497 1 a20181129-psecbabybondps.htm 497 Document
Filed pursuant to Rule 497
File No. 333-227124

PROSPECTUS SUPPLEMENT
(To Prospectus dated October 31, 2018)
$50,000,000

image1c45.jpg
Prospect Capital Corporation
6.875% Notes due 2029
This is an offering by Prospect Capital Corporation of $50,000,000 in aggregate principal amount of its 6.875% Notes due 2029, which we refer to in this prospectus supplement as the Notes. The Notes will mature on June 15, 2029. We will pay interest on the Notes on March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2019. We may redeem the Notes in whole or in part at any time or from time to time on or after December 15, 2021, at the redemption price discussed under the caption “Specific Terms of the Notes and the Offering-Optional redemption” in this prospectus supplement. The Notes will be issued in minimum denominations of $25 and integral multiples of $25 in excess thereof. We may offer other debt securities from time to time other than the Notes under our Registration Statement or in private placements.
The Notes will be our direct unsecured obligations and rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by Prospect Capital Corporation.
We intend to list the Notes on The New York Stock Exchange and we expect trading in the Notes on The New York Stock Exchange to begin within 30 days of the original issue date. The Notes are expected to trade “flat.” This means that purchasers will not pay, and sellers will not receive, any accrued and unpaid interest on the Notes that is not reflected in the trading price. Currently, there is no public market for the Notes and it is not expected that a market for the Notes will develop unless and until the Notes are listed on The New York Stock Exchange.
Prospect Capital Corporation is a financial services company that lends to and invests in middle market, privately-held companies. We are organized as an externally-managed, non-diversified closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Prospect Capital Management L.P. manages our investments and Prospect Administration LLC provides the administrative services necessary for us to operate.
Investing in the Notes involves certain risks, including those described in the “Risk Factors” section beginning on page S-9 of this prospectus supplement and page 12 of the accompanying prospectus.
 
 
Per Note
 
Total(2)
 
Public offering price(1)
 
100.00
%
 
$50,000,000
 
Underwriting discount (sales load)
 
3.15
%
 
$1,575,000
 
Proceeds to Prospect Capital Corporation (before expenses)(3)
 
96.85
%
 
$48,425,000
 
 
 
 
 
 
 
____________________________________________

(1)    The public offering price set forth above does not include accrued interest, if any.
(2)    Assumes no exercise of the underwriters’ option to purchase additional Notes as described below.
(3)    Expenses payable by us related to this offering are estimated to be $500,000.

The underwriters may also purchase up to an additional $7,500,000 total aggregate principal amount of Notes solely to cover over-allotments, if any, within 30 days of the date of this prospectus supplement. If the underwriters exercise this option


in full, the total public offering price will be $57,500,000, the total underwriting discount (sales load) paid by us will be $1,811,250 and total proceeds before expenses will be $55,688,750.

THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

Delivery of the Notes in book-entry form only through The Depository Trust Company will be made on or about December 5, 2018.

This prospectus supplement and the accompanying prospectus contain important information you should know before investing in our securities. Please read it before you invest and keep it for future reference. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission, or the “SEC.” This information is available free of charge by contacting us at 10 East 40th Street, 42nd Floor, New York, NY 10016 or by telephone at (212) 448-0702. The SEC maintains a website at www.sec.gov where such information is available without charge upon written or oral request. Our internet website address is www.prospectstreet.com. Information contained on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus and you should not consider information contained on our website to be part of this prospectus supplement or the accompanying prospectus.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
Obligations of Prospect Capital Corporation and any subsidiary of Prospect Capital Corporation are not guaranteed by the full faith and credit of the United States of America. Neither Prospect Capital Corporation nor any subsidiary of Prospect Capital Corporation is a government-sponsored enterprise or an instrumentality of the United States of America.

Joint Book-Running Managers
RBC Capital Markets
 
UBS Investment Bank
Joint Lead Managers
Ladenburg Thalmann
 
Oppenheimer & Co.
 
