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Section 1: 10-Q (10-Q)

Document
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, 2019
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
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 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 May 7, 2019
$0.001 par value
 
366,967,671




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. 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, 2018, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

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)
 
March 31, 2019
 
June 30, 2018
 
 
 
(Unaudited)
 
(Audited)
Assets
 
 
 

Investments at fair value:
 

 
 

Control investments (amortized cost of $2,331,616 and $2,300,526, respectively)
$
2,394,716

 
$
2,404,326

Affiliate investments (amortized cost of $180,279 and $55,637, respectively)
91,042

 
58,436

Non-control/non-affiliate investments (amortized cost of $3,437,174 and $3,475,295, respectively)
3,214,915

 
3,264,517

Total investments at fair value (amortized cost of $5,949,069 and $5,831,458, respectively)
5,700,673

 
5,727,279

Cash
120,566

 
83,758

Receivables for:
 
 
 
Interest, net
16,925

 
19,783

Other
985

 
1,867

Deferred financing costs on Revolving Credit Facility (Note 4)
8,386

 
2,032

Due from broker (Note 6)
539

 
3,029

Prepaid expenses
285

 
984

Due from Affiliate (Note 13)
88

 
88

Total Assets 
5,848,447

 
5,838,820

Liabilities 
 

 
 

Revolving Credit Facility (Notes 4 and 8)
99,000

 
37,000

Convertible Notes (less unamortized debt issuance costs of $15,207 and $13,074, respectively)
(Notes 5 and 8)
763,245

 
809,073

Public Notes (less unamortized discount and debt issuance costs of $14,296 and $11,007,
  respectively) (Notes 6 and 8)
775,624

 
716,810

Prospect Capital InterNotes® (less unamortized debt issuance costs of $11,969 and $11,998,
respectively) (Notes 7 and 8)
742,752

 
748,926

Due to Prospect Capital Management (Note 13)
48,855

 
49,045

Interest payable
25,426

 
33,741

Due to broker
31,819

 
6,159

Dividends payable
22,013

 
21,865

Accrued expenses
5,478

 
5,426

Due to Prospect Administration (Note 13)
1,807

 
2,212

Other liabilities
613

 
1,516

Total Liabilities 
2,516,632

 
2,431,773

Commitments and Contingencies (Note 3)


 
 
Net Assets 
$
3,331,815

 
$
3,407,047

 
 
 
 
Components of Net Assets 
 

 
 

Common stock, par value $0.001 per share (1,000,000,000 common shares authorized; 366,884,974 and 364,409,938 issued and outstanding, respectively) (Note 9)
$
367

 
$
364

Paid-in capital in excess of par (Note 9)
4,038,229

 
4,021,541

Total distributable earnings (loss)
(706,781
)
 
(614,858
)
Net Assets 
$
3,331,815

 
$
3,407,047

 
 
 
 
Net Asset Value Per Share (Note 16) 
$
9.08

 
$
9.35


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 March 31,
 
Nine Months Ended March 31,
 
2019
 
2018
 
2019
 
2018
Investment Income
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
Control investments
$
51,078

 
$
45,944

 
$
161,206

 
$
139,392

Affiliate investments
230

 
271

 
631

 
476

Non-control/non-affiliate investments
67,656

 
68,376

 
204,944

 
216,639

Structured credit securities
36,112

 
31,271

 
105,731

 
90,822

Total interest income
155,076

 
145,862

 
472,512

 
447,329

Dividend income:
 
 
 
 
 
 
 
Control investments
3,612

 
5,639

 
31,277

 
5,639

Affiliate investments
659

 

 
659

 

Non-control/non-affiliate investments
253

 
648

 
781

 
1,518

Total dividend income
4,524

 
6,287

 
32,717

 
7,157

Other income:
 
 
 
 
 
 
 
Control investments
10,799

 
6,188

 
29,331

 
12,317

Non-control/non-affiliate investments
710

 
4,498

 
4,854

 
17,011

Total other income (Note 10)
11,509

 
10,686

 
34,185

 
29,328

Total Investment Income
171,109

 
162,835

 
539,414

 
483,814

Operating Expenses
 
 
 
 
 
 
 
