0001104659-13-037639.txt : 20130506 0001104659-13-037639.hdr.sgml : 20130506 20130506164305 ACCESSION NUMBER: 0001104659-13-037639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130506 DATE AS OF CHANGE: 20130506 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: 13816650 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 a13-8709_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 March 31, 2013

 

 

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 May 6, 2013 was 243,243,161.

 


 



 

PROSPECT CAPITAL CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2013
TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

Item 1.

FINANCIAL STATEMENTS

3

 

Consolidated Statements of Assets and Liabilities – March 31, 2013 (Unaudited) and June 30, 2012 (Audited)

3

 

Consolidated Statements of Operations (Unaudited) - For the Three and Nine Months Ended March 31, 2013 and 2012

4

 

Consolidated Statements of Changes in Net Assets (Unaudited) - For the Nine Months Ended March 31, 2013 and 2012

5

 

Consolidated Statements of Cash Flows (Unaudited) - For the Nine Months Ended March 31, 2013 and 2012

6

 

Consolidated Schedule of Investments – March 31, 2013 (Unaudited) and June 30, 2012 (Audited)

7

 

Notes to Consolidated Financial Statements (Unaudited)

35

Item 2.

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

60

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

96

Item 4.

Controls and Procedures

96

 

 

 

PART II.

OTHER INFORMATION

97

Item 1.

Legal Proceedings

97

Item 1A.

Risk Factors

97

Item 2.

Unregistered Sales in Equity Securities and Use of Proceeds

97

Item 3.

Defaults Upon Senior Securities

97

Item 4.

Mine Safety Disclosures

97

Item 5.

Other Information

97

Item 6.

Exhibits

97

 

Signatures

104

 

2



 

PART I: FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
March 31, 2013 and June 30, 2012
(in thousands, except share and per share data)

 

 

 

March 31,
2013

 

 

June 30,
2012

 

 

 

 

(Unaudited)

 

 

(Audited)

 

 

Assets (Note 4)

 

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

 

Control investments (amortized cost of $715,301 and $518,015, respectively)

 

  $

675,305

 

 

  $

564,489

 

 

Affiliate investments (amortized cost of $48,949 and $44,229, respectively)

 

41,745

 

 

46,116

 

 

Non-control/Non-affiliate investments (amortized cost of $3,030,863 and $1,537,069, respectively)

 

2,990,672

 

 

1,483,616

 

 

Total investments at fair value (amortized cost of $3,795,113 and $2,099,313, respectively, Note 3)

 

3,707,722

 

 

2,094,221

 

 

 

 

 

 

 

 

 

 

Investments in money market funds

 

253,332

 

 

118,369

 

 

Total investments

 

3,961,054

 

 

2,212,590

 

 

 

 

 

 

 

 

 

 

Cash

 

24,726

 

 

2,825

 

 

Receivables for:

 

 

 

 

 

 

 

Interest, net

 

18,435

 

 

14,219

 

 

Dividends

 

2

 

 

1

 

 

Other

 

462

 

 

783

 

 

Prepaid expenses

 

210

 

 

421

 

 

Deferred financing costs

 

42,128

 

 

24,415

 

 

Total Assets 

 

4,047,017

 

 

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)

 

347,682

 

 

100,000

 

 

Prospect Capital InterNotes® (Note 7 and Note 8)

 

199,401

 

 

20,638

 

 

Due to broker

 

42,961

 

 

44,533

 

 

Dividends payable

 

26,267

 

 

14,180

 

 

Due to Prospect Administration (Note 12)

 

1,332

 

 

658

 

 

Due to Prospect Capital Management (Note 12)

 

873

 

 

7,913

 

 

Accrued expenses

 

2,559

 

 

2,925

 

 

Interest payable

 

15,268

 

 

6,723

 

 

Other liabilities

 

7,586

 

 

2,210

 

 

Total Liabilities 

 

1,491,429

 

 

743,280

 

 

Net Assets

 

  $

2,555,588

 

 

  $

1,511,974

 

 

 

 

 

 

 

 

 

 

