PROSPECT CAPITAL CORP
For the period ended Mar 31, 2024. Filed May 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 8, 2024
PSEC$1.41+1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0001287032-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001287032-24-000152
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 244 previous paragraphs and 254 current paragraphs.
159 unchanged; 75 reworded; 19 added; 5 removed; 5 previous and 1 current paragraphs rearranged.
Tables are not compared: 30 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Third Quarter Highlights
Current report
On January 16, 2024, we repaid the remaining outstanding principal amount of $81,240 of the 6.375% 2024 Notes, plus interest, at maturity.
Current report
On March 12, 2024, we filed a notice of meeting and definitive proxy statement in connection with a special meeting of our stockholders that is scheduled to be held on June 10, 2024 for the purpose of asking our stockholders to vote on a proposal to authorize us, with approval of our Board of Directors, to sell shares of our common stock (during the next 12 months) at a price or prices below our then current net asset value per share in one or more offerings subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of our outstanding common stock immediately prior to such sale).
Current report
(1)Does not foot due to rounding.
Current report
CP Energy Services, Inc.
Current report
Prospect owns 100% of the equity of CP Holdings, a Consolidated Holding Company. CP Holdings owns 99.8% of the equity of CP Energy, and the remaining equity is owned by CP Energy management. CP Energy provides oilfield flowback services and fluid hauling and disposal services through its subsidiaries.
Current report
The fair value of our investment in CP Energy decreased to $99,673 as of March 31, 2024, which is a discount of $190,891 from its amortized cost, compared to a fair value of $114,020 as of June 30, 2023, representing a discount of $164,948 to its amortized cost. The increase in discount to amortized cost resulted from increased debt in the capital structure and revised forecast impacted by discontinued operations.
Current report
MITY, Inc.
Current report
Prospect owns 100% of the equity of MITY Holdings of Delaware Inc. (“MITY Delaware”), a Consolidated Holding Company. MITY Delaware owns 100% of the equity of MITY, Inc. (f/k/a MITY Enterprises, Inc.) (“MITY”). MITY owns 100% of each of MITY-Lite, Inc. (“MITY-Lite”); Broda USA, Inc. (f/k/a Broda Enterprises USA, Inc.) (“Broda USA”); and Broda Enterprises ULC (“Broda Canada”). MITY is a designer, manufacturer and seller of multipurpose room furniture and specialty healthcare seating products.
Current report
The fair value of our investment in Mity increased to $82,108 as of March 31, 2024, representing a discount of $5,289 to its amortized cost basis, compared to a fair value of $68,178 as of June 30, 2023, representing a discount of $16,719 to its amortized cost basis. The increase in fair value was primarily driven by an improvement in financial performance.
Current report
Universal Turbine Parts, LLC
Current report
On December 10, 2018, UTP Holdings purchased all of the voting stock of UTP and appointed a new Board of Directors to UTP Holdings, consisting of three employees of the Investment Advisor. At the time UTP Holdings acquired UTP, UTP Holdings (f/k/a Harbortouch Holdings of Delaware) was a wholly owned holding company controlled by Prospect and therefore Prospect’s investment in UTP is classified as a control investment as of June 30, 2019.
Current report
The fair value of our investment in UTP increased to $68,244 as of March 31, 2024, a premium of $595 from its amortized cost basis, compared to a fair value of $45,065 as of June 30, 2023, representing a discount of $20,119 to it amortized cost. The increase in premium to amortized cost was driven by an improvement in financial performance.
Current report
During the nine months ended March 31, 2024, we repaid the remaining outstanding principal amount of $81,240 of the 6.375% 2024 Notes, plus interest, at maturity.
Current report
The following table reflects net change in unrealized gains (losses) on investments for the nine months ended March 31, 2024:
Current report
(2)Our Curo Group Holdings Corp. First Lien Term Loan was sold for $4,700 with a remaining cost basis at sale of $47,022, resulting in a realized loss of $42,322. Upon the sale of Curo, we reversed all previously recorded unrealized losses related to our investment.
Current report
(3)Our Engine Group, Inc. First Lien Term Loan and Class B Common Units were written-off and we recorded a realized loss of $1,977 and $26,991, respectively, while reversing our previously recorded unrealized losses related to our investment in Engine, in the same amount.
Current report
The following table reflects net change in unrealized gains (losses) on investments for the nine months ended March 31, 2023:
Current report
On April 22, 2024, the accordion limit of the Revolving Credit Facility was increased to $2,250.0 million. During the period of April 1, 2024 to May 3, 2024, we increased total commitments to the Revolving Credit Facility by $85.0 million to $2,039.5 million. Aggregate commitments are from a group of 53 lenders.
Removed paragraphs (5)
Previous report
Second Quarter Highlights
Previous report
As of December 31, 2023 and June 30, 2023, the outstanding aggregate principal amount of the 6.375% 2024 Notes was $81,240 and $81,240, respectively.