Base management fee (Note 13)
29,540

 
29,268

 
92,684

 
88,990

Income incentive fee (Note 13)
19,315

 
17,612

 
60,808

 
51,843

Interest and credit facility expenses
38,946

 
37,479

 
117,510

 
117,861

Allocation of overhead from Prospect Administration (Note 13)
2,084

 
3,195

 
11,091

 
5,899

Audit, compliance and tax related fees
680

 
1,130

 
3,462

 
4,084

Directors’ fees
112

 
113

 
341

 
338

Other general and administrative expenses
3,170

 
3,592

 
10,286

 
7,429

Total Operating Expenses
93,847

 
92,389

 
296,182

 
276,444

Net Investment Income
77,262

 
70,446

 
243,232

 
207,370

Net Realized and Net Change in Unrealized Gains (Losses) from Investments
 
 
 
 
 
 
 
Net realized gains (losses)
 
 
 
 
 
 
 
Control investments
11,507

 
2

 
14,309

 
13

Affiliate investments

 
(14,197
)
 

 
(13,351
)
Non-control/non-affiliate investments
(2,024
)
 
(23
)
 
(792
)
 
(5,116
)
Net realized gains (losses)
9,483

 
(14,218
)
 
13,517

 
(18,454
)
Net change in unrealized gains (losses)
 
 
 
 
 
 
 
Control investments
11,686

 
1,380

 
(22,129
)
 
46,898

Affiliate investments
(4,101
)
 
12,952

 
(23,750
)
 
19,678

Non-control/non-affiliate investments
(2,155
)
 
(18,188
)
 
(98,338
)
 
(68,488
)
Net change in unrealized gains (losses)
5,430

 
(3,856
)
 
(144,217
)
 
(1,912
)
Net Realized and Net Change in Unrealized Gains (Losses) from Investments
14,913

 
(18,074
)
 
(130,700
)
 
(20,366
)
Net realized losses on extinguishment of debt
(2,980
)
 
(513
)
 
(6,931
)
 
(1,445
)
Net Increase in Net Assets Resulting from Operations
$
89,195

 
$
51,859

 
$
105,601

 
$
185,559

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

 
$
0.14

 
$
0.29

 
$
0.51

Dividends declared per share
$
(0.18
)
 
$
(0.18
)
 
$
(0.54
)
 
$
(0.59
)

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
 
 
 
 
Nine Months Ended March 31, 2019 (Unaudited)
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)(1)
 
Total Net Assets
Balance as of June 30, 2018
 
364,409,938

 
$
364

 
$
4,021,541

 
$
(614,858
)
 
$
3,407,047

Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
 
 
 
 
 
243,232

 
243,232

Net realized gains
 
 
 
 
 
 
 
6,586

 
6,586

Net change in net unrealized losses
 
 
 
 
 
 
 
(144,217
)
 
(144,217
)
Distributions to Shareholders:
 
 
 
 
 
 
 
 
 
 
Distributions from earnings
 
 
 
 
 
 
 
(197,555
)
 
(197,555
)
Value of shares issued through reinvestment of dividends
 
2,475,036

 
3

 
16,719

 
 
 
16,722

Tax reclassifications of net assets (Note 12)
 
 
 
 
 
(31
)
 
31

 

Total increase (decrease) for the nine months ended March 31, 2019
 
2,475,036

 
3

 
16,688

 
(91,923
)
 
(75,232
)
Balance as of March 31, 2019
 
366,884,974

 
$
367

 
$
4,038,229

 
$
(706,781
)
 
$
3,331,815

 
 
Common Stock
 
 
 
 
Nine Months Ended March 31, 2018 (Unaudited)
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)(2)
 
Total Net Assets
Balance as of June 30, 2017
 
360,076,933

 
$
360

 
$
3,991,317

 
$
(636,725
)
 
$
3,354,952

Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
 
 
 
 
 
207,370

 
207,370

Net realized losses
 
 
 
 
 
 
 
(19,899
)
 
(19,899
)
Net change in net unrealized losses
 
 
 
 
 
 
 
(1,912
)
 
(1,912
)
Distributions to Shareholders:
 
 
 
 
 
 
 
 
 
 
Distributions from earnings
 
 
 
 
 
 
 
(211,733
)
 
(211,733
)
Value of shares issued through reinvestment of dividends
 
2,580,429

 
3

 
17,615

 
 
 
17,618

Tax reclassifications of net assets (Note 12)
 
 
 
 
 
772

 
(772
)
 

Total increase (decrease) for the nine months ended March 31, 2018
 
2,580,429

 
3

 
18,387

 
(26,946
)
 
(8,556
)
Balance as of March 31, 2018
 
362,657,362

 
$
363

 
$
4,009,704

 
$
(663,671
)
 
$
3,346,396

(1)  The following table provides the reconciliation of the components of distributable earnings (loss) to conform to the current period presentation:
 
Overdistributed Net Investment Income
 
Realized gains (losses)
 
