0001104659-13-008542.txt : 20130207 0001104659-13-008542.hdr.sgml : 20130207 20130207172739 ACCESSION NUMBER: 0001104659-13-008542 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20121231 FILED AS OF DATE: 20130207 DATE AS OF CHANGE: 20130207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROSPECT CAPITAL CORP CENTRAL INDEX KEY: 0001287032 IRS NUMBER: 432048643 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 814-00659 FILM NUMBER: 13583492 BUSINESS ADDRESS: STREET 1: 10 EAST 40TH STREET 44TH FL CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 212-448-0702 MAIL ADDRESS: STREET 1: 10 EAST 40TH STREET 44TH FL CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: PROSPECT ENERGY CORP DATE OF NAME CHANGE: 20040623 FORMER COMPANY: FORMER CONFORMED NAME: PROSPECT STREET ENERGY CORP DATE OF NAME CHANGE: 20040414 10-Q 1 a13-4540_110q.htm 10-Q

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter Ended December 31, 2012

 

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

 

 

44th Floor

 

 

New York, New York

 

10016

(Address of principal executive offices)

 

(Zip Code)

 

 

(212) 448-0702

 

 

(Registrant’s telephone number, including area code)

 

 

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. x Yes    o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). oYes    o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer x     Accelerated Filer  o    Non-Accelerated Filer o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes    x No

 

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of February 7, 2013 was 225,581,643.

 


 



 

PROSPECT CAPITAL CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2012
TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

Item 1.

FINANCIAL STATEMENTS

3

 

Consolidated Statements of Assets and Liabilities – December 31, 2012 (Unaudited) and June 30, 2012 (Audited)

3

 

Consolidated Statements of Operations (Unaudited) - For the Three and Six Months Ended December 31, 2012 and 2011

4

 

Consolidated Statements of Changes in Net Assets (Unaudited) - For the Six Months Ended December 31, 2012 and 2011

5

 

Consolidated Statements of Cash Flows (Unaudited) - For the Six Months Ended December 31, 2012 and 2011

6

 

Consolidated Schedule of Investments – December 31, 2012 (Unaudited) and June 30, 2012 (Audited)

7

 

Notes to Consolidated Financial Statements (Unaudited)

33

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

58

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

93

Item 4.

Controls and Procedures

94

 

 

 

PART II.

OTHER INFORMATION

94

Item 1.

Legal Proceedings

94

Item 1A.

Risk Factors

94

Item 2.

Unregistered Sales in Equity Securities and Use of Proceeds

95

Item 3.

Defaults upon Senior Securities

96

Item 4.

Mine Safety Disclosure

96

Item 5.

Other Information

96

Item 6.

Exhibits

96

 

Signatures

101

 

2



 

PART I: FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2012 and June 30, 2012

(in thousands, except share and per share data)

 

 

 

December 31,
2012

 

June 30,
2012

 

 

 

(Unaudited)

 

(Audited)

 

Assets (Note 4) 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

Control investments (amortized cost of $666,360 and $518,015, respectively)

 

$

649,380

 

$

564,489

 

Affiliate investments (amortized cost of $48,659 and $44,229, respectively)

 

48,266

 

46,116

 

Non-control/Non-affiliate investments (amortized cost of $2,402,038 and $1,537,069, respectively)

 

2,341,162

 

1,483,616

 

Total investments at fair value (amortized cost of $3,117,057 and $2,099,313, respectively, Note 3)

 

3,038,808

 

2,094,221

 

 

 

 

 

 

 

Investments in money market funds

 

430,945

 

118,369

 

Total investments

 

3,469,753

 

2,212,590

 

 

 

 

 

 

 

Cash

 

2,219

 

2,825

 

Receivables for:

 

 

 

 

 

Interest, net

 

16,531

 

14,219

 

Dividends

 

11

 

1

 

Other

 

2,409

 

783

 

Prepaid expenses

 

227

 

421

 

Deferred financing costs

 

38,571

 

24,415

 

Total Assets 

 

3,529,721

 

2,255,254

 

 

 

 

 

 

 

Liabilities 

 

 

 

 

 

Credit facility payable (Note 4 and Note 8)

 

 

96,000

 

Senior convertible notes (Note 5 and Note 8)

 

847,500

 

447,500

 

Senior unsecured notes (Note 6 and Note 8)

 

100,000

 

100,000

 

Prospect Capital InterNotes® (Note 7 and Note 8)