Previous report
The following table reflects net change in unrealized gains (losses) on investments for the six months ended December 31, 2023:
Previous report
The following table reflects net change in unrealized gains (losses) on investments for the six months ended December 31, 2022:
Previous report
•6.03865, subject to certain adjustments,
Reworded paragraphs (75)
Previous wording
We hold many of our control investments in a two-tier structure consisting of a holding company and one or more related operating companies for tax purposes. These holding companies serve various business purposes including concentration of management teams, optimization of third-party borrowing costs, improvement of supplier, customer, and insurance terms, and enhancement of co-investments by the management teams. In these cases, our investment, which is generally equity in the holding company, the holding company’s equity investment in the operating company and any debt from us directly to the operating company structure represents our total exposure for the investment. As of December 31, 2023, as shown in our Consolidated Schedule of Investments, the cost basis and fair value of our investments in controlled companies was $3,115,009 and $3,580,975, respectively. This structure gives rise to several of the risks described in our public documents and highlighted elsewhere in this Quarterly Report. We consolidate all wholly owned and substantially wholly owned holding companies formed by us for the purpose of holding our controlled investments in operating companies. There is no significant effect of consolidating these holding companies as they hold minimal assets other than their investments in the controlled operating companies. Investment company accounting prohibits the consolidation of any operating companies.
Current wording
We hold many of our control investments in a two-tier structure consisting of a holding company and one or more related operating companies for tax purposes. These holding companies serve various business purposes including concentration of management teams, optimization of third-party borrowing costs, improvement of supplier, customer, and insurance terms, and enhancement of co-investments by the management teams. In these cases, our investment, which is generally equity in the holding company, the holding company’s equity investment in the operating company and any debt from us directly to the operating company structure represents our total exposure for the investment. As of March 31, 2024, as shown in our Consolidated Schedule of Investments, the cost basis and fair value of our investments in controlled companies was $3,222,326 and $3,814,119, respectively. This structure gives rise to several of the risks described in our public documents and highlighted elsewhere in this Quarterly Report. We consolidate all wholly owned and substantially wholly owned holding companies formed by us for the purpose of holding our controlled investments in operating companies. There is no significant effect of consolidating these holding companies as they hold minimal assets other than their investments in the controlled operating companies. Investment company accounting prohibits the consolidation of any operating companies.
Previous wording
We seek to be a long-term investor with our portfolio companies. During the three months ended December 31, 2023 we acquired $20,750 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $95,313, funded $16,409 of revolver advances, and recorded PIK interest of $39,255, resulting in gross investment originations of $171,727. During the three months ended December 31, 2023 we received full repayments totaling $19,600, received $13,000 in sales, received $4,519 of revolver paydowns, received $94,213 in partial prepayments, scheduled principal amortization payments, and return of capital distributions, resulting in net repayments of $131,332.
Current wording
We seek to be a long-term investor with our portfolio companies. During the three months ended March 31, 2024 we acquired $56,500 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $125,954, funded $4,371 of revolver advances, and recorded PIK interest of $32,690, resulting in gross investment originations of $219,515. During the three months ended March 31, 2024 we received full repayments totaling $31,874, received $47,022 in sales, received $2,046 of revolver paydowns, and received $33,530 in partial prepayments, scheduled principal amortization payments, and return of capital distributions, resulting in repayments of $73,677, net of $40,795 realized losses associated with such dispositions.
Previous wording
During the three months ended December 31, 2023 we repaid $2,443 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option, as defined in the InterNotes® Offering prospectus. As a result of these transactions, we recorded a loss in the amount of the unamortized debt issuance costs. The net loss on the extinguishment of Prospect Capital InterNotes® in the three months ended December 31, 2023 was $53.
Current wording
During the three months ended March 31, 2024 we repaid $2,965 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option, as defined in the InterNotes® Offering prospectus. As a result of these transactions, we recorded a loss in the amount of the unamortized debt issuance costs. The net loss on the extinguishment of Prospect Capital InterNotes® in the three months ended March 31, 2024 was $68.
Previous wording
During the three months ended December 31, 2023 we issued $34,616 aggregate principal amount of Prospect Capital InterNotes® with a weighted average stated interest rate of 7.49%, to extend our borrowing base. The newly issued notes mature between October 15, 2026 and November 15, 2043 and generated net proceeds of $34,104.
Current wording
During the three months ended March 31, 2024 we issued $55,573 aggregate principal amount of Prospect Capital InterNotes® with a weighted average stated interest rate of 6.97%, to extend our borrowing base. The newly issued notes mature between January 15, 2027 and March 15, 2034 and generated net proceeds of $54,736.
Previous wording
On October 19, 2023, November 20, 2023 and December 19, 2023, we issued 560,746, 571,512, and 549,175 shares of our common stock in connection with the dividend reinvestment plan, respectively.
Current wording
On January 18, 2024, February 20, 2024 and March 20, 2024, we issued 561,852,578,398, and 632,893 shares of our common stock in connection with the dividend reinvestment plan, respectively.
Previous wording
During the three months ended December 31, 2023, 220,346 shares of our Series A1 Preferred Stock, 44,125 shares of our Series A3 Preferred Stock, 317,712 shares of our Series M1 Preferred Stock, and 13,480 shares of our Series M3 Preferred Stock were converted to 2,493,984 shares of our common stock, in connection with Holder Optional Conversions and Optional Redemptions Following Death of a Holder, resulting in a loss from redemption of preferred stock of $1,192.