Net unrealized loss
 
Distributable earnings (loss)
Balance as of June 30, 2018
$
(45,186
)
 
$
(465,493
)
 
$
(104,179
)
 
$
(614,858
)
Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
Net investment income
243,232

 
 
 
 
 
243,232

Net realized gains
 
 
6,586

 
 
 
6,586

Net change in net unrealized losses
 
 
 
 
(144,217
)
 
(144,217
)
Distributions to Shareholders:
 
 
 
 
 
 
 
Distributions from net investment income
(197,555
)
 
 
 
 
 
(197,555
)
Tax reclassifications of net assets (Note 12)
31

 
 
 
 
 
31

Balance as of March 31, 2019
$
522

 
$
(458,907
)
 
$
(248,396
)
 
$
(706,781
)
(2)  The following table provides the reconciliation of the prior year’s components of distributable earnings (loss) to conform to the current period presentation:
 
Overdistributed Net Investment Income
 
Realized gains (losses)
 
Net unrealized loss
 
Distributable earnings (loss)
Balance as of June 30, 2017
$
(54,039
)
 
$
(439,435
)
 
$
(143,251
)
 
$
(636,725
)
Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
Net investment income
207,370

 
 
 
 
 
207,370

Net realized losses
 
 
(19,899
)
 
 
 
(19,899
)
Net change in net unrealized losses
 
 
 
 
(1,912
)
 
(1,912
)
Distributions to Shareholders:
 
 
 
 
 
 
 
Distributions from net investment income
(211,733
)
 
 
 
 
 
(211,733
)
Tax reclassifications of net assets (Note 12)
(772
)
 
 
 
 
 
(772
)
Balance as of March 31, 2018
$
(59,174
)
 
$
(459,334
)
 
$
(145,163
)
 
$
(663,671
)

See notes to consolidated financial statements.
6


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, 2019
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)(3)
 
Total Net Assets
Balance as of December 31, 2018
 
366,055,966

 
$
366

 
$
4,032,761

 
$
(729,952
)
 
$
3,303,175

Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
 
 
 
 
 
77,262

 
77,262

Net realized gains
 
 
 
 
 
 
 
6,503

 
6,503

Net change in net unrealized losses
 
 
 
 
 
 
 
5,430

 
5,430

Distributions to Shareholders:
 
 
 
 
 
 
 
 
 
 
Distributions from earnings
 
 
 
 
 
 
 
(66,024
)
 
(66,024
)
Value of shares issued through reinvestment of dividends
 
829,008

 
1

 
5,468

 
 
 
5,469

Total increase (decrease) for the three months ended March 31, 2019
 
829,008

 
1

 
5,468

 
23,171

 
28,640

Balance as of March 31, 2019
 
366,884,974

 
$
367

 
$
4,038,229

 
$
(706,781
)
 
$
3,331,815

 
 
Common Stock
 
 
 
 
Three Months Ended March 31, 2018
 
Shares
 
Par
 
Paid-in capital in excess of par
 
Distributable earnings (loss)(4)
 
Total Net Assets
Balance as of December 31, 2017
 
360,980,752

 
$
361

 
$
3,998,406

 
$
(650,355
)
 
$
3,348,412

Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
 
 
 
 
 
70,446

 
70,446

Net realized losses
 
 
 
 
 
 
 
(14,731
)
 
(14,731
)
Net change in net unrealized losses
 
 
 
 
 
 
 
(3,857
)
 
(3,857
)
Distributions to Shareholders:
 
 
 
 
 
 
 
 
 
 
Distributions from earnings
 
 
 
 
 
 
 
(65,174
)
 
(65,174
)
Value of shares issued through reinvestment of dividends
 
1,676,610

 
2

 
11,298

 
 
 
11,300

Total increase (decrease) for the three months ended March 31, 2018
 
1,676,610

 
2

 
11,298

 
(13,316
)
 
(2,016
)
Balance as of March 31, 2018
 
362,657,362

 
$
363

 
$
4,009,704

 
$
(663,671
)
 
$
3,346,396

(3)  The following table provides the reconciliation of the components of distributable earnings (loss) to conform to the current period presentation:
 
Overdistributed Net Investment Income
 
Realized gains (losses)
 
Net unrealized loss
 
Distributable earnings (loss)
Balance as of December 31, 2018
$
(10,716
)
 
$
(465,410
)
 
$
(253,826
)
 
$
(729,952
)
Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
Net investment income
77,262

 
 
 
 
 
77,262

Net realized gains
 
 
6,503

 
 
 
6,503

Net change in net unrealized losses
 
 
 
 
5,430

 
5,430

Distributions to Shareholders:
 