 

164,993

 

20,638

 

Due to broker

 

38,291

 

44,533

 

Dividends payable

 

23,669

 

14,180

 

Due to Prospect Administration (Note 12)

 

373

 

658

 

Due to Prospect Capital Management (Note 12)

 

2,019

 

7,913

 

Accrued expenses

 

16,544

 

9,648

 

Other liabilities

 

9,697

 

2,210

 

Total Liabilities 

 

1,203,086

 

743,280

 

Net Assets

 

$

2,326,635

 

$

1,511,974

 

 

 

 

 

 

 

Components of Net Assets 

 

 

 

 

 

Common stock, par value $0.001 per share (500,000,000 common shares authorized; 215,173,410 and 139,633,870 issued and outstanding, respectively) (Note 9)

 

$

215

 

$

140

 

Paid-in capital in excess of par (Note 9)

 

2,379,742

 

1,544,801

 

Undistributed net investment income

 

82,817

 

23,667

 

Accumulated realized losses on investments

 

(57,890)

 

(51,542)

 

Unrealized depreciation on investments

 

(78,249)

 

(5,092)

 

Net Assets 

 

$

2,326,635

 

$

1,511,974

 

 

 

 

 

 

 

Net Asset Value Per Share 

 

$

10.81

 

$

10.83

 

 

See notes to consolidated financial statements.

 

3



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Three and Six Months Ended December 31, 2012 and 2011

(in thousands, except share and per share data)
(Unaudited)

 

 

 

For The Three Months Ended

 

For The Six Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

 

 

 

 

 

 

 

 

Interest Income: (Note 3)

 

 

 

 

 

 

 

 

 

Control investments

 

$

33,239

 

$

6,415

 

$

51,158

 

$

12,580

 

Affiliate investments

 

1,694

 

2,399

 

3,345

 

4,801

 

Non-control/Non-affiliate investments other than CLO securities

 

58,513

 

36,714

 

103,540

 

70,034

 

CLO fund securities

 

23,420

 

608

 

37,133

 

1,108

 

Total interest income

 

116,866

 

46,136

 

195,176

 

88,523

 

 

 

 

 

 

 

 

 

 

 

Dividend income:

 

 

 

 

 

 

 

 

 

Control investments

 

31,717

 

17,645

 

64,967

 

24,345

 

Non-control/Non-affiliate investments

 

230

 

1,384

 

3,185

 

1,733

 

Money market funds

 

8

 

-

 

11

 

1

 

Total dividend income

 

31,955

 

19,029

 

68,163

 

26,079

 

 

 

 

 

 

 

 

 

 

 

Other income: (Note 10)

 

 

 

 

 

 

 

 

 

Control investments

 

5,095

 

612

 

5,097

 

618

 

Affiliate investments

 

605

 

13

 

613

 

74

 

Non-control/Non-affiliate investments

 

11,514

 

1,473

 

20,622

 

7,311

 

Total other income

 

17,214

 

2,098

 

26,332

 

8,003

 

Total Investment Income

 

166,035

 

67,263

 

289,671

 

122,605

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Investment advisory fees:

 

 

 

 

 

 

 

 

 

Base management fee (Note 12)

 

16,306

 

8,825

 

29,534

 

17,036

 

Income incentive fee (Note 12)

 

24,804

 

9,127

 

43,311

 

16,096

 

Total investment advisory fees

 

41,110

 

17,952

 

72,845

 

33,132

 

 

 

 

 

 

 

 

 

 

 

Interest and credit facility expenses

 

16,414

 

9,759

 

29,925

 

18,719

 

Legal fees

 

635

 

510

 

1,257

 

942

 

Valuation services

 

371

 

306

 

747

 

608

 

Audit, compliance and tax related fees

 

378

 

525

 

810

 

865

 

Allocation of overhead from Prospect Administration (Note 12)

 

2,139

 

1,117

 

4,323

 

2,233

 

Insurance expense

 

78

 

20

 

171

 

99

 

Directors’ fees

 

75

 

63

 

150

 

127

 

Excise tax (Note 2)

 

4,500

 

-

 

4,500

 

-

 

Other general and administrative expenses

 

1,119

 

503

 

1,700

 

1,495

 

Total Operating Expenses

 

66,819

 

30,755

 

116,428

 

58,220

 

 

 

 

 

 

 

 

 

 

 

Net Investment Income

 

99,216

 

36,508

 

173,243

 