Current wording
During the three months ended March 31, 2024, 245,219 shares of our Series A1 Preferred Stock, 47,269 shares of our Series A3 Preferred Stock, 67,259 shares of our Series M1 Preferred Stock, and 22,468 shares of our Series M3 Preferred Stock were converted to 1,583,622 shares of our common stock, in connection with Holder Optional Conversions and Optional Redemptions Following Death of a Holder, resulting in a loss from redemption of preferred stock of $1,192.
Previous wording
During the three months ended December 31, 2023 we issued 2,215,314 shares of our Series A3 Preferred Stock for net proceeds of $49,845 and 444,648 shares of our Series M3 Preferred Stock for net proceeds of $10,785, each excluding offering costs and preferred stock dividend reinvestment.
Current wording
During the three months ended March 31, 2024 we issued 856,668 shares of our Series A3 Preferred Stock for net proceeds of $19,275, 100,886 shares of our Series M3 Preferred Stock for net proceeds of $2,446, 1,580,456 shares of Series A4 Preferred Stock for net proceeds of $35,560, 237,810 shares of Series M4 Preferred Stock for net proceeds of $5,767, each excluding offering costs and preferred stock dividend reinvestment.
Previous wording
In connection with our Preferred Stock Dividend Reinvestment Plan, we issued additional Series A1 Preferred Stock, Series A3 Preferred Stock, Series M1 Preferred Stock, and Series M3 Preferred Stock of 11,787, 11,696, and 12,435 throughout October, November, and December.
Current wording
In connection with our Preferred Stock Dividend Reinvestment Plan, we issued additional Series A1 Preferred Stock, Series A3 Preferred Stock, Series M1 Preferred Stock, and Series M3 Preferred Stock of 12,618, 12,716, and 12,846 throughout January, Februrary, and March.
Previous wording
At December 31, 2023, we have $7,631,846, or 207.2%, of our net assets applicable to common shares invested in 126 long-term portfolio investments and CLOs.
Current wording
At March 31, 2024, we have $7,806,712, or 208.6%, of our net assets applicable to common shares invested in 122 long-term portfolio investments and CLOs.
Previous wording
Our annualized current yield was 12.3% and 13.3% as of December 31, 2023 and June 30, 2023, respectively, across all performing interest bearing investments, excluding equity investments and non-accrual loans. Our annualized current yield was 10.1% and 10.7% as of December 31, 2023 and June 30, 2023, respectively, across all investments. In many of our portfolio companies we hold equity positions, ranging from minority interests to majority stakes, which we expect over time to contribute to our investment returns. Some of these equity positions include features such as contractual minimum internal rates of returns, preferred distributions, flip structures and other features expected to generate additional investment returns, as well as contractual protections and preferences over junior equity, in addition to the yield and security offered by our cash flow and collateral debt protections.
Current wording
Our annualized current yield was 12.1% and 13.3% as of March 31, 2024 and June 30, 2023, respectively, across all performing interest bearing investments, excluding equity investments and non-accrual loans. Our annualized current yield was 9.7% and 10.7% as of March 31, 2024 and June 30, 2023, respectively, across all investments. In many of our portfolio companies we hold equity positions, ranging from minority interests to majority stakes, which we expect over time to contribute to our investment returns. Some of these equity positions include features such as contractual minimum internal rates of returns, preferred distributions, flip structures and other features expected to generate additional investment returns, as well as contractual protections and preferences over junior equity, in addition to the yield and security offered by our cash flow and collateral debt protections.
Previous wording
As of December 31, 2023, we own controlling interests in the following portfolio companies: CP Energy Services Inc. (“CP Energy”); Credit Central Loan Company, LLC (“Credit Central”); Echelon Transportation, LLC (“Echelon”); First Tower Finance Company LLC (“First Tower Finance”); Freedom Marine Solutions, LLC (“Freedom Marine”); InterDent, Inc. (“InterDent”); Kickapoo Ranch Pet Resort (“Kickapoo”); MITY, Inc. (“MITY”); NPRC; Nationwide Loan Company LLC (“Nationwide”); NMMB, Inc. (“NMMB”); Pacific World Corporation (“Pacific World”); R-V Industries, Inc. (“R-V”); Universal Turbine Parts, LLC (“UTP”); USES Corp. (“United States Environmental Services” or “USES”); and Valley Electric Company, Inc. (“Valley Electric”). In June 2019, CP Energy purchased a controlling interest of the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”), a portfolio company of Prospect with $34,576 in senior secured term loans (the “Spartan Term Loan A”) due to us as of December 31, 2023. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, we report our investments in Spartan as control investment. Spartan remains the direct borrower and guarantor to Prospect for the Spartan Term Loan A.