Components of Net Assets 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share (500,000,000 common shares authorized; 238,628,037 and 139,633,870 issued and outstanding, respectively) (Note 9)

 

  $

239

 

 

  $

140

 

 

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

 

2,640,457

 

 

1,544,801

 

 

Undistributed net investment income

 

66,187

 

 

23,667

 

 

Accumulated realized losses on investments

 

(63,904

)

 

(51,542

)

 

Unrealized depreciation on investments

 

(87,391

)

 

(5,092

)

 

Net Assets 

 

  $

2,555,588

 

 

  $

1,511,974

 

 

 

 

 

 

 

 

 

 

Net Asset Value Per Share 

 

$

10.71

 

 

  $

10.83

 

 

 

See notes to consolidated financial statements.

 

3



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended March 31, 2013 and 2012
(in thousands, except share and per share data)
(Unaudited)

 

 

 

For The Three Months Ended
March 31,

 

 

For The Nine Months Ended
March 31,

 

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income: (Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments

 

  $

26,598

 

 

  $

32,966

 

 

  $

77,756

 

 

  $

45,546

 

 

Affiliate investments

 

1,599

 

 

2,378

 

 

4,944

 

 

7,179

 

 

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

 

58,187

 

 

37,044

 

 

161,727

 

 

107,078

 

 

CLO fund securities

 

23,228

 

 

2,560

 

 

60,361

 

 

3,668

 

 

Total interest income

 

109,612

 

 

74,948

 

 

304,788

 

 

163,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments

 

75

 

 

5,474

 

 

65,042

 

 

29,819

 

 

Non-control/Non-affiliate investments

 

 

 

 

 

3,185

 

 

1,733

 

 

Money market funds

 

8

 

 

1

 

 

19

 

 

2

 

 

Total dividend income

 

83

 

 

5,475

 

 

68,246

 

 

31,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income: (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments

 

2,656

 

 

13,768

 

 

7,753

 

 

14,386

 

 

Affiliate investments

 

5

 

 

11

 

 

618

 

 

85

 

 

Non-control/Non-affiliate investments

 

7,839

 

 

1,421

 

 

28,461

 

 

8,732

 

 

Total other income

 

10,500

 

 

15,200

 

 

36,832

 

 

23,203

 

 

Total Investment Income

 

120,195

 

 

95,623

 

 

409,866

 

 

218,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

Base management fee (Note 12)

 

18,966

 

 

8,949

 

 

48,500

 

 

25,985

 

 

Income incentive fee (Note 12)

 

14,896

 

 

14,518

 

 

58,207

 

 

30,614

 

 

Total investment advisory fees

 

33,862

 

 

23,467

 

 

106,707

 

 

56,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and credit facility expenses

 

20,854

 

 

9,655

 

 

50,779

 

 

28,374

 

 

Legal fees

 

395

 

 

256

 

 

1,652

 

 

1,198

 

 

Valuation services

 

420

 

 

308

 

 

1,167

 

 

916

 

 

Audit, compliance and tax related fees

 

200

 

 

276

 

 

1,010

 

 

1,141

 

 

Allocation of overhead from Prospect Administration (Note 12)

 

2,957

 

 

2,910

 

 

7,280

 

 

5,143

 

 

Insurance expense

 

88

 

 

69

 

 

259

 

 

168

 

 

Directors’ fees

 

75

 

 

68

 

 

225

 

 

195

 

 

Excise Tax

 

1,000

 

 

 

 

5,500

 

 

 

 

Other general and administrative expenses

 

759

 

 

542

 

 

2,459

 

 

2,037

 

 

Total Operating Expenses

 

60,610

 

 

37,551

 

 

177,038

 

 

95,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Investment Income

 

59,585

 

 

58,072

 

 

232,828

 

 

122,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(6,014

)

 

24,812

 

 

(12,362

)

 

23,703

 

 

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

 

(9,142

)

 

(32,675

)

 

(82,299

)

 

8,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Increase in Net Assets Resulting from Operations

 

  $

44,429

 

 

  $

50,209

 

 

  $

138,167

 

 

  $

154,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

  $

0.20

 

 

  $

0.44

 

 

  $

0.71

 

 

  $

1.39

 

 

Dividends declared per share

 

  $

0.33

 

 

  $

0.30

 

 

  $

0.95

 

 

  $

0.91

 

 

 

See notes to consolidated financial statements.

