	(3)(8)(10)
									79,735		79,825		2.2	%
Dunn Paper, Inc.	Paper & Forest Products	First Lien Term Loan	11/27/2019	5.75% (2ML+ 4.75%)	1.00	8/26/2022	4,488		4,426		4,488		0.1	%	(3)(8)(10)
		Second Lien Term Loan	10/7/2016	9.75% (2ML+ 8.75%)	1.00	8/26/2023	11,500		11,420		11,500		0.3	%	(3)(8)(10)
									15,846		15,988		0.4	%
Easy Gardener Products, Inc.	Household Durables	Third Lien Term Loan	6/11/2020	10.25% (3ML+ 10.00%)	0.25	9/30/2024	3,970		3,970		3,970		0.1	%	(10)
		Class A Units of EZG Holdings, LLC (200 units)	6/11/2020		—	N/A	—		313		781		—	%	(16)
		Class B Units of EZG Holdings, LLC (12,525 units)	6/11/2020		—	N/A	—		1,688		6,890		0.2	%	(16)
									5,971		11,641		0.3	%
Edmentum (22)	Diversified Consumer Services	Escrow Receivable	12/11/2020		—	N/A	—		—		128		—	%	(16)
									—		128		—	%

See notes to consolidated financial statements.

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2021 (Unaudited)

(in thousands, except share data)


							March 31, 2021 (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)

Engine Group, Inc. (7)	Media	Senior Secured Term Loan	11/17/2020	5.75% (3ML+ 4.75%)	1.00	11/17/2023	$	12,229	$	12,229	$	10,966	0.3	%	(8)(10)
		Class B Common Units (1,039,554 units)	11/17/2020		—	N/A	—		26,991		—		—	%	(8)
									39,220		10,966		0.3	%
EXC Holdings III Corp	Technology Hardware, Storage & Peripherals	Second Lien Term Loan	12/5/2017	8.50% (3ML+ 7.50%)	1.00	12/1/2025	12,500		12,427		12,500		0.3	%	(3)(8)(10)
									12,427		12,500		0.3	%
Eze Castle Integration, Inc. (f/k/a/ H.I.G. ECI Merger Sub, Inc.)	IT Services	Delayed Draw Term Loan - $1,786 Commitment	7/15/2020	10.00% (1ML+ 8.50%)	1.50	7/15/2025	—		—		—		—	%	(10)(15)
		First Lien Term Loan	7/15/2020	10.00% (1ML+ 8.50%)	1.50	7/15/2025	47,853		47,853		47,853		1.3	%	(3)(10)
									47,853		47,853		1.3	%
First Brands Group	Auto Components	First Lien Term Loan	3/24/2021	6.00% (3ML+ 5.00%)	1.00	3/30/2027	16,750		16,583		16,750		0.5	%	(8)(10)
		Second Lien Term Loan	3/24/2021	9.50% (3ML+ 8.50%)	1.00	3/30/2028	32,000		31,360		32,000		0.9	%	(8)(10)
									47,943		48,750		1.4	%
Galaxy XV CLO, Ltd.	Structured Finance	Subordinated Structured Note	2/13/2013	Residual Interest, current yield 12.91%	—	10/15/2030	50,525		35,502		26,388		0.8	%	(5)(14)
									35,502		26,388		0.8	%
Galaxy XXVII CLO, Ltd.	Structured Finance	Subordinated Structured Note	9/30/2013	Residual Interest, current yield 14.38%	—	5/16/2031	24,575		16,901		12,061		0.3	%	(5)(14)
									16,901		12,061		0.3	%
Galaxy XXVIII CLO, Ltd.	Structured Finance	Subordinated Structured Note	5/30/2014	Residual Interest, current yield 11.16%	—	7/15/2031	39,905		29,204		16,806		0.5	%	(5)(14)
									29,204		16,806		0.5	%
GEON Performance Solutions, LLC	Chemicals	Revolving Line of Credit - $3,621 Commitment	12/12/2019	7.88% (1ML+ 6.25%)	1.63	10/25/2024	—		—		—		—	%	(10)(15)
		First Lien Term Loan	12/12/2019	7.88% (1ML+ 6.25%)	1.63

PROSPECT CAPITAL CORP - FORM 10-Q - May 10, 2021

Attached files