Current wording
As of March 31, 2024, we own controlling interests in the following portfolio companies: CP Energy Services Inc. (“CP Energy”); Credit Central Loan Company, LLC (“Credit Central”); Echelon Transportation, LLC (“Echelon”); First Tower Finance Company LLC (“First Tower Finance”); Freedom Marine Solutions, LLC (“Freedom Marine”); InterDent, Inc. (“InterDent”); Kickapoo Ranch Pet Resort (“Kickapoo”); MITY, Inc. (“MITY”); NPRC; Nationwide Loan Company LLC (“Nationwide”); NMMB, Inc. (“NMMB”); Pacific World Corporation (“Pacific World”); R-V Industries, Inc. (“R-V”); Universal Turbine Parts, LLC (“UTP”); USES Corp. (“United States Environmental Services” or “USES”); and Valley Electric Company, Inc. (“Valley Electric”). In June 2019, CP Energy purchased a controlling interest of the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”), a portfolio company of Prospect with $35,779 in senior secured term loans (the “Spartan Term Loan A”) due to us as of March 31, 2024. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, we report our investments in Spartan as control investment. Spartan remains the direct borrower and guarantor to Prospect for the Spartan Term Loan A.
Previous wording
(1) Our SSN investments do not have industry concentrations and as such have been separated in the tables above. As of December 31, 2023 and June 30, 2023, Structured Finance includes $268,882 and $236,248, respectively, of senior secured debt investments held through our investment in NPRC and its wholly-owned subsidiary.
Current wording
(1) Our SSN investments do not have industry concentrations and as such have been separated in the tables above. As of March 31, 2024 and June 30, 2023, Structured Finance includes $254,129 and $236,248, respectively, of senior secured debt investments held through our investment in NPRC and its wholly-owned subsidiary.
Previous wording
Our origination efforts are focused primarily on secured lending to non-control investments to reduce the risk in the portfolio by investing primarily in first lien loans and second lien loans, though we also continue to invest in select equity investments. For information regarding investment activity for the year ended June 30, 2022, see the Company’s Form 10-K for the fiscal year ended June 30, 2023.
Current wording
Our origination efforts are focused primarily on secured lending to non-control investments to reduce the risk in the portfolio by investing primarily in first lien loans and second lien loans, though we also continue to invest in select equity investments.
Previous wording
Our gross investment activity for the six months ended December 31, 2023 and December 31, 2022 are presented below:
Current wording
Our gross investment activity for the nine months ended March 31, 2024 and March 31, 2023 are presented below:
Previous wording
(2) During the six months ended December 31, 2023, approximately $62,358 of PIK interest capitalized was accrued as interest income. During the six months ended December 31, 2022, approximately $49,728 of PIK interest capitalized was accrued as interest income and the remaining $1,298 was included due to the timing of interest payment dates and resulting capitalization occurring during the prior year.
Current wording
(2) During the nine months ended March 31, 2024, approximately $95,048 of PIK interest capitalized was accrued as interest income. During the nine months ended March 31, 2023, approximately $96,654 of PIK interest capitalized was accrued as interest income and the remaining $1,298 was included due to the timing of interest payment dates and resulting capitalization occurring during the prior year.
Previous wording
The Board of Directors looked at several factors in determining where within the range to value the asset including: recent operating and financial trends for the asset, independent ratings obtained from third parties, comparable multiples for recent sales of companies within the industry and discounted cash flow models for our investments in CLOs. The composite of all these various valuation techniques, applied to each investment, was a total valuation of $7,631,846.
Current wording
The Board of Directors looked at several factors in determining where within the range to value the asset including: recent operating and financial trends for the asset, independent ratings obtained from third parties, comparable multiples for recent sales of companies within the industry and discounted cash flow models for our investments in CLOs. The composite of all these various valuation techniques, applied to each investment, was a total valuation of $7,806,712.
Previous wording
Control investments offer increased risk and reward over straight debt investments. Operating results and changes in market multiples can result in dramatic changes in values from quarter to quarter. Significant downturns in operations can further result in our looking to recoveries on sales of assets rather than the enterprise value of the investment. Equity positions in our portfolio are susceptible to potentially significant changes in value, both increases as well as decreases, due to changes in operating results and market multiples. Our controlled companies discussed below experienced such changes and we recorded corresponding fluctuations in valuations during the six months ended December 31, 2023.
Current wording
Control investments offer increased risk and reward over straight debt investments. Operating results and changes in market multiples can result in dramatic changes in values from quarter to quarter. Significant downturns in operations can further result in our looking to recoveries on sales of assets rather than the enterprise value of the investment. Equity positions in our portfolio are susceptible to potentially significant changes in value, both increases as well as decreases, due to changes in operating results and market multiples. Our controlled companies discussed below experienced such changes and we recorded corresponding fluctuations in valuations during the nine months ended March 31, 2024.
Previous wording
The fair value of our investment in First Tower increased to $603,629 as of December 31, 2023, representing a premium of $159,781 to its amortized cost basis compared to a fair value of $598,382 as of June 30, 2023, a premium of $171,310 to its amortized cost. The decrease in premium to amortized cost was driven by a decline in financial performance and increased debt in the capital structure.
Current wording
The fair value of our investment in First Tower decreased to $590,436 as of March 31, 2024, representing a premium of $144,778 to its amortized cost basis compared to a fair value of $598,382 as of June 30, 2023, representing a premium of $171,310 to its amortized cost. The decrease in premium to amortized cost was driven by a decline in financial performance and increased debt in the capital structure.
Previous wording
During the six months ended December 31, 2023, we provided $119,781 of debt financing and $4,600 of equity financing to NPRC to fund real estate capital expenditures, provide working capital, and to fund purchases of rated secured structured notes.