BB&T Capital Markets
 
Citigroup
 
William Blair
Co-Managers
B. Riley FBR
 
Incapital
Prospectus Supplement dated November 28, 2018



FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” which involve substantial risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and portfolio management and the performance of our investments and our investment management business. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs, and our assumptions. Words such as “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes” and “scheduled” and variations of these words and similar expressions are intended to identify forward-looking statements. Our actual results or outcomes may differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
•
our future operating results,
•
our business prospects and the prospects of our portfolio companies,
•
the impact of investments that we expect to make,
•
our contractual arrangements and relationships with third parties,
•
the dependence of our future success on the general economy and its impact on the industries in which we invest,
•
the ability of our portfolio companies to achieve their objectives,
•
difficulty in obtaining financing or raising capital, especially in the current credit and equity environment,
•
the level and volatility of prevailing interest rates and credit spreads, magnified by the current turmoil in the credit markets,
•
adverse developments in the availability of desirable loan and investment opportunities whether they are due to competition, regulation or otherwise,
•
a compression of the yield on our investments and the cost of our liabilities, as well as the level of leverage available to us,
•
our regulatory structure and tax treatment, including our ability to operate as a business development company and a regulated investment company,
•
the adequacy of our cash resources and working capital,
•
the timing of cash flows, if any, from the operations of our portfolio companies,
•
the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments,
•
authoritative generally accepted accounting principles or policy changes from such standard-setting bodies as the Financial Accounting Standards Board, the SEC, Internal Revenue Service, the NASDAQ Global Select Market, the New York Stock Exchange and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business, and
•
the risks, uncertainties and other factors we identify in “Risk Factors” and elsewhere in this prospectus supplement and the accompanying prospectus and in our filings with the SEC.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, ability to obtain certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus supplement and the accompanying prospectus, respectively, should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Risk Factors” and elsewhere in this prospectus supplement and the accompanying prospectus, respectively. You should not place undue reliance on these forward-looking statements, which apply

(i)

only as of the date of this prospectus supplement or the accompanying prospectus, as applicable. These forward-looking statements do not meet the safe harbor for forward-looking statements pursuant to Section 27A of the Securities Act of 1933, as amended, or the “Securities Act.”
You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with information that is different from that contained in this prospectus supplement or the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus is accurate only as of their respective dates and we assume no obligation to update any such information. Our business, financial condition and results of operations may have changed since those dates. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
This prospectus supplement supersedes the accompanying prospectus to the extent it contains information that is different from or in addition to the information in that prospectus.



(ii)

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT
Page
PROSPECTUS
Page

(iii)




(iv)

PROSPECTUS SUMMARY
This section summarizes some of the information contained elsewhere in this prospectus supplement and the accompanying prospectus, including the legal and financial terms of the Notes that are described in more detail in “Description of the Notes” beginning on page S-13. It does not contain all of the information that may be important to an investor. For a more complete understanding of this offering, we encourage you to read the more detailed information appearing elsewhere in this prospectus supplement and the accompanying prospectus. You should read carefully the information set forth under “Risk Factors” in this prospectus supplement and the accompanying prospectus and the other information included in this prospectus supplement and the accompanying prospectus.
The terms “we,” “us,” “our” and “Company” refer to Prospect Capital Corporation; “Prospect Capital Management,” “Investment Adviser” and “PCM” refer to Prospect Capital Management L.P.; and “Prospect Administration” and the “Administrator” refer to Prospect Administration LLC.
Our $101.6 million aggregate principal amount of 5.875% Senior Convertible Notes due 2019 are referred to as the “2019 Notes.” Our $392.0 million aggregate principal amount of 4.75% Senior Convertible Notes due 2020 are referred to as the “2020 Notes.” Our $328.5 million aggregate principal amount of 4.95% Convertible Notes due 2022 are referred to as the “2022 Notes” and, collectively with the 2019 Notes and the 2020 Notes, the “Convertible Notes.” Our $320.0 million aggregate principal amount of 5.875% Senior Notes due 2023 are referred to as the “2023 Notes.” Our $214.8 million aggregate principal amount of 6.25% Notes due 2024 are referred to as the “2024 Notes.” Our $65.1 million aggregate principal amount of 6.25% Senior Notes due 2028 are referred to as the “2028 Notes.” Our $100.0 million aggregate principal amount of 6.375% Notes due 2024 are referred to as the “6.375% 2024 Notes.” The 2023 Notes, 2024 Notes, the 6.375% 2024 Notes and the 2028 Notes, are collectively referred to as the “Public Notes.” Any Prospect Capital InterNotes® issued pursuant to our medium term notes program are referred to as the “Prospect Capital InterNotes.” The Convertible Notes, the Public Notes and the Prospect Capital InterNotes are referred to as the “Unsecured Notes.”
The Company
Prospect Capital Corporation is a financial services company that primarily lends to and invests in middle market privately-held companies. We are a closed-end investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). We were organized on April 13, 2004 and were funded in an initial public offering completed on July 27, 2004. We are one of the largest BDCs with approximately $6.2 billion of total assets as of September 30, 2018.
We are externally managed by our investment adviser, Prospect Capital Management. Prospect Administration provides administrative services and facilities necessary for us to operate.
On May 15, 2007, we formed a wholly-owned subsidiary Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly-owned subsidiary Prospect Small Business Lending, LLC (“PSBL”) was formed on January 27, 2014 and purchases small business whole loans on a recurring basis from online small business loan originators, including On Deck Capital, Inc. (“OnDeck”). On September 30, 2014, we formed a wholly-owned subsidiary Prospect Yield Corporation, LLC (“PYC”) and effective October 23, 2014, PYC holds our investments in collateralized loan obligations (“CLOs”). Each of these subsidiaries have been consolidated since operations commenced.
We currently have nine strategies that guide our origination of investment opportunities: (1) lending to companies controlled by private equity sponsors, (2) lending to companies not controlled by private equity sponsors, (3) purchasing controlling equity positions and lending to operating companies, (4) purchasing controlling equity positions and lending to financial services companies, (5) purchasing controlling equity positions and lending to real estate companies, (6) purchasing controlling equity positions and lending to aircraft leasing companies, (7) investing in structured credit, (8) investing in syndicated debt and (9) investing in consumer and small business loans and asset-backed securitizations. We may also invest in other strategies and opportunities from time to time that we view as attractive. We continue to evaluate other origination strategies in the ordinary course of business with no specific top-down allocation to any single origination strategy.
    