 
 
 
 
 
 
Distributions from net investment income
(66,024
)
 
 
 
 
 
(66,024
)
Balance as of March 31, 2019
$
522

 
$
(458,907
)
 
$
(248,396
)
 
$
(706,781
)
(4)  The following table provides the reconciliation of the prior year’s components of distributable earnings (loss) to conform to the current period presentation:
 
Overdistributed Net Investment Income
 
Realized gains (losses)
 
Net unrealized loss
 
Distributable earnings (loss)
Balance as of December 31, 2017
$
(64,446
)
 
$
(444,603
)
 
$
(141,306
)
 
$
(650,355
)
Net Increase in Net Assets Resulting from Operations:
 
 
 
 
 
 
 
Net investment income
70,446

 
 
 
 
 
70,446

Net realized losses
 
 
(14,731
)
 
 
 
(14,731
)
Net change in net unrealized losses
 
 
 
 
(3,857
)
 
(3,857
)
Distributions to Shareholders:
 
 
 
 
 
 
 
Distributions from net investment income
(65,174
)
 
 
 
 
 
(65,174
)
Balance as of March 31, 2018
$
(59,174
)
 
$
(459,334
)
 
$
(145,163
)
 
$
(663,671
)


See notes to consolidated financial statements.
7


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

 
Nine Months Ended March 31,
 
2019
 
2018
Operating Activities
 
 
 
Net increase in net assets resulting from operations
$
105,601

 
$
185,559

Net realized losses on extinguishment of debt
6,931

 
1,445

Net realized (gains) losses on investments
(13,517
)
 
18,454

Net change in net unrealized losses on investments
144,217

 
1,912

(Accretion of premiums) and amortization of discounts, net
(2,654
)
 
17,706

Accretion of discount on Public Notes (Note 6)
406

 
212

Amortization of deferred financing costs
8,699

 
9,168

Payment-in-kind interest
(29,663
)
 
(6,128
)
Structuring fees
(3,434
)
 
(9,135
)
Change in operating assets and liabilities:
 
 
 
Payments for purchases of investments
(483,508
)
 
(1,375,555
)
Proceeds from sale of investments and collection of investment principal
415,165

 
1,471,247

Increase (decrease) in due to broker
25,660

 
(25,914
)
Decrease in due to Prospect Capital Management
(190
)
 
(1,240
)
Decrease (increase) in interest receivable, net
2,858

 
(19,952
)
Decrease in interest payable
(8,315
)
 
(9,042
)
Increase (decrease) in accrued expenses
52

 
(60
)
Decrease in due from broker
2,490

 

Decrease in other liabilities
(903
)
 
(1,286
)
Decrease in other receivables
882

 
88

Increase in due from Prospect Administration

 
(60
)
Increase in due from affiliate

 
(74
)
Decrease in prepaid expenses
699

 
559

(Decrease) Increase in due to Prospect Administration
(405
)
 
238

Net Cash Provided by Operating Activities
171,071

 
258,142

Financing Activities
 
 
 
Borrowings under Revolving Credit Facility (Note 4)
912,154

 
427,000

Principal payments under Revolving Credit Facility (Note 4)
(850,154
)
 
(341,000
)
Issuances of Public Notes, net of original issue discount (Note 6)
215,638

 

Redemptions of Public Notes (Note 6)
(153,536
)
 

Redemptions of Convertible Notes, net (Note 5)
(246,670
)
 
(136,153
)
Issuance of Convertible Notes (Note 5)
201,250

 

Issuances of Prospect Capital InterNotes® (Note 7)
124,643

 
69,428

Redemptions of Prospect Capital InterNotes®, net (Note 7)
(130,846
)
 
(293,851
)
Financing costs paid and deferred
(26,057
)
 
(1,724
)
Dividends paid
(180,685
)
 
(202,362
)
Net Cash Used in Financing Activities
(134,263
)
 
(478,662
)
Net Increase (Decrease) in Cash
36,808

 
(220,520
)
Cash at beginning of period
83,758

 
318,083

Cash at End of Period
$
120,566

 
$
97,563

Supplemental Disclosures
 
 
 
Cash paid for interest
$
116,720

 
$
117,523

Non-Cash Financing Activities
 
 
 
Value of shares issued through reinvestment of dividends
$
16,722

 
$
17,618

Cost basis of investments written off as worthless
$
371

 
$
20,235


See notes to consolidated financial statements.
8


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





 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets



 







LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 



 







Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 



 