64,385

 

 

 

 

 

 

 

 

 

 

 

Net realized (loss) gain on investments (Note 3)

 

(8,123)

 

13,498

 

(6,348)

 

(1,109)

 

Net change in unrealized (depreciation) appreciation on investments (Note 3)

 

(44,604)

 

14,486

 

(73,157)

 

41,116

 

 

 

 

 

 

 

 

 

 

 

Net Increase in Net Assets Resulting from Operations

 

$

46,489

 

$

64,492

 

$

93,738

 

$

104,392

 

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations per share: (Note 11 and Note 15)

 

$

0.24

 

$

0.59

 

$

0.52

 

$

0.96

 

Dividends declared per share

 

$

0.31

 

$

0.31

 

$

0.61

 

$

0.61

 

 

See notes to consolidated financial statements.

 

4



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
For The Six Months Ended December 31, 2012 and 2011

(in thousands, except share data)
(Unaudited)

 

 

 

For The Six Months Ended December 31,

 

 

 

 

2012

 

2011

 

 

Increase in Net Assets from Operations: 

 

 

 

 

 

 

Net investment income

 

$173,243

 

$64,385

 

 

Net realized loss on investments

 

(6,348

)

(1,109

)

 

Net change in unrealized (depreciation) appreciation on investments

 

(73,157

)

41,116

 

 

Net Increase in Net Assets Resulting from Operations 

 

93,738

 

104,392

 

 

 

 

 

 

 

 

 

Dividends to Shareholders

 

(114,093

)

(66,553

)

 

 

 

 

 

 

 

 

Capital Share Transactions: 

 

 

 

 

 

 

Net proceeds from issuance of common stock

 

829,503

 

15,060

 

 

Less: Offering costs of public share offerings

 

(1,514

)

(165

)

 

Reinvestment of dividends

 

7,027

 

5,393

 

 

Net Increase in Net Assets Resulting from Capital Share Transactions 

 

835,016

 

20,288

 

 

 

 

 

 

 

 

 

Total Increase in Net Assets 

 

814,661

 

58,127

 

 

Net assets at beginning of period

 

1,511,974

 

1,114,357

 

 

Net Assets at End of Period 

 

$2,326,635

 

$1,172,484

 

 

 

 

 

 

 

 

 

Capital Share Activity: 

 

 

 

 

 

 

Shares sold

 

69,407,632

 

1,500,000

 

 

Shares issued to acquire controlled investments

 

5,507,381

 

 

 

Shares issued through reinvestment of dividends

 

624,527

 

584,361

 

 

Net increase in capital share activity

 

75,539,540

 

2,084,361

 

 

Shares outstanding at beginning of period

 

139,633,870

 

107,606,690

 

 

 

 

 

 

 

 

 

Shares Outstanding at End of Period 

 

215,173,410

 

109,691,051

 

 

 

See notes to consolidated financial statements.

 

5



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Six Months Ended December 31, 2012 and 2011
(in thousands, except share data)
(Unaudited)

 

 

 

For The Six Months Ended December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cash Flows from Operating Activities: 

 

 

Net increase in net assets resulting from operations

 

$

93,738

 

$

104,392

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operations:

 

 

 

 

 

Net realized loss on investments

 

6,348

 

1,109

 

Net change in unrealized depreciation (appreciation) on investments

 

73,157

 

(41,116

)

Amortization of discounts and premiums

 

(11,422

)

(2,575

)

Amortization of deferred financing costs

 

3,724

 

4,494

 

Payment-in-kind interest

 

(4,048

)

(3,329

)

Structuring fees

 

(24,273

)

(7,356

)

 

 

 

 

 

 

Change in operating assets and liabilities 

 

 

 

 

 

Payments for purchases of investments

 

(1,432,490

)

(366,587

)

Proceeds from sale of investments and collection of investment principal

 

507,392

 

166,261

 

Net increase of investments in money market funds

 

(312,576

)

(802

)

Increase in interest receivable

 

(2,312

)

(470

)

Increase in dividends receivable

 

(10

)

 

Increase in other receivables

 

(1,626

)

(250

)

Decrease (increase) in prepaid expenses

 

194

 

(286

)

(Decrease) increase in due to broker

 

(6,242

)

17,339

 

(Decrease) increase in due to Prospect Administration

 

(285

)

416

 

(Decrease) increase in due to Prospect Capital Management

 

(5,894

)

9,753

 