 

4



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
For The Nine Months Ended March 31, 2013 and 2012
(in thousands, except share data)
(Unaudited)

 

 

 

For The Nine Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Increase in Net Assets from Operations: 

 

 

 

 

 

Net investment income

 

$

232,828

 

$

122,457

 

Net realized (loss) gain on investments

 

(12,362

)

23,703

 

Net change in unrealized appreciation on investments

 

(82,299

)

8,441

 

Net Increase in Net Assets Resulting from Operations 

 

138,167

 

154,601

 

 

 

 

 

 

 

Dividends to Shareholders

 

(190,308

)

(102,421

)

 

 

 

 

 

 

Capital Share Transactions: 

 

 

 

 

 

Proceeds from capital shares sold, net of underwriting costs

 

1,085,188

 

144,900

 

Less: Offering costs of public share offerings

 

(1,570

)

(524

)

Reinvestment of dividends

 

12,137

 

7,893

 

Net Increase in Net Assets Resulting from Capital Share Transactions 

 

1,095,755

 

152,269

 

 

 

 

 

 

 

Total Increase in Net Assets 

 

1,043,614

 

204,449

 

Net assets at beginning of period

 

1,511,974

 

1,114,357

 

Net Assets at End of Period 

 

$

2,555,588

 

$

1,318,806

 

 

 

 

 

 

 

Capital Share Activity: 

 

 

 

 

 

Shares sold

 

92,408,899

 

13,500,000

 

Shares issued to acquire controlled investments

 

5,507,381

 

 

Shares issued through reinvestment of dividends

 

1,077,887

 

817,241

 

Net increase in capital share activity

 

98,994,167

 

14,317,241

 

Shares outstanding at beginning of period

 

139,633,870

 

107,606,690

 

 

 

 

 

 

 

Shares Outstanding at End of Period 

 

238,628,037

 

121,923,931

 

 

See notes to consolidated financial statements.

 

5



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended March 31, 2013 and 2012
(in thousands, except share data)
(Unaudited)

 

 

 

For The Nine Months Ended March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Cash Flows from Operating Activities: 

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

138,167

 

$

154,601

 

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

 

 

 

 

 

Net realized loss (gain) on investments

 

12,362

 

(23,703

)

Net change in unrealized depreciation (appreciation) on investments

 

82,299

 

(8,441

)

Amortization of discounts and premiums

 

(13,624

)

(3,741

)

Amortization of deferred financing costs

 

5,878

 

7,174

 

Payment-in-kind interest

 

(7,025

)

(4,499

)

Structuring fees

 

(33,578

)

(13,530

)

 

 

 

 

 

 

Change in operating assets and liabilities 

 

 

 

 

 

Payments for purchases of investments

 

(2,204,603

)

(524,817

)

Proceeds from sale of investments and collection of investment principal

 

609,919

 

354,660

 

Net (increase) decrease of investments in money market funds

 

(134,963

)

1,878

 

Increase in interest receivable

 

(4,216

)

(7,637

)

Increase in dividends receivable

 

(1

)

(75

)

Decrease (increase) in other receivables

 

321

 

(1,344

)

Decrease (increase) in prepaid expenses

 

211

 

(53

)

(Decrease) increase in due to broker

 

(1,572

)

26,569

 

Increase in due to Prospect Administration

 

674

 

150

 

Decrease in due to Prospect Capital Management

 

(7,040

)

(3,391

)

(Decrease) increase in accrued expenses

 

(366

)

111

 

Increase in interest payable

 

8,545

 

179

 

Increase (decrease) in other liabilities

 

5,376

 

(117

)

Net Cash Used In Operating Activities 

 

(1,543,236

)

(46,026

)

 

 

 

 

 

 