CP Energy Services Inc.(20)
Energy Equipment & Services
Senior Secured Term Loan (13.81% (LIBOR + 11.00% with 1.00% LIBOR floor), due 12/29/2022)(11)
12/29/2017
$
35,048

$
35,048

$
35,048

1.1%
Series B Convertible Preferred Stock (16.00%, 790 shares)(16)
10/30/2015


63,225

63,225

1.9%
Common Stock (102,924 shares)(16)
8/2/2013


81,203

27,308

0.8%



 


179,476

125,581

3.8%
Credit Central Loan Company, LLC(21)
Consumer Finance
Subordinated Term Loan (10.00% plus 10.00% PIK, due 6/26/2024)(14)(46)
6/24/2014
54,979

51,590

54,979

1.7%
Class A Units (10,640,642 units)(14)(16)
6/24/2014


13,730

14,098

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



473

—%



 


65,320

69,550

2.1%
Echelon Transportation, LLC
Aerospace & Defense
Senior Secured Term Loan (12.25% (LIBOR + 9.75% with 2.00% LIBOR floor) plus 2.25% PIK, due 3/31/2022)(13)(46)
3/31/2014
36,128

36,128

36,128

1.1%
Senior Secured Term Loan (11.50% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 1.00% PIK, due 12/7/2024)(13)(46)
12/9/2016
18,063

18,063

18,063

0.5%
Membership Interest (100%)(16)
3/31/2014


22,738

35,419

1.1%



 


76,929

89,610

2.7%
First Tower Finance Company LLC(23)
Consumer Finance
Subordinated Term Loan to First Tower, LLC (10.00% plus 10.50% PIK, due 6/24/2024)(14)(46)
6/24/2014
272,170

272,170

272,170

8.2%
Class A Units (95,709,910 units)(14)(16)
6/24/2014


81,146

205,788

6.2%



 


353,316

477,958

14.4%
Freedom Marine Solutions, LLC(24)
Energy Equipment & Services
Membership Interest (100%)(16)
10/1/2009


43,892

14,120

0.4%



 


43,892

14,120

0.4%
InterDent, Inc.(52)
Health Care Providers & Services
Senior Secured Term Loan A/B (2.75% (LIBOR + 0.25% with 0.75% LIBOR floor), due 9/5/2020)(13)
8/1/2018
14,000

14,000

14,000

0.4%
Senior Secured Term Loan A (8.00% (LIBOR + 5.50% with 0.75% LIBOR floor), due 9/5/2020)(13)
8/3/2012
77,994

77,994

77,994

2.3%
Senior Secured Term Loan B (16.00% PIK, due 9/5/2020)(46)
8/3/2012
111,598

111,598

111,598

3.4%
Senior Secured Term Loan C (18.00% PIK, in non-accrual status effective 10/1/2018, due 9/5/2020)
3/22/2018
39,095

35,766

18,937

0.6%
Senior Secured Term Loan D (1.00% PIK, in non-accrual status effective 10/1/2018, due 9/5/2020)
9/19/2018
5,027

5,001


—%
Warrants (to purchase 99,900 shares of Common Stock, expires 9/19/2030)(16)
2/23/2018




—%



 


244,359

222,529

6.7%

See notes to consolidated financial statements.
9


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




 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets



 







LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 



 







Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 



 







MITY, Inc.(25)
Commercial Services & Supplies
Senior Secured Note A (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor), due 1/30/2020)(3)(11)
9/19/2013
$
26,250

$
26,250

$
26,250

0.8%
Senior Secured Note B (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor) plus 10.00% PIK, due 1/30/2020)(3)(11)(46)
6/23/2014
25,918

25,918

18,039

0.5%
Subordinated Unsecured Note to Broda Enterprises ULC (10.00%, due 1/1/2028)(14)
9/19/2013
5,515

7,057


—%
Common Stock (42,053 shares)(16)
9/19/2013


6,849


—%



 


66,074

44,289

1.3%
National Property REIT Corp.(26)
Equity Real Estate Investment Trusts (REITs) / Online Lending
Senior Secured Term Loan A (6.50% (LIBOR + 3.50% with 3.00% LIBOR floor) plus 5.00% PIK, due 12/31/2023)(11)(46)
12/31/2018
433,553

433,553

433,553

13.0%
Senior Secured Term Loan B (5.00% (LIBOR + 2.00% with 3.00% LIBOR floor) plus 5.50% PIK, due 12/31/2023)(11)(46)
12/31/2018
172,000

172,000

172,000

5.2%
Common Stock (3,110,101 shares)
12/31/2013


163,836

263,982

7.9%
Residual Profit Interest (25% of Residual Profit)
12/31/2018



87,779

2.6%



 