Increase in accrued expenses

 

6,896

 

90

 

Increase (decrease) in other liabilities

 

7,487

 

(848

)

Net Cash Used In Operating Activities 

 

(1,102,242

)

(119,765

)

 

 

 

 

 

 

Cash Flows from Financing Activities: 

 

 

 

 

 

Borrowings under credit facility (Note 4)

 

99,000

 

442,300

 

Principal payments under credit facility (Note 4)

 

(195,000

)

(274,500

)

Issuance of Senior Convertible Notes (Note 5)

 

400,000

 

 

Issuance of Prospect Capital InterNotes® (Note 7)

 

144,355

 

 

Financing costs paid and deferred

 

(17,880

)

(1,629

)

Proceeds from issuance of common stock, net of underwriting costs

 

770,252

 

15,060

 

Offering costs from issuance of common stock

 

(1,514

)

(165

)

Dividends paid

 

(97,577

)

(60,932

)

Net Cash Provided By Financing Activities

 

1,101,636

 

120,134

 

 

 

 

 

 

 

Total (Decrease) Increase in Cash 

 

(606

)

369

 

Cash balance at beginning of period

 

2,825

 

1,492

 

Cash Balance at End of Period 

 

$

2,219

 

$

1,861

 

 

 

 

 

 

 

Cash Paid For Interest 

 

$

17,442

 

$

12,777

 

 

 

 

 

 

 

Non-Cash Financing Activity: 

 

 

 

 

 

Amount of shares issued in connection with dividend reinvestment plan

 

$

7,027

 

$

5,393

 

Amount of shares issued in connection with controlled investments

 

$

59,251

 

$

 

 

See notes to consolidated financial statements.

 

6



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

December 31, 2012 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control Investments (25.00% or greater of voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AIRMALL USA, Inc. (27)

 

Pennsylvania / Property Management

 

Senior Secured Term Loan (12.00% (LIBOR + 9.00% with 3.00% LIBOR floor), due 6/30/2015)(3), (4)

 

$   29,050

 

$  29,050

 

$  29,050

 

1.2%

 

 

 

 

 

Senior Subordinated Term Loan (12.00% plus 6.00% PIK, due 12/31/2015)

 

12,500

 

12,500

 

12,500

 

0.5%

 

 

 

 

 

Convertible Preferred Stock (9,919.684 shares)

 

 

 

9,920

 

8,202

 

0.4%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

51,470

 

49,752

 

2.1%

 

Ajax Rolled Ring & Machine, Inc.

 

South Carolina / Manufacturing

 

Senior Secured Note — Tranche A (10.50% (LIBOR + 7.50% with 3.00% LIBOR floor), due 4/01/2013)(3), (4)

 

19,910

 

19,910

 

19,910

 

0.9%

 

 

 

 

 

Subordinated Secured Note — Tranche B (11.50% (LIBOR + 8.50% with 3.00% LIBOR floor) plus 6.00% PIK, due 4/01/2013)(3), (4)

 

15,035

 

15,035

 

15,035

 

0.6%

 

 

 

 

 

Subordinated Unsecured Note (11.50% (LIBOR + 8.50% with 3.00% LIBOR floor) plus 6.00% PIK, due 12/31/2017)(4)

 

3,600

 

3,600

 

3,600

 

0.2%

 

 

 

 

 

Convertible Preferred Stock — Series A (6,142.6 shares)

 

 

 

6,057

 

4,866

 

0.2%

 

 

 

 

 

Unrestricted Common Stock (6 shares)

 

 

 

 

5

 

0.0%

 

 

 

 

 

 

 

 

 

44,602

 

43,416

 

1.9%

 

APH Property Holdings, LLC(32)

 

Georgia / Real Estate

 

Senior Secured Note (10.50% (LIBOR + 8.50% with 2.00% LIBOR floor) plus 2.00% PIK, due 10/24/2020)(4)

 

12,418

 

12,418

 

12,418

 

0.5%

 

 

 

 

 

Common Stock (17,400 shares)

 

 

 

5,002

 

5,002

 

0.2%

 

 

 

 

 

 

 

 

 

17,420

 

17,420

 

0.7%

 

AWCNC, LLC(19)

 

North Carolina / Machinery

 

Members Units — Class A (1,800,000 units)

 

 

 

 

 

0.0%

 

 

 

 

Members Units — Class B-1 (1 unit)

 

 

 

 

 

0.0%

 

 

 

 

 

Members Units — Class B-2 (7,999,999 units)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

0.0%

 

Borga, Inc.