Lending to Companies Controlled by Private Equity Sponsors - We make agented loans to companies which are controlled by private equity sponsors. This debt can take the form of first lien, second lien, unitranche or unsecured loans. These loans typically have equity subordinate to our loan position. Historically, this strategy has comprised approximately 40%-60% of our portfolio.


S-1

Lending to Companies not Controlled by Private Equity Sponsors - We make loans to companies which are not controlled by private equity sponsors, such as companies that are controlled by the management team, the founder, a family or public shareholders. This origination strategy may have less competition to provide debt financing than the private-equity-sponsor origination strategy because such company financing needs are not easily addressed by banks and often require more diligence preparation. This origination strategy can result in investments with higher returns or lower leverage than the private-equity-sponsor origination strategy. Historically, this strategy has comprised up to approximately 15% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Operating Companies - This strategy involves purchasing yield-producing debt and controlling equity positions in non-financial-services operating companies. We believe that we can provide enhanced certainty of closure and liquidity to sellers and we look for management to continue on in their current roles. This strategy has comprised approximately 5%-15% of our portfolio.

Purchasing Controlling Equity Positions and Lending to Financial Services Companies - This strategy involves purchasing yield-producing debt and controlling equity investments in financial services companies, including consumer direct lending, sub-prime auto lending and other strategies. These investments are often structured in tax-efficient partnerships, enhancing returns. This strategy has comprised approximately 5%-15% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Real Estate Companies - We purchase debt and controlling equity positions in tax-efficient real estate investment trusts (“REIT” or “REITs”). National Property REIT Corp.’s (“NPRC”), an operating company and the surviving entity of the May 23, 2016 merger with American Property REIT Corp. (“APRC”) and United Property REIT Corp. (“UPRC”), real estate investments are in various classes of developed and occupied real estate properties that generate current yields, including multi-family properties, student housing, and self-storage. NPRC seeks to identify properties that have historically significant occupancy rates and recurring cash flow generation. NPRC generally co-invests with established and experienced property management teams that manage such properties after acquisition. Additionally, NPRC purchases loans originated by certain consumer loan facilitators. It purchases each loan in its entirety (i.e., a “whole loan”). The borrowers are consumers, and the loans are typically serviced by the facilitators of the loans. This investment strategy has comprised approximately 10%-20% of our business.

Purchasing Controlling Equity Positions and Lending to Aircraft Leasing Companies - We invest in debt as well as equity in companies with aircraft assets subject to commercial leases to airlines across the globe. We believe that these investments can present attractive return opportunities due to cash flow consistency from long-term leases coupled with hard asset residual value. We believe that these investment companies seek to deliver risk-adjusted returns with strong downside protection by analyzing relative value characteristics across a variety of aircraft types and vintages. This strategy historically has comprised less than 5% of our portfolio.

Investing in Structured Credit - We make investments in CLOs, often taking a significant position in the subordinated interests (equity) and debt of the CLOs. The underlying portfolio of each CLO investment is diversified across approximately 100 to 200 broadly syndicated loans and does not have direct exposure to real estate, mortgages, or consumer-based credit assets. The CLOs in which we invest are managed by established collateral management teams with many years of experience in the industry. This strategy has comprised approximately 10%-20% of our portfolio.