769,389

957,314

28.7%
Nationwide Loan Company LLC(27)
Consumer Finance
Senior Subordinated Term Loan to Nationwide Acceptance LLC (10.00% plus 10.00% PIK, due 6/18/2019)(14)(46)
6/18/2014
18,148

18,148

18,148

0.6%
Class A Units (32,456,159 units)(14)(16)
1/31/2013


21,962

13,735

0.4%



 


40,110

31,883

1.0%
NMMB, Inc.(28)
Media
Senior Secured Note (14.00%, due 5/6/2021)(3)
5/6/2011
3,714

3,714

3,714

0.1%
Senior Secured Note to Armed Forces Communications, Inc. (14.00%, due 5/6/2021)(3)
6/12/2014
900

900

900

—%
Series A Preferred Stock (7,200 shares)(16)
12/12/2013


7,200

11,432

0.4%
Series B Preferred Stock (5,669 shares)(16)
12/12/2013


5,669

9,001

0.3%



 


17,483

25,047

0.8%
Pacific World Corporation(40)
Personal Products
Revolving Line of Credit – $26,000 Commitment (9.75% (LIBOR + 7.25% with 1.00% LIBOR floor), due 9/26/2020)(13)(15)
9/26/2014
24,825

24,825

24,825

0.7%
Senior Secured Term Loan A (7.75% PIK (LIBOR + 5.25% with 1.00% LIBOR floor), in non-accrual status effective 10/24/2018, due 9/26/2020)(13)
12/31/2014
99,214

96,000

99,214

3.0%
Senior Secured Term Loan B (11.75% PIK (LIBOR + 9.25% with 1.00% LIBOR floor), in non-accrual status effective 5/21/2018, due 9/26/2020)(13)
12/31/2014
106,881

96,500

6,412

0.2%
Convertible Preferred Equity (100,000 shares)(16)
6/15/2018


15,000


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




—%



 


232,325

130,451

3.9%
R-V Industries, Inc.
Machinery
Senior Subordinated Note (11.61% (LIBOR + 9.00% with 1.00% LIBOR floor), due 3/31/2022)(3)(11)
6/12/2013
28,622

28,622

28,622

0.8%
Common Stock (745,107 shares)(16)
6/26/2007


6,866

2,819

0.1%



 


35,488

31,441

0.9%

See notes to consolidated financial statements.
10


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




 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets



 







LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 



 







Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 



 







Universal Turbine Parts, LLC(54)
Trading Companies & Distributors
Delayed Draw Term Loan – $5,000 Commitment (10.25% (LIBOR + 7.75% with 2.50% LIBOR floor), due 9/30/2020)(15)
2/28/2019
$

$

$

—%
Senior Secured Term Loan A (8.56% (LIBOR + 5.75% with 1.00% LIBOR floor), due 7/22/2021)(11)
7/22/2016
30,875

30,875

30,080

0.9%
Senior Secured Term Loan B (14.56% PIK (LIBOR + 11.75% with 1.00% LIBOR floor), in non-accrual status effective 7/1/2018, due 7/22/2021)(11)
7/22/2016
34,861

32,500

697

—%
Common Stock (10,000 units)(16)
12/10/2018




—%
 
 
 
 
 
63,375

30,777

0.9%
USES Corp.(30)
Commercial Services & Supplies
Senior Secured Term Loan A (9.00% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
43,134

35,101

14,631

0.4%
Senior Secured Term Loan B (15.50% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
53,796

35,568


—%
Common Stock (268,962 shares)(16)
6/15/2016




—%



 


70,669

14,631

0.4%
Valley Electric Company, Inc.(31)
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 12/31/2024)(3)(11)(46)
12/31/2012
10,430

10,430

10,430

0.3%
Senior Secured Note (8.00% plus 10.00% PIK, due 6/23/2024)(46)
6/24/2014
32,881

32,881

32,881

1.0%
Consolidated Revenue Interest (2.0%)(38)
6/22/2018



3,095

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


26,204

83,115

2.5%



 


69,515

129,521

3.9%
Wolf Energy, LLC(32)
Energy Equipment & Services
Membership Interest (100%)(16)
7/1/2014




—%
Membership Interest in Wolf Energy Services Company, LLC (100%)(16)
3/14/2017


3,896


—%
Net Profits Interest (8% of Equity Distributions)(4)(16)
4/15/2013



14

—%



 


3,896

14

—%
Total Control Investments (Level 3)
 
$
2,331,616

$
2,394,716

71.9%


See notes to consolidated financial statements.
11


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

 
 