Cash Flows from Financing Activities: 

 

 

 

 

 

Borrowings under credit facility (Note 4)

 

99,000

 

615,800

 

Principal payments under credit facility (Note 4)

 

(195,000

)

(579,000

)

Borrowings under Senior Convertible Notes (Note 5)

 

400,000

 

 

Repurchases under Senior Convertible Notes (Note 5)

 

 

(5,000

)

Borrowings under Senior Unsecured Notes

 

247,682

 

 

Borrowings under Prospect Capital InterNotes® (Note 7)

 

178,763

 

5,465

 

Financing costs paid and deferred

 

(23,591

)

(9,078

)

Proceeds from issuance of common stock, net of underwriting costs

 

1,025,937

 

144,900

 

Offering costs from issuance of common stock

 

(1,570

)

(524

)

Dividends paid

 

(166,084

)

(93,051

)

Net Cash Provided By Financing Activities

 

1,565,137

 

79,512

 

 

 

 

 

 

 

Total Increase in Cash 

 

21,901

 

33,486

 

Cash balance at beginning of period

 

2,825

 

1,492

 

Cash Balance at End of Period 

 

$

24,726

 

$

34,978

 

 

 

 

 

 

 

Cash Paid For Interest 

 

$

32,757

 

$

19,607

 

 

 

 

 

 

 

Non-Cash Financing Activity: 

 

 

 

 

 

Amount of shares issued in connection with dividend reinvestment plan

 

$

12,137

 

$

7,893

 

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
March 31, 2013 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2013 (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)

 

$   28,900

 

$ 28,900

 

$ 28,900

 

1.1%

 

 

 

 

 

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

 

9,920

 

0.4%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

 

374

 

0.0%

 

 

 

 

 

 

 

 

 

51,320

 

51,694

 

2.0%

 

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)

 

19,837

 

19,837

 

19,837

 

0.8%

 

 

 

 

 

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

 

0.1%

 

 

 

 

 

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

 

 

 

6,057

 

 

0.0%

 

 

 

 

 

Unrestricted Common Stock (6 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

44,529

 

38,472

 

1.5%

 

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)

 

40,018

 

40,018

 

40,018

 

1.6%

 

 

 

 

 

Common Stock (17,400 shares)

 

 

 

7,750

 

7,750

 

0.3%

 

 

 

 

 

 

 

 

 

47,768

 

47,768

 

1.9%

 

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 — $1,150 Commitment (5.00% (PRIME + 1.75%) plus 3.00% default interest, in non-accrual status effective 03/02/2010, past due)(4), (25)

 

1,150

 

1,095

 

480

 

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

 

1,501

 

 

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)

 

9,641

 

706

 

 

0.0%

 

 

 

 

 

Common Stock (100 shares)(21)

 

 

 

 

 

0.0%

 

 

 

 

 

Warrants (33,750 warrants)(21)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

3,302

 

480

 

0.0%

 

 

See notes to consolidated financial statements.

 

7



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
March 31, 2013 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2013 (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)

 

$   17,775

 

$  17,775

 

$  17,775

 

0.7%

 

 

 

 

 

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

 

0.3%

 

 

 

 

 

Net Revenue Interest (4% of Net Revenue)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

33,882

 

33,882

 

1.3%

 

Credit Central Holdings of Delaware, LLC (22), (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

 

1.5%

 

 

 

 

 

Common Stock (100 shares)

 

 

 

9,581

 

7,342

 

0.3%

 

 

 

 

 

Net Revenue Interest (5% of Net Revenue)

 

 

 

 

2,907

 

0.1%

 

 

 

 

 

 

 

 

 

47,663

 

48,331

 

1.9%

 

Energy Solutions Holdings, Inc.(8)

 

Texas / Gas Gathering and Processing

 

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

 

750

 

750

 

750

 

0.0%

 

 

 

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

 

0.1%

 

 

 

 

 

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)

 

13,765

 

12,503

 

5,134

 

0.2%

 

 

 

 

 

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

 

1,449

 

1,449

 

 

0.0%

 

 

 

 