Current wording
During the nine months ended March 31, 2024, we provided $183,299 of debt financing and $4,600 of equity financing to NPRC to fund real estate capital expenditures, provide working capital, and to fund purchases of rated secured structured notes.
Previous wording
During the six months ended December 31, 2023, we received partial repayments of $50,450 of our loans previously outstanding with NPRC and its wholly owned subsidiary.
Current wording
During the nine months ended March 31, 2024, we received partial repayments of $62,950 of our loans previously outstanding with NPRC and its wholly owned subsidiary.
Previous wording
During the six months ended December 31, 2022, we provided $104,471 of debt financing and $3,600 of equity financing to NPRC to fund capital expenditures for existing real estate properties, to provide working capital, and to fund purchases of rated secured structured notes.
Current wording
During the nine months ended March 31, 2023, we provided $132,071 of debt financing and $3,600 of equity financing to NPRC to fund capital expenditures for existing real estate properties, to provide working capital, and to fund purchases of rated secured structured notes.
Previous wording
During the six months ended December 31, 2022, we received partial repayments of $72,852 of our loans previously outstanding with NPRC and its wholly owned subsidiaries and $4,000 as a return of capital on our equity investment in NPRC.
Current wording
During the nine months ended March 31, 2023, we received partial repayments of $86,852 of our loans previously outstanding with NPRC and its wholly owned subsidiaries and $4,000 as a return of capital on our equity investment in NPRC.
Previous wording
The online consumer loan investments held by certain of NPRC’s wholly owned subsidiaries are unsecured obligations of individual borrowers that are issued in amounts ranging from $10 to $50, with fixed terms ranging from 60 months to 84 months. As of December 31, 2023, the outstanding investment in online consumer loans by certain of NPRC’s wholly-owned subsidiaries was comprised of 27 individual loans valued at $81, residual interest intwo securitizations valued at$2,726, andone corporate bond valued at $16,484, for an aggregate fair value of $19,291. As of December 31, 2023, , our investment in NPRC and its wholly-owned subsidiaries relating to online consumer lending had a fair value of $20,349.
Current wording
The online consumer loan investments held by certain of NPRC’s wholly owned subsidiaries are unsecured obligations of individual borrowers that are issued in amounts ranging from $10 to $50, with fixed terms ranging from 72 months to 84 months. As of March 31, 2024, the outstanding investments held by certain of NPRC’s wholly-owned subsidiaries was comprised of 13 individual loans valued at $37, residual interest in two securitizations valued at $2,691, one corporate bond valued at $17,733 and other assets valued at $1,506 for an aggregate fair value of $21,966.
Previous wording
The rated secured structured note investments held by certain of NPRC’s wholly owned subsidiaries are subordinated debt interests in broadly syndicated loans managed by established collateral management teams with many years of experience in the industry. As of December 31, 2023, the outstanding investment in rated secured structured notes by certain of NPRC’s wholly owned subsidiaries was comprised of 90 investments with a fair value of $418,762 and face value of $467,017. The average outstanding note is approximately $5,189 with an expected maturity date ranging from October 2026 to April 2032 and weighted-average expected maturity of 6 years as of December 31, 2023. Coupons range from three-month SOFR (“3M”) plus 5.20% to 9.23%with a weighted-average coupon of 3M + 6.46%. As of December 31, 2023, our investment in NPRC and its wholly-owned subsidiaries relating to rated secured structured notes had a fair value of $268,882. As of December 31, 2023, based on outstanding notional balance, 12.3% of the portfolio was invested in Single - B rated tranches and 87.7% of the portfolio in BB rated tranches.
Current wording
The rated secured structured note investments held by certain of NPRC’s wholly owned subsidiaries are subordinated debt interests in broadly syndicated loans managed by established collateral management teams with many years of experience in the industry. As of March 31, 2024, the outstanding investment in rated secured structured notes by certain of NPRC’s wholly owned subsidiaries was comprised of 111 investments with a fair value of $437,959 and face value of $465,567. The average outstanding note is approximately $4,194 with an expected maturity date ranging from January 2027 to June 2033 and weighted-average expected maturity of 6 years as of March 31, 2024. Coupons range from three-month SOFR (“3M”) plus 5.20% to 9.23%with a weighted-average coupon of 3M + 6.93%. As of March 31, 2024, our investment in NPRC and its wholly-owned subsidiaries relating to rated secured structured notes had a fair value of $254,129. As of March 31, 2024, based on outstanding notional balance, 10.5% of the portfolio was invested in Single - B rated tranches and 89.5% of the portfolio in BB rated tranches.
Previous wording
As of December 31, 2023, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of$1,037,730 and a fair value of$1,588,537. The fair value of $1,357,907 related to NPRC’s real estate portfolio was comprised of forty-eight multi-family properties, seven student housing properties, four senior living properties, and three commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of December 31, 2023:
Current wording
As of March 31, 2024, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of$1,088,998 and a fair value of$1,664,510. The fair value of $1,388,416 related to NPRC’s real estate portfolio was comprised of fifty multi-family properties, seven student housing properties, four senior living properties, and three commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of March 31, 2024:
Previous wording
The fair value of our investment in NPRC decreased to $1,588,537 as of December 31, 2023, a premium of $550,807 from its amortized cost basis, compared to a fair value of $1,659,976 as of June 30, 2023, representing a premium of $696,663. The decrease in premium is primarily driven by a decrease in like-for-like property values due to a rise in discount rates and terminal capitalization rates and decrease in market interest rates, offset by growth in net operating income in our real estate portfolio.