Investing in Syndicated Debt - On a primary or secondary basis, we purchase primarily senior and secured loans and high yield bonds that have been sold to a club or syndicate of buyers. These investments are often purchased with a long term, buy-and-hold outlook, and we often look to provide significant input to the transaction by providing anchoring orders. This strategy has comprised approximately 5%-10% of our portfolio.
Investing in Consumer and Small Business Loans and Asset-Backed Securitizations - We purchase loans originated by certain consumer and small-and-medium-sized business (“SME”) loan platforms. We generally purchase each loan in its entirety (i.e., a “whole loan”) and we invest in asset-backed securitizations collateralized by consumer or small business loans. The borrowers are consumers and SMEs and the loans are typically serviced by the platforms of the loans. This investment strategy has comprised up to approximately 0% of our portfolio.
Typically, we concentrate on making investments in companies with annual revenues of less than $750 million and enterprise values of less than $1 billion. Our typical investment involves a secured loan of less than $250 million. We also acquire controlling interests in companies in conjunction with making secured debt investments in such companies. In most cases, companies in which we invest are privately held at the time we invest in them. We refer to these companies as “target” or “middle market” companies and these investments as “middle market investments.”

S-2

We seek to maximize total returns to our investors, including both current yield and equity upside, by applying rigorous credit analysis and asset-based and cash-flow based lending techniques to make and monitor our investments. We are constantly pursuing multiple investment opportunities, including purchases of portfolios from private and public companies, as well as originations and secondary purchases of particular securities. We also regularly evaluate control investment opportunities in a range of industries, and some of these investments could be material to us. There can be no assurance that we will successfully consummate any investment opportunity we are currently pursuing. If any of these opportunities are consummated, there can be no assurance that investors will share our view of valuation or that any assets acquired will not be subject to future write downs, each of which could have an adverse effect on our stock price.
As of September 30, 2018, we had investments in 137 portfolio companies and CLOs. The aggregate fair value as of September 30, 2018 of investments in these portfolio companies held on that date is approximately $5.9 billion. Our portfolio across all our performing interest-bearing investments had an annualized current yield of 13.5% as of September 30, 2018. Our annualized current yield was 10.8% as of September 30, 2018 across all investments.
Recent Developments
Investment Activity
On October 1, 2018, Fleetwash, Inc. fully repaid the $21.5 million Senior Secured Term Loan B receivable to us.

On October 10, 2018, we made a $25.0 million Second Lien Term Loan investment in 8th Avenue Food & Provisions, Inc., a private food brands provider and manufacturer of peanut and other nut butters, pasta and healthy snacks.

On October 12, 2018, we made a $35.0 million Second Lien Term Loan investment in CCS-CMGC Holdings, Inc., a leading provider of outsourced correctional healthcare and behavioral healthcare solutions for government customers.

On October 18, 2018, ATS Consolidated, Inc. fully repaid the $15.0 million Second Lien Term Loan receivable to us.

On October 25, 2018, we made a $12.5 million Second Lien Term Loan investment in GlobalTranz Enterprises, Inc., a technology-enabled third-party logistics provider of transportation services, including full truckload, less-than-truckload, expedited (air), and intermodal services, along with logistics services and supply chain management solutions.

Debt and Equity

During the period from October 1, 2018 through November 27, 2018 we issued $23.9 million aggregate principal amount of Prospect Capital InterNotes® for net proceeds of $23.5 million.

During the period from October 1, 2018 through November 27, 2018, we issued $3.7 million in aggregate principal amount of our 2024 Notes for net proceeds of $3.6 million and issued $2.2 million in aggregate principal amount of our 2028 Notes for net proceeds of $2.2 million.

Pursuant to notice to call provided on October 12, 2018, we redeemed $70.1 million of our Prospect Capital InterNotes® at par maturing between May 15, 2020 and November 15, 2020, with a weighted average rate of 4.92%. Settlement of the call occurred on November 15, 2018.

On October 11, 2018, we increased total commitments to our revolving credit facility for Prospect Capital Funding LLC, one of our GAAP consolidated subsidiaries, by $35.0 million to $830.0 million in the aggregate and on November 19, 2018 we increased total commitments to our credit facility by $80.0 million to $910.0 million in the aggregate.

On October 31, 2018, our Registration Statement on Form N-2 (File No. 333-227124) was declared effective by the SEC. Under this Shelf Registration Statement, we can issue up to an aggregate of $5.0 billion in securities, including debt and equity, in the public market.