 

Escrow Receivable

 

 

 

 

 

0.0%

 

 

 

 

Common Stock (100 shares)

 

 

 

8,318

 

9,558

 

0.4%

 

 

 

 

 

 

 

 

 

38,520

 

30,942

 

1.2%

 

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

 

10.4%

 

 

 

 

 

Common Stock (83,729,323 shares)

 

 

 

43,193

 

30,398

 

1.2%

 

 

 

 

 

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

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

307,953

 

295,158

 

11.6%

 

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)

 

 

 

1,171

 

 

0.0%

 

 

 

 

 

 

 

 

 

11,028

 

 

0.0%

 

Nationwide Acceptance Holdings, LLC(22), (36)

 

Chicago / Consumer Finance

 

Senior Secured Revolving Credit Facility — $30,000 Commitment (20.00% (LIBOR + 18.50% with 1.50% LIBOR floor), due 1/31/2023) (4), (25)

 

21,308

 

21,308

 

21,308

 

0.8%

 

 

 

 

 

Membership Units (100 shares)

 

 

 

3,843

 

2,127

 

0.1%

 

 

 

 

Net Revenue Interest (5% of Net Revenue)

 

 

 

 

1,716

 

0.1%

 

 

 

 

 

 

 

 

 

25,151

 

25,151

 

1.0%

 

NMMB Holdings, Inc. (24)

New York / Media

 

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

 

16,000

 

16,000

 

14,506

 

0.6%

 

 

 

 

 

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

 

2,800

 

2,800

 

 

0.0%

 

 

 

 

 

Series A Preferred Stock (4,400 shares)

 

 

 

4,400

 

 

0.0%

 

 

 

 

 

 

 

 

 

23,200

 

14,506

 

0.6%

 

 

See notes to consolidated financial statements.

 

8



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
March 31, 2013 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2013 (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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R-V Industries, Inc.

 

Pennsylvania / Manufacturing

 

Senior Subordinated Note (12.00% (LIBOR + 9.00% with 3.00% LIBOR floor,) due 5/30/2018) (4)

 

$   9,500

 

$  9,500

 

$  9,500

 

0.4%

 

 

 

 

 

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

 

 

 

1,682

 

6,916

 

0.3%

 

 

 

 

 

Common Stock (545,107 shares)

 

 

 

5,087

 

18,850

 

0.7%

 

 

 

 

 

 

 

 

 

16,269

 

35,266

 

1.4%

 

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 – 4/10/2013)

 

1,688

 

$  1,686

 

 

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)

 

 

 

975

 

 

0.0%

 

 

 

 

 

 

 

 

 

3,831

 

 

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)

 

33,305

 

33,305

 

33,305

 

1.3%

 

 

 

 

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

 

10,013

 

10,013

 

10,013

 

0.4%

 

 

 

 

 

Common Stock (50,000 Shares)

 

 

 

9,526

 

8,358

 

0.3%

 

 

 

 

 

Net Revenue Interest (5% of Net Revenue)

 

 

 

 

1,168

 

0.0%

 

 

 

 

 

 

 

 

 

52,844

 

52,844

 

2.0%

 

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)

 

2,590

 

2,000

 

202

 

0.0%

 

 

 

 

 

Appalachian Energy Holdings, LLC (“AEH”) — Senior Secured First Lien Note (8.00%, in non-accrual status due 5/28/2013)

 

50

 

50

 

4

 

0.0%

 

 

 

 

 

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

 

7,773

 

5,991

 

605

 

0.0%

 

 

 

 

 

Common Stock (100 Shares)

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

8,041

 

811

 

0.0%

 

 

 

 

 

Total Control Investments

 

715,301

 

675,305

 

26.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

29,700

 

29,700

 

29,700

 

1.2%

 

 

 

 

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

 

 

 

2,300

 

2,538

 

0.1%

 

 

 

 

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

 

 

 

579

 

639

 

0.0%

 

 

 

 

 

 

 

 

 

32,579

 

32,877

 

1.3%

 

 

See notes to consolidated financial statements.