 

California / Manufacturing

 

Revolving Line of Credit — $1,000 Commitment (5.00% (PRIME + 1.75%) plus 3.00% default interest, in non-accrual status effective 03/02/2010, past due)(4), (25)

 

1,000

 

945

 

622

 

0.0%

 

 

 

 

 

Senior Secured Term Loan B (8.50% (PRIME + 5.25%) plus 3.00% default interest, in non-accrual status effective 03/02/2010, past due)(4)

 

1,612

 

1,500

 

 

0.0%

 

 

 

 

 

Senior Secured Term Loan C (12.00% plus 4.00% PIK plus 3.00% default interest, in non-accrual status effective 03/02/2010, past due)

 

9,546

 

707

 

 

0.0%

 

 

 

 

 

Common Stock (100 shares)(21)

 

 

 

 

 

0.0%

 

 

 

 

 

Warrants (33,750 warrants)(21)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

3,152

 

622

 

0.0%

 

 

See notes to consolidated financial statements.

 

7



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
December 31, 2012 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

December 31, 2012 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control Investments (25.00% or greater of voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCPI Holdings Inc(33)

 

Ohio / Manufacturing

 

Senior Secured Note (10.00%, due 12/31/2017)

 

$   17,888

 

$  17,888

 

$  17,888

 

0.8%

 

 

 

 

 

Senior Secured Note (12.00% plus 7.00% PIK, due 6/30/2018)

 

7,526

 

7,526

 

7,526

 

0.3%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

8,581

 

8,581

 

0.4%

 

 

 

 

 

 

 

 

 

33,995

 

33,995

 

1.5%

 

Credit Central Holdings of Delaware, LLC(34)

 

Ohio / Consumer Finance

 

Senior Secured Revolving Credit Facility - $60,000 Commitment (20.00%(LIBOR + 18.50% with 1.50% LIBOR floor), due 12/31/2020) (4), (25)

 

38,082

 

38,082

 

38,082

 

1.6%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

9,581

 

9,581

 

0.4%

 

 

 

 

 

 

 

 

 

47,663

 

47,663

 

2.0%

 

Energy Solutions Holdings, Inc.(8)

 

Texas / Gas Gathering and Processing

 

Senior Secured Note (18.00%, due 12/11/2016)

 

5,000

 

5,000

 

5,000

 

0.2%

 

 

 

Junior Secured Note (18.00%, due 12/12/2016)

 

12,000

 

12,000

 

12,000

 

0.5%

 

 

 

 

 

Senior Secured Note to Vessel Holdings LLC (18.00%, due 12/12/2016)

 

3,500

 

3,500

 

3,500

 

0.2%

 

 

 

 

 

Subordinated Secured Note to Freedom Marine Holdings, LLC (12.00% (LIBOR + 6.11% with 5.89% LIBOR floor) plus 4.00% PIK, in non-accrual status effective 10/1/2010, due 12/31/2011) (4)

 

13,628

 

12,503

 

5,896

 

0.3%

 

 

 

 

 

Senior Secured Debt to Yatesville Coal Holdings, Inc. (Non-accrual status effective 1/1/2009, past due)

 

1,449

 

1,449

 

 

0.0%

 

 

 

 

 

Escrow

 

 

 

 

4,997

 

0.2%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

8,318

 

8,507

 

0.4%

 

 

 

 

 

 

 

 

 

42,770

 

39,900

 

1.8%

 

First Tower Holdings of Delaware, LLC.(22), (29)

Mississippi / Consumer Finance

 

Senior Secured Revolving Credit Facility — $400,000 Commitment (20.00% (LIBOR + 18.50% with 1.50% LIBOR floor), due 6/30/2022) (4), (25)

 

264,760

 

264,760

 

264,760

 

11.4%

 

 

 

 

 

Common Stock (83,729,323 shares)

 

 

 

43,193

 

45,649

 

2.0%

 

 

 

 

 

Net Revenue Interest (5% of Net Revenue & Distributions)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

307,953

 

310,409

 

13.4%

 

Manx Energy, Inc. (“Manx”)(12)

 

Kansas / Oil & Gas Production

 

Senior Secured Note (13.00%, in non-accrual status effective 1/19/2010, due 6/21/2013)

 

3,550

 

3,550

 

 

0.0%

 

 

 

 

 