Dividends
On November 6, 2018, we announced the declaration of monthly dividends in the following amounts and with the following dates:
•
$0.06 per share for November 2018 to holders of record on November 30, 2018 with a payment date of December 20, 2018.
•
$0.06 per share for December 2018 to holders of record on January 2, 2019 with a payment date of January 24, 2019.
•
$0.06 per share for January 2019 to holders of record on January 31, 2019 with a payment date of February 21, 2019.    

S-3

Specific Terms of the Notes and the Offering
This prospectus supplement sets forth certain terms of the Notes that Prospect Capital Corporation is offering pursuant to this prospectus supplement and supplements the accompanying prospectus that is attached to the back of this prospectus supplement. This section outlines the specific legal and financial terms of the Notes. You should read this section together with the more general description of the Notes under the heading “Description of the Notes” in this prospectus supplement and in the accompanying prospectus under the heading “Description of Our Debt Securities” before investing in the Notes. Capitalized terms used in this prospectus supplement and not otherwise defined shall have the meanings ascribed to them in the accompanying prospectus or in the indenture governing, or the supplemental indenture establishing, the terms of the Notes (collectively, the indenture and the supplemental indenture is referred to as the “Indenture”).
Issuer
 
Prospect Capital Corporation
 
 
 
Title of securities
 
6.875% Notes due 2029
 
 
 
Initial aggregate principal amount being offered
 
$50,000,000
 
 
 
Option to purchase additional Notes
 
The underwriters may also purchase from us up to an additional $7,500,000 aggregate principal amount of Notes within 30 days of the date of this prospectus supplement.
 
 
 
Initial public offering price
 
100% of the aggregate principal amount of Notes.
 
 
 
Principal payable at maturity
 
100% of the aggregate principal amount; the principal amount of each Note will be payable on its stated maturity date at the office of the Paying Agent, Registrar and Transfer Agent for the Notes or at such other office in The City of New York as we may designate.
 
 
 
Type of Note
 
Fixed rate note
 
 
 
Listing
 
We intend to list the Notes on The New York Stock Exchange within 30 days of the original issue date. The Notes will not be listed or quoted for trading on any national securities exchange or trading market on the original issue date.
 
 
 
Interest rate
 
6.875% per year
 
 
 
Interest rate adjustment
 
The interest rate payable on the Notes will be subject to adjustment from time to time if an Interest Rate Adjustment Triggering Event occurs or, if following an Interest Rate Adjustment Triggering Event, Standard & Poor’s Rating Service, a division of McGraw Hill, Inc. (“S&P”) (or, if applicable, any Substitute Rating Agency), subsequently upgrades the debt rating assigned to the Notes, in each case in the manner described under “Description of the Notes-Interest Rate Adjustment.”
 
 
 
Day count basis
 
360-day year of twelve 30-day months
 
 
 
Original issue date
 
December 5, 2018
 
 
 
Stated maturity date
 
June 15, 2029
 
 
 
Date interest starts accruing
 
December 5, 2018
 
 
 
Interest payment dates
 
Every March 15, June 15, September 15 and December 15, commencing March 15, 2019. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment.
 
 
 

S-4

Interest periods
 
The initial interest period will be the period from and including December 5, 2018, to, but excluding, the initial interest payment date, and the subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.
 
 
 
Regular record dates for interest
 
Every March 1, June 1, September 1 and December 1, commencing March 1, 2019.
 
 
 
Specified currency
 
U.S. Dollars
 
 
 
Place of payment
 
New York City
 
 
 
Ranking of Notes
 
The Notes will be our general, unsecured obligations and will rank equal in right of payment with all of our existing and future senior, unsecured indebtedness (including the Unsecured Notes) and senior in right of payment to any of our subordinated indebtedness. As a result, the Notes will be effectively subordinated to our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of our subsidiaries.

As of November 27, 2018, we and our subsidiaries had approximately $2.6 billion of senior indebtedness outstanding, $2.3 billion of which was unsecured indebtedness.
 
 
 
Denominations
 
We will issue the Notes in denominations of $25 and integral multiples of $25 in excess thereof.
 
 
 
Business day
 
Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City are authorized or required by law or executive order to close.
 
 
 
Optional redemption
 
The Notes may be redeemed in whole or in part at any time or from time to time at our option on or after December 15, 2021 upon not less than 30 days nor more than 90 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of $25 per Note plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to, but excluding, the date fixed for redemption.

You may be prevented from exchanging or transferring the Notes when they are subject to redemption