Current wording
The fair value of our investment in NPRC was $1,664,510 as of March 31, 2024, a premium of $575,512 from its amortized cost basis, compared to a fair value of $1,659,976 as of June 30, 2023, representing a premium of $696,663. The decrease in premium is primarily driven by increased debt in the capital structure, offset by growth in net operating income in our real estate portfolio.
Previous wording
The fair value of our investment in R-V increased to $102,331 as of December 31, 2023, representing a premium of $58,142 to its amortized cost basis, compared to a fair value of $81,508 as of June 30, 2023, representing a premium of $41,020 to its amortized cost basis. The increase in premium to amortized cost was driven by an improvement in financial performance combined with the benefit of recent acquisitions.
Current wording
The fair value of our investment in R-V increased to $98,649 as of March 31, 2024, representing a premium of $54,461 to its amortized cost basis, compared to a fair value of $81,508 as of June 30, 2023, representing a premium of $41,020 to its amortized cost basis. The increase in premium to amortized cost was driven by an improvement in financial performance as a result of recent acquisitions.
Previous wording
The fair value of our investment in Valley Electric increased to $212,544 as of December 31, 2023, a premium of $119,845 to its amortized cost, compared to a fair value of $165,784 as of June 30, 2023, representing a $74,636 premium to its amortized cost. The increase in premium to amortized cost was driven by an improvement in financial performance.
Current wording
The fair value of our investment in Valley Electric increased to $318,270 as of March 31, 2024, a premium of $223,983 to its amortized cost, compared to a fair value of $165,784 as of June 30, 2023, representing a $74,636 premium to its amortized cost. The increase in premium to amortized cost was driven by an improvement in financial performance and expansion of comparable company trading multiples.
Previous wording
Our controlled investments, including those discussed above, are valued at $465,966 above their amortized cost as of December 31, 2023.
Current wording
Our controlled investments, including those discussed above, are valued at $591,793 above their amortized cost as of March 31, 2024.
Previous wording
We hold two affiliate investments at December 31, 2023 (Nixon, Inc. and RGIS Services, LLC, (“RGIS”)) with a total fair value of $14,292, a premium of $4,130 from their combined amortized cost, compared to a fair value as $10,397 of June 30, 2023, representing a $1,542 premium to its amortized cost. The increase in premium to amortized cost was driven by an improvement in RGIS’s financial performance.
Current wording
We hold two affiliate investments at March 31, 2024 (Nixon, Inc. and RGIS Services, LLC, (“RGIS”)) with a total fair value of $13,805, a premium of $3,643 from their combined amortized cost, compared to a fair value as $10,397 of June 30, 2023, representing a $1,542 premium to its amortized cost. The increase in premium to amortized cost was driven by an improvement in RGIS’s financial performance.
Previous wording
With the non-control/non-affiliate investments, generally, there is less volatility related to our total investments because our equity positions tend to be smaller than with our control/affiliate investments, and debt investments are generally not as susceptible to large swings in value as equity investments. For debt investments, the fair value is generally limited on the high side to each loan’s par value, plus any prepayment premium that could be imposed. As of December 31, 2023, our non-control/ non-affiliate portfolio is valued at a discount to amortized cost primarily due to our CLO investment portfolio, which is valued at a$285,259 discount to amortized cost. Additionally, as of December 31, 2023, fiveof our non-control/ non-affiliate investments, United Sporting Companies, Inc. (“USC”), Engine Group, Inc (“Engine”), Curo Group Holdings Corp. (“Curo”), K&N (“K&N Parent, Inc.), and Aventiv Technologies, LLC (f/k/a Securus Technologies Holdings, Inc.) (“Securus”) are valued at discounts to amortized cost of$81,770, $28,990, $28,967, $23,763, and$16,933, respectively.
Current wording
With the non-control/non-affiliate investments, generally, there is less volatility related to our total investments because our equity positions tend to be smaller than with our control/affiliate investments, and debt investments are generally not as susceptible to large swings in value as equity investments. For debt investments, the fair value is generally limited on the high side to each loan’s par value, plus any prepayment premium that could be imposed. As of March 31, 2024, our non-control/non-affiliate portfolio is valued at a discount to amortized cost primarily due to our CLO investment portfolio, which is valued at a$291,797 discount to amortized cost. Additionally, as of March 31, 2024, five of our non-control/ non-affiliate investments, United Sporting Companies, Inc. (“USC”), Research Now Group, LLC and Dynata, LLC (collectively “Research Now”), K&N HoldCo, LLC (“K&N”), Rising Tide Holdings, Inc. (“West Marine”), and Credit.com Holdings, LLC, are valued at discounts to amortized cost of $79,884, $38,256, $24,651, $18,705, and $15,000, respectively.
Previous wording
Our largest non-control/non-affiliate investment is Town & Country Holdings, Inc. (“Town & Country”), which is valued at $43,627 above its amortized cost and represents approximately 6.7% of our Net Asset Value as of December 31, 2023. Town & Country is a supplier of home textiles and accessories to retailers throughout North America.