 
 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments (5.00% to 24.99% voting control)(48)
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC(22)
Diversified Consumer Services
Second Lien Revolving Credit Facility to Edmentum, Inc. – $7,834 Commitment (5.00% PIK, due 12/9/2021)(15)(46)
6/9/2015
$
7,608

$
7,608

$
7,608

0.2%
Unsecured Senior PIK Note (8.50% PIK, due 12/9/2021)(46)
6/9/2015
8,020

8,020

8,020

0.2%
Unsecured Junior PIK Note (10.00% PIK, in non-accrual status effective 1/1/2017, due 12/9/2021)
6/9/2015
37,997

23,829

18,402

0.6%
Class A Units (370,964 units)(16)
6/9/2015


6,577


—%
 
 
 
 
 
46,034

34,030

1.0%
Nixon, Inc.(39)
Textiles, Apparel & Luxury Goods
Common Stock (857 units)(16)
5/12/2017




—%
 
 
 
 
 


—%
Targus Cayman HoldCo Limited(33)
Textiles, Apparel & Luxury Goods
Common Stock (7,383,395 shares)
5/24/2011


7,154

21,315

0.6%
 
 
 
 
 
7,154

21,315

0.6%
United Sporting Companies, Inc.(18)
Distributors
Second Lien Term Loan (13.49% (LIBOR + 11.00% with 1.75% LIBOR floor) plus 2.00% PIK, in non-accrual status effective 4/1/2017, due 11/16/2019)(13)
9/28/2012
160,922

127,091

35,697

1.1%
Common Stock (218,941 shares)(16)
5/2/2017




—%
 
 
 
 
 
127,091

35,697

1.1%
Total Affiliate Investments (Level 3)
 
$
180,279

$
91,042

2.7%

See notes to consolidated financial statements.
12


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

 
 
 
 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
8TH Avenue Food & Provisions, Inc.
Food Products
Second Lien Term Loan (10.24% (LIBOR + 7.75%), due 10/1/2026)(3)(8)(13)
10/10/2018
$
25,000

$
24,823

$
24,823

0.7%
 
 
 
 
 
24,823

24,823

0.7%
ACE Cash Express, Inc.
Consumer Finance
Senior Secured Note (12.00%, due 12/15/2022)(8)(14)
12/15/2017
18,000

17,778

17,005

0.5%



 

17,778

17,005

0.5%
AgaMatrix, Inc.
Health Care Equipment & Supplies
Senior Secured Term Loan (11.61% (LIBOR + 9.00% with 1.25% LIBOR floor), due 9/29/2022)(3)(11)
9/29/2017
34,510

34,510

33,260

1.0%



 

34,510

33,260

1.0%
Apidos CLO IX
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 0.00%, due 7/15/2023)(5)(14)(17)
7/11/2012
23,525

21

26

—%



 

21

26

—%
Apidos CLO XI
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 9.24%, due 10/17/2028)(5)(14)
1/17/2013
40,500

33,471

27,599

0.8%



 

33,471

27,599

0.8%
Apidos CLO XII
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 14.94%, due 4/15/2031)(5)(14)
4/18/2013
52,203

35,616

27,792

0.8%



 

35,616

27,792

0.8%
Apidos CLO XV
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 14.08%, due 4/21/2031)(5)(14)
10/16/2013
48,515

37,036

27,059

0.8%



 

37,036

27,059

0.8%
Apidos CLO XXII
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 10.49%, due 10/20/2027)(5)(6)(14)
10/14/2015
31,350

28,444

24,756

0.7%



 

28,444

24,756

0.7%
Ark-La-Tex Wireline Services, LLC
Energy Equipment & Services
Escrow Receivable
4/8/2014




—%



 



—%
Atlantis Health Care Group (Puerto Rico), Inc.
Health Care Providers & Services
Revolving Line of Credit – $6,000 Commitment (11.55% (LIBOR + 8.75% with 2.00% LIBOR floor), due 2/21/2020)(11)(15)
2/21/2013
4,000

4,000

3,948

0.1%
Senior Term Loan (11.55% (LIBOR + 8.75% with 2.00% LIBOR floor), due 2/21/2020)(3)(11)
2/21/2013
75,332

75,332

74,349

2.2%



 

79,332

78,297

2.3%
Autodata, Inc./ Autodata Solutions, Inc.(9)
Software
Second Lien Term Loan (9.75% (LIBOR + 7.25%), due 12/12/2025)(3)(8)(13)
12/14/2017
6,000

5,975

6,000

0.2%



 