Preferred Stock (6,635 shares)

 

 

 

6,307

 

 

0.0%

 

 

 

 

 

Common Stock (17,082 shares)

 

 

 

1,170

 

 

0.0%

 

 

 

 

 

 

 

 

 

11,027

 

 

0.0%

 

NMMB Holdings, Inc. (24)

New York / Media

 

Senior Term Loan (14.00%, due 5/6/2016)

 

19,000

 

19,000

 

18,975

 

0.8%

 

 

 

 

 

Senior Subordinated Term Loan (15.00%, due 5/6/2016)

 

2,800

 

2,800

 

1,225

 

0.1%

 

 

 

 

 

Series A Preferred Stock (4,400 shares)

 

 

 

4,400

 

 

0.0%

 

 

 

 

 

 

 

 

 

26,200

 

20,200

 

0.9%

 

R-V Industries, Inc.

 

Pennsylvania / Manufacturing

 

Senior Subordinated Note (12.00% (LIBOR + 9.00% with 3.00% LIBOR floor,) due 5/30/2018)

 

9,500

 

9,500

 

9,500

 

0.4%

 

 

 

 

 

Warrants (200,000 warrants, expiring 6/30/2017) (4)

 

 

 

1,682

 

6,299

 

0.3%

 

 

 

 

 

Common Stock (545,107 shares)

 

 

 

5,087

 

17,167

 

0.7%

 

 

 

 

 

 

 

 

 

16,269

 

32,966

 

1.4%

 

 

See notes to consolidated financial statements.

 

8



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
December 31, 2012 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

December 31, 2012 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control Investments (25.00% or greater of voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Healing Staff, Inc.(9)

 

North Carolina / Contracting

 

Secured Promissory Notes (15.00%, in non-accrual status effective 12/22/2010, due 3/21/2012 – 12/18/2013)

 

$    2,581

 

$   2,580

 

$       —

 

0.0%

 

 

 

 

 

Senior Demand Note (15.00%, in non-accrual status effective 11/1/2010, past due)

 

1,170

 

1,170

 

 

0.0%

 

 

 

 

 

Common Stock (1,000 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

3,750

 

 

0.0%

 

Valley Electric Co. of Mt. Vernon, Inc(35)

 

Washington / Construction & Engineering

 

Senior Secured Note (9.00% (LIBOR + 6.00%, with 3.00% LIBOR floor) plus 9.00% PIK, due 12/31/2018) (4)

 

32,572

 

32,572

 

32,572

 

1.4%

 

 

Senior Secured Note (8.00% (LIBOR + 5.00% with 3.00% LIBOR floor) plus 2.50% PIK, due 12/31/2017) (4)

 

10,000

 

10,000

 

10,000

 

0.4%

 

 

 

 

 

Common Stock (50,000 Shares)

 

 

 

9,526

 

9,526

 

0.4%

 

 

 

 

 

 

 

 

 

52,098

 

52,098

 

2.2%

 

Wolf Energy Holdings, Inc. (12)

 

Kansas / Oil & Gas Production

 

Appalachian Energy Holdings, LLC (“AEH”) — Senior Secured First Lien Note (8.00%, in non-accrual status effective 1/19/2010, due 6/21/2013)

 

2,540

 

2,000

 

235

 

0.0%

 

 

 

 

 

Coalbed, LLC — Senior Secured Note (8.00%, in non-accrual status effective 1/19/2010, due 6/21/2013) (6)

 

7,620

 

5,991

 

704

 

0.0%

 

 

 

 

 

Common Stock (100 Shares)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

7,991

 

939

 

0.0%

 

Total Control Investments  

 

666,360

 

649,380

 

27.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate Investments (5.00% to 24.99% voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BNN Holdings Corp., (f/k/a Biotronic NeuroNetwork)

 

Michigan / Healthcare

 

Senior Secured Note (10.00% (LIBOR + 8.00% with 2.00% LIBOR floor), due 12/17/2017) (4)

 

29,850

 

29,850

 

29,850

 

1.3%

 

 

Preferred Stock Series A (9,925.455 shares) (13)

 

 

 

2,300

 

2,144

 

0.1%

 

 

 

 

 

Preferred Stock Series B (1,753.64 shares) (13)

 

 

 

579

 

540

 

0.0%

 

 

 

 

 

 

 

 

 

32,729

 

32,534

 

1.4%

 

Boxercraft Incorporated (20)

Georgia / Textiles & Leather

 