Current wording
Our largest non-control/non-affiliate investment is Town & Country Holdings, Inc. (“Town & Country”), which is valued at $39,833 above its amortized cost and represents approximately 6.8% of our Net Asset Value as of March 31, 2024. Town & Country is a supplier of home textiles and accessories to retailers throughout North America. Excluding those non-control/non-affiliate investments discussed above, our remaining non-control/non-affiliate portfolio is valued at a discount of $48,936 to amortized cost as of March 31, 2024.
Previous wording
As of December 31, 2023 and June 30, 2023, we had $861,149 and $697,325, respectively, available to us for borrowing under the Revolving Credit Facility, net of $864,049 and $1,014,703 outstanding borrowings as of the respective balance sheet dates. Refer to Note 4. Revolving Credit Facility within our consolidated financial statements for additional details.
Current wording
As of March 31, 2024 and June 30, 2023, wehad$798,303 and $697,325, respectively, available to us for borrowing under the Revolving Credit Facility, net of $906,376 and $1,014,703 outstanding borrowings as of the respective balance sheet dates. Refer to Note 4. Revolving Credit Facility within our consolidated financial statements for additional details.
Previous wording
The 2023 Notes, the 6.375% 2024 Notes, 2026 Notes, the 3.364% 2026 Notes, and the 3.437% 2028 Notes (collectively, the “Public Notes”) are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding. Refer to Note 6. Public Notes within our consolidated financial statements for additional details.
Current wording
The 6.375% 2024 Notes, 2026 Notes, the 3.364% 2026 Notes, and the 3.437% 2028 Notes (collectively, the “Public Notes”) are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding. Refer to Note 6. Public Notes within our consolidated financial statements for additional details.
Previous wording
We have, from time to time, repurchased certain notes issued through the InterNotes® Offerings and, therefore, as of December 31, 2023 and June 30, 2023, the aggregate principal amount of Prospect Capital InterNotes® outstanding were $391,007 and $358,105, respectively. Refer to Note 7. Prospect Capital InterNotes®within our consolidated financial statements for additional details.
Current wording
We have, from time to time, repurchased certain notes issued through the InterNotes® Offerings and, therefore, as of March 31, 2024 and June 30, 2023, the aggregate principal amount of Prospect Capital InterNotes® outstanding were $442,953 and $358,105, respectively. Refer to Note 7. Prospect Capital InterNotes®within our consolidated financial statements for additional details.
Previous wording
During the six months ended December 31, 2023, our net asset value applicable to common shares decreased by $49,016 or $0.32 per common share. The net asset value decrease is primarily due to net realized and changes in unrealized losses.
Current wording
During the nine months ended March 31, 2024, our net asset value applicable to common shares decreased by $9,554 or $0.25 per common share. The net asset value decrease is primarily due to net realized and changes in unrealized losses.
Previous wording
During the thesix months ended December 31, 2023, net realized lossesof $206,631, or $0.51 per common share, were offset by net unrealized gains of $73,888, or$0.18 per common share, resulting in a net decrease of$0.33 per basic weighted average share. During the six months ended December 31, 2023, net investment income of $222,539, or $0.54 per basic weighted average common share exceeded distributions from earnings to common and preferred stockholders of $194,529, or $0.48 per basic weig hted average common share, resulting in a net incr ease of $0.06 per basic weighted average common share. The increase was offsetby $0.06 ofdilution per common share related to common stock issuances for the six months ended December 31, 2023. The following table shows the calculation of net asset value per common share as of December 31, 2023 and June 30, 2023:
Current wording
During the nine months ended March 31, 2024, net realized losses of $282,120, or $0.69 per common share, were offset by net unrealized gains of $193,705, or $0.47 per common share, resulting in a net decrease of $0.22 per basic weighted average share. During the nine months ended March 31, 2024, net investment income of $316,914, or $0.77 per basic weighted average common share exceeded distributions from earnings to common and preferred stockholders of $294,025, or $0.72 per basic weighted average common share, resulting in a net increase of $0.05 per basic weighted average common share. The increase was offset by $0.09 of dilution per common share related to common stock issuances for the nine months ended March 31, 2024. The following table shows the calculation of net asset value per common share as of March 31, 2024 and June 30, 2023:
Previous wording
Operating results for the three and six months ended December 31, 2023 and December 31, 2022 were as follows:
Current wording
Operating results for the three and nine months ended March 31, 2024 and March 31, 2023 were as follows:
Previous wording
The average interest earned on interest bearing performing assets increased to 10.46% for the three months ended December 31, 2023, from 10.43% for the three months ended December 31, 2022. The average interest earned on all interest bearing assets increased to 10.02% for the three months ended December 31, 2023, from 9.97% for the three months ended December 31, 2022. The weighted average interest rate earned on our portfolio increased by 0.03%, primarily due to an increase in LIBOR/SOFR rates rising above our floors amongst our interest-bearing investments, for which interest income from portfolio company investments increased to $184,016 from $163,418, for the three months ended December 31, 2023 and 2022, respectively. This increase was offset by a decrease in income from our structured credit investments to $8,882 from $26,047, for the three months ended December 31, 2023 and 2022, respectively.