5,975

6,000

0.2%
Barings CLO 2018-III (f/k/a Babson CLO Ltd. 2014-III)
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 14.42%, due 7/20/2029)(5)(6)(14)
6/14/2018
83,098

50,992

42,441

1.3%



 

50,992

42,441

1.3%
Broder Bros., Co.
Textiles, Apparel & Luxury Goods
Senior Secured Note (11.11% (LIBOR + 8.50% with 1.25% LIBOR floor), due 12/02/2022)(3)(11)
12/4/2017
194,226

194,226

194,226

5.8%



 

194,226

194,226

5.8%
Brookside Mill CLO Ltd.
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 9.69%, due 1/17/2028)(5)(14)
5/23/2013
36,300

18,690

13,968

0.4%



 


18,690

13,968

0.4%

See notes to consolidated financial statements.
13


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

 
 
 
 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
California Street CLO IX Ltd. (f/k/a Symphony CLO IX Ltd.)
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 9.07%, due 10/16/2028)(5)(14)
5/8/2012
$
58,915

$
41,754

$
34,054

1.0%



 


41,754

34,054

1.0%
Candle-Lite Company, LLC
Household Products
Senior Secured Term Loan A (8.13% (LIBOR + 5.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,250

12,250

12,189

0.4%
Senior Secured Term Loan B (12.13% (LIBOR + 9.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,500

12,500

12,500

0.4%



 


24,750

24,689

0.8%
Capstone Logistics Acquisition, Inc.
Commercial Services & Supplies
Second Lien Term Loan (10.75% (LIBOR + 8.25% with 1.00% LIBOR floor), due 10/7/2022)(3)(8)(13)
10/7/2014
101,030

100,732

101,030

3.0%



 


100,732

101,030

3.0%
Carlyle C17 CLO Limited (f/k/a Cent CLO 17 Limited)
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 21.77%, due 4/30/2031)(5)(14)
5/10/2018
24,870

14,423

12,709

0.4%



 


14,423

12,709

0.4%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 22.15%, due 7/15/2030)(5)(6)(14)
6/29/2018
25,534

16,941

18,770

0.6%



 


16,941

18,770

0.6%
Carlyle Global Market Strategies CLO 2016-3, Ltd.
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 16.72%, due 10/20/2029)(5)(6)(14)
9/13/2016
32,200

33,708

28,846

0.9%



 


33,708

28,846

0.9%
CCPI Inc.(19)
Electronic Equipment, Instruments & Components
Escrow Receivable
2/28/2019



2,192

0.1%







2,192

0.1%
CCS-CMGC Holdings, Inc.
Health Care Providers & Services
Second Lien Term Loan (11.50% (LIBOR + 9.00%), due 10/1/2026)(3)(8)(13)
10/12/2018
35,000

34,340

33,688

1.0%






34,340

33,688

1.0%
Cent CLO 21 Limited
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 17.44%, due 7/27/2030)(5)(6)(14)
6/18/2014
49,552

37,983

30,930

0.9%



 


37,983

30,930

0.9%
Cent CLO 21 Limited
Structured Finance
Rated Secured Structured Note (11.92% (LIBOR + 8.65%), due 7/27/2030)(6)(11)(14)(37)
7/27/2018
10,591

9,999

10,750

0.3%



 


9,999

10,750

0.3%
Centerfield Media Holding Company(35)
IT Services
Senior Secured Term Loan A (9.81% (LIBOR + 7.00% with 2.00% LIBOR floor), due 1/17/2022)(3)(11)
1/17/2017
74,451

74,451

74,451

2.2%
Senior Secured Term Loan B (15.31% (LIBOR + 12.50% with 2.00% LIBOR floor), due 1/17/2022)(11)
1/17/2017
78,100

78,100

78,100

2.4%



 


152,551

152,551

4.6%
CIFC Funding 2013-III-R, Ltd. (f/k/a CIFC Funding 2013-III, Ltd.)
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 15.38%, due 4/24/2031)(5)(14)
4/5/2018
44,100

29,369

25,437

0.8%



 


29,369

25,437

0.8%

See notes to consolidated financial statements.
14


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

 
 
 
 
March 31, 2019 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date(53)
Principal Value
Amortized 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-IV, Ltd.
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 17.09%, due 4/28/2031)(5)(14)
11/14/2013
$
45,500

$
32,365

$
27,655

0.8%



 


32,365

27,655

0.8%
CIFC Funding 2014-IV-R, Ltd.
Structured Finance
Subordinated Structured Note (Residual Interest, current yield 14.88%, due 10/17/2030)(5)(6)(14)
9/3/2014
44,467

30,424

24,138

0.7%