Senior Secured Term Loan A (10.00% plus 5.00% PIK, due 9/16/2013)

 

1,677

 

1,626

 

1,651

 

0.1%

 

 

 

 

 

Senior Secured Term Loan B (10.00% plus 5.00% PIK, due 9/16/2013)

 

4,792

 

4,528

 

4,691

 

0.2%

 

 

 

 

 

Senior Secured Term Loan C (10.00% plus 5.00% PIK, due 9/16/2013) due 9/16/2013)

 

2,323

 

2,323

 

2,274

 

0.1%

 

 

 

 

 

Senior Secured Term Loan (10.00% plus 5.00% PIK, due 3/16/2014)

 

8,153

 

7,453

 

7,116

 

0.3%

 

 

 

 

 

Preferred Stock (1,000,000 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

Common Stock (10,000 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

Warrants (1 warrant, expiring 8/31/2022)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

15,930

 

15,732

 

0.7%

 

Smart, LLC(14)

 

New York / Diversified / Conglomerate Service

 

Membership Interest

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

0.0%

 

Total Affiliate Investments  

 

48,659

 

48,266

 

2.1%

 

 

See notes to consolidated financial statements.

 

9



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
December 31, 2012 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

December 31, 2012 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate Investments (less than 5.00% of voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADAPCO, Inc.

 

Florida / Ecological

 

Common Stock (5,000 shares)

 

 

 

$   141

 

$   282

 

0.0%

 

 

 

 

 

 

 

 

 

141

 

282

 

0.0%

 

Aderant North America, Inc.

 

Georgia / Software & Computer Services

 

Second Lien Term Note (11.00%, PRIME + 7.75)%, due 6/20/2019) (4)

 

$   7,000

 

6,895

 

6,895

 

0.3%

 

 

 

 

 

 

 

 

 

6,895

 

6,895

 

0.3%

 

Aircraft Fasteners International, LLC

 

California / Machinery

 

Convertible Preferred Stock (32,500 units)

 

 

 

396

 

517

 

0.0%

 

 

 

 

 

 

 

 

 

396

 

517

 

0.0%

 

American Gilsonite Company

 

Utah / Specialty Minerals

 

Second Lien Term Note (11.50%, due 9/1/2017)

 

38,500

 

38,500

 

38,500

 

1.7%

 

 

Membership Interest in AGC/PEP, LLC (99.9999%)(15)

 

 

 

 

5,036

 

0.2%

 

 

 

 

 

 

 

 

 

38,500

 

43,536

 

1.9%

 

Apidos CLO VIII, Ltd. (22)

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

19,730

 

18,597

 

19,347

 

0.8%

 

 

 

 

 

 

 

 

 

18,597

 

19,347

 

0.8%

 

Apidos CLO IX, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

20,525

 

19,810

 

19,357

 

0.8%

 

 

 

 

 

 

 

 

 

19,810

 

19,357

 

0.8%

 

Apidos CLO XI, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

38,340

 

38,291

 

38,291

 

1.6%

 

 

 

 

 

 

 

 

 

38,291

 

38,291

 

1.6%

 

Archipelago Learning, Inc.

 

Minnesota / Consumer Services

 

Second Lien Debt (11.25% (LIBOR + 9.75% with 1.50% LIBOR floor), due 5/17/2019) (4), (16)

 

50,000

 

48,118

 

50,000

 

2.1%

 

 

 

 

 

 

 

 

 

48,118

 

50,000

 

2.1%

 

Arctic Glacier U.S.A, Inc.

 

Canada / Food Products

 

Subordinated Unsecured (12.00% plus 3.00% PIK , due 7/27/2019)

 

86,118

 

86,118

 

86,118

 

3.7%

 

 

 

 

 

 

 

 

 

86,118

 

86,118

 

3.7%

 

Babson CLO Ltd 2011-I. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

35,000

 

34,634

 

35,470

 

1.5%

 

 

 

 

 

 

 

 

 

34,634

 

35,470

 

1.5%

 

Babson CLO Ltd 2012-IA. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

29,075

 

26,199

 

27,182

 

1.2%

 

 

 

 

 

 

 

 

 

26,199

 

27,182

 

1.2%

 

Babson CLO Ltd 2012-IIA. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

27,850

 

29,029

 

27,072

 

1.2%

 

 

 

 

 

 

 

 

 

29,029

 

27,072

 

1.2%

 

 

See notes to consolidated financial statements.