Current wording
The average interest earned on interest bearing performing assets decreased to 10.02% for the three months ended March 31, 2024, from 11.00% for the three months ended March 31, 2023. The average interest earned on all interest bearing assets decreased to 9.51% for the three months ended March 31, 2024, from 10.54% for the three months ended March 31, 2023. The weighted average interest rate earned on performing interest bearing investments decreased by 0.98% and the weighted average interest rate earned on all interest bearing investments in our portfolio decreased by 1.03%. The decrease is primarily due to a decrease in income from our structured credit investments to $4,748 from $24,039, for the three months ended March 31, 2024 and 2023, respectively.
Previous wording
The average interest earned on interest bearing performing assets increased to 10.75% for the six months ended December 31, 2023 from 10.11% for the six months ended December 31, 2022. The average interest earned on all interest bearing assets increased to 10.12% for the six months ended December 31, 2023 from 9.67% for the six months ended December 31, 2022 . The weighted average interest rate earned on our portfolio increased by 0.64% due to a increase in the weighted average interest rate earned on our portfolio primarily due to LIBOR/SOFR rates rising above our floors amongst our interest-bearing investm ents, for which interest income increased to $368,271 from $312,804, six months ended December 31, 2023 and 2022, respectively. This increase was offset by a decrease in income from our structured credit investments to $25,569 from $48,943, for the six months ended December 31, 2023 and 2022, respectively.
Current wording
The average interest earned on interest bearing performing assets increased to 10.51% for the nine months ended March 31, 2024 from 10.40% for the nine months ended March 31, 2023. Theweighted average interest rate earned on our performing interest bearing investments increased by 0.11% due to a increase in the weighted average interest rate earned on our portfolio primarily due to LIBOR/SOFR rates rising above our floors amongst our interest-bearing investments, for which interest income increased to $545,830 from $485,563, nine months ended March 31, 2024 and 2023, respectively. This increase was offset by a decrease in income from our structured credit investments to $30,317 from $72,982, for the nine months ended March 31, 2024 and 2023, respectively. The average interest earned on all interest bearing assets decreased to 9.92% for the nine months ended March 31, 2024 from 9.96% for the nine months ended March 31, 2023. Theweighted average interest rate earned on all interest bearing investments decreased by 0.04% primarily due to a decrease in income from our structured credit investments for the nine months ended March 31, 2024 and 2023, respectively, and offset by an increase to interest income due to LIBOR/SOFR rates rising above our floors amongst our interest-bearing investments.
Showing the first 40 of 75 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In June 2019, CP Energy purchased a controlling interest in the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”) a portfolio company of Prospect with $29,458 in first lien term loans (the “Spartan Term Loans”) due to us as of March 31, 2024. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, our Spartan Term Loans are presented as control investments under CP Energy beginning June 30, 2019. Spartan remains the direct borrow and guarantor to Prospect for the Spartan Term Loans.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
During the three months ended December 31, 2023, we commenced a tender offer (the “Series A Preferred Stock Tender Offer”) to purchase for cash any and all of 5,882,351 shares of outstanding Series A Preferred Stock at a price of $15.88, plus accrued and unpaid dividends for a total consideration of $16.00 per share. On November 29, 2023,$15,780 aggregate liquidation amount of the Series A Preferred Stock were validly tendered and accepted, and we recognized a realized gain of$5,197 from the purchase of 631,194 shares of Series A Preferred Stock in the amount of the difference between the consideration transferred and the net carrying amount of the Series A Preferred Stock.
Previous report — wording carried elsewhere
During the three months ended December 31, 2023, the Company repurchased 17,994 shares of Series A Preferred Stock for a total cost of approximately $278, including fees and commissions paid to the broker, representing an average repurchase price of $15.41 per share. The difference in the consideration transferred and the net carrying value of the Series A Preferred Stock repurchased, which was $434, resulted in a gain applicable to common stock holders of approximately $156 during thethree months ended December 31, 2023.
Previous report — wording carried elsewhere
During the three months ended December 31, 2023, we repurchased 17,994 shares of Series A Preferred Stock for a total cost of approximately $278, including fees and commissions paid to the broker, representing an average purchase price of $15.41 per share. The difference in the consideration transferred and the net carrying value of the Series A Preferred Stock repurchased, which was $434, resulted in a gain applicable to common stock holders of approximately $156 during the three months ended December 31, 2023.
Previous report — wording carried elsewhere
On January 25, 2024, we announced the declaration of monthly dividends for our Floating Rate Preferred Stock for holders of record on the following dates based on an annualized rate equal to 7.33586% of the stated value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month), authorized on January 25, 2024, as follows:
Previous report — wording carried elsewhere
On January 31, 2024, the Company Launched an offer to exchange (i) any and all outstanding 6.50% Series M3 Preferred Stock for Floating Rate Series M4 Preferred Stock and (ii) 5.50% Series M1 Preferred Stock for either 6.50% Series M3 Preferred Stock or Floating Rate Series M4 Preferred Stock pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). The shares issued in the exchanges will be issued in each case to an existing security holder of the Company exclusively in exchange for such holder’s securities and no commission or other remuneration will be paid or given for soliciting the exchange. Other exemptions may apply.