 

9



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
March 31, 2013 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2013 (Unaudited)

Portfolio Company

 

Locale / Industry

 

Investments(1)

 

Principal
Value

 

Cost

 

Fair
Value
(2)

 

% of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEVEL 3 PORTFOLIO INVESTMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate Investments (5.00% to 24.99% voting control)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boxercraft Incorporated (20)

 

Georgia / Textiles & Leather

 

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

 

$   1,698

 

$   1,670

 

$   1,698

 

0.1%

 

 

 

 

 

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

 

4,851

 

4,675

 

4,851

 

0.2%

 

 

 

 

 

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

 

2,351

 

2,351

 

2,319

 

0.1%

 

 

 

 

 

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

 

8,254

 

7,674

 

 

0.0%

 

 

 

 

 

Preferred Stock (1,000,000 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

Common Stock (10,000 shares)

 

 

 

 

 

0.0%

 

 

 

 

 

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

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

16,370

 

8,868

 

0.4%

 

Smart, LLC(14)

 

New York / Diversified / Conglomerate Service

 

Membership Interest

 

 

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

0.0%

 

 

 

 

 

Total Affiliate Investments

 

48,949

 

41,745

 

1.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADAPCO, Inc.

 

Florida / Ecological

 

Common Stock (5,000 shares)

 

 

 

141

 

306

 

0.0%

 

 

 

 

 

 

 

 

 

141

 

306

 

0.0%

 

Aderant North America, Inc.

 

Georgia / Software & Computer Services

 

Second Lien Term Loan (10.00% (LIBOR + 8.75% with 1.25% LIBOR floor), due 6/20/2019) (4)

 

7,000

 

6,898

 

7,000

 

0.3%

 

 

 

 

 

 

 

 

 

6,898

 

7,000

 

0.3%

 

Aircraft Fasteners International, LLC

 

California / Machinery

 

Convertible Preferred Stock (32,500 units)

 

 

 

396

 

539

 

0.0%

 

 

 

 

 

 

 

 

 

396

 

539

 

0.0%

 

ALG USA Holdings, LLC

 

Pennsylvania / Hotels, Restaurants & Leisure

 

Second Lien Term Loan (10.25% (LIBOR + 9.00% with 1.25% LIBOR floor,) due 2/28/2020) (4)

 

12,000

 

11,764

 

11,764

 

0.5%

 

 

 

 

 

 

 

 

 

11,764

 

11,764

 

0.5%

 

American Gilsonite Company

 

Utah / Specialty Minerals

 

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

 

38,500

 

38,500

 

38,500

 

1.5%

 

 

 

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

 

 

 

 

5,038

 

0.2%

 

 

 

 

 

 

 

 

 

38,500

 

43,538

 

1.7%

 

Apidos CLO VIII, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

19,730

 

19,681

 

20,450

 

0.8%

 

 

 

 

 

 

 

 

 

19,681

 

20,450

 

0.8%

 

Apidos CLO IX, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

20,525

 

19,635

 

19,614

 

0.8%

 

 

 

 

 

 

 

 

 

19,635

 

19,614

 

0.8%

 

 

See notes to consolidated financial statements.

 

10



 

PROSPECT CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF INVESTMENTS – (CONTINUED)
March 31, 2013 (Unaudited) and June 30, 2012 (Audited)
(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2013 (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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apidos CLO XI, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

$   38,340

 

$   38,715

 

$   38,306

 

1.5%

 

 

 

 

 

 

 

 

 

38,715

 

38,306

 

1.5%

 

Apidos CLO XII, Ltd. (22)

 

Cayman Islands / Diversified Financial Services

 

Subordinated Notes (Residual Interest)

 

44,063

 

42,961

 

42,957

 

1.7%

 

 

 

 

 

 

 

 

 

42,961

 

42,957

 

1.7%

 

Arctic Glacier U.S.A, Inc.

 

Canada / Food Products

 

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

 

86,751

 

86,751

 

86,751

 

3.4%

 

 

 

 

 

 

 

 

 

86,751

 

86,751

 

3.4%