 

10



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
December 31, 2012 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

December 31, 2012 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate Investments (less than 5.00% of voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Byrider Systems Acquisition Corp(22)

 

Indiana / Auto Finance

 

Senior Subordinated Notes (12.00% plus 2.00% PIK, due 11/3/2016) (3)

 

$   15,755

 

$   15,755

 

$   15,755

 

0.7%

 

 

 

 

 

 

 

 

 

15,755

 

15,755

 

0.7%

 

Caleel + Hayden, LLC (14), (31)

 

Colorado / Personal & Nondurable Consumer Products

 

Membership Units (7,500 shares)

 

 

 

351

 

1,210

 

0.1%

 

 

 

 

 

 

 

 

 

351

 

1,210

 

0.1%

 

Capstone Logistics, LLC (4)

Georgia / Commercial Services

 

Senior Secured Term Loan A (7.50% (LIBOR + 5.50% with 2.00% LIBOR floor), due 9/16/2016)

 

30,705

 

30,705

 

30,705

 

1.3%

 

 

Senior Secured Term Loan B (13.50% (LIBOR + 11.50% with 2.00% LIBOR floor), due 9/16/2016)(3)

 

38,434

 

38,434

 

38,434

 

1.7%

 

 

 

 

 

 

 

 

 

69,139

 

69,139

 

3.0%

 

Cargo Airport Services USA, LLC

 

New York / Transportation

 

Senior Secured Term Loan (10.50% (LIBOR + 7.50% with 3.00% LIBOR floor), due 3/31/2016) (3), (4)

 

47,273

 

47,273

 

47,273

 

2.0%

 

 

Common Equity (1.6 units)

 

 

 

1,639

 

2,121

 

0.1%

 

 

 

 

 

 

 

 

 

48,912

 

49,394

 

2.1%

 

CIFC Funding 2011-I, Ltd. (4), (22)

 

Cayman Islands / Diversified Financial Services

 

Secured Class D Notes (5.32% (LIBOR + 5.00%), due 1/19/2023)

 

19,000

 

14,902

 

16,097

 

0.7%

 

 

Unsecured Class E Notes (7.32% (LIBOR + 7.00%), due 1/19/2023)

 

15,400

 

12,557

 

13,292

 

0.6%

 

 

 

 

 

 

 

 

 

27,459

 

29,389

 

1.3%

 

The Copernicus Group, Inc.

 

North Carolina / Healthcare

 

Escrow Receivable

 

 

 

 

314

 

0.0%

 

 

 

 

 

 

 

 

 

 

314

 

0.0%

 

Coverall North America, Inc.

 

Florida / Commercial Services

 

Senior Secured Term Loan (11.50% (LIBOR + 8.50% with 3.00% floor), due 12/17/2017)(4)

 

39,800

 

39,800

 

39,800

 

1.7%

 

 

 

 

 

 

 

 

 

39,800

 

39,800

 

1.7%

 

CP Well Testing, LLC

 

Oklahoma / Oil & Gas Products

 

Senior Secured Term Loan (13.50% (LIBOR + 11.00% with 2.50% floor), due 10/03/2017)(4)

 

21,366

 

21,366

 

21,366

 

0.9%

 

 

 

 

 

 

 

 

 

21,366

 

21,366

 

0.9%

 

CRT MIDCO, LLC

 

Wisconsin / Media

 

Senior Secured Term Loan (10.50% (LIBOR + 7.50% with 3.00% LIBOR floor), due 6/30/2017)(3), (4)

 

72,750

 

72,750

 

72,750

 

3.1%

 

 

 

 

 

 

 

 

 

72,750

 

72,750

 

3.1%

 

Deltek, Inc.

 

Virginia/ Software & Computer Services

 

Second Lien Term Loan (10.00% (LIBOR + 8.75% with 1.25% LIBOR floor), due 10/10/2019)(4)

 

12,000

 

11,824

 

11,824

 

0.5%

 

 

 

 

 

 

 

 

 

11,824

 

11,824

 

0.5%

 

Diamondback Operating, LP

 

Oklahoma / Oil & Gas Production

 

Net Profits Interest (15.00% payable on Equity distributions)(7)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

0.0%

 

Empire Today, LLC

 

Illinois / Durable Consumer Products

 

Senior Secured Note (11.375%, due 2/1/2017)

 

15,700

 

15,293

 

15,700

 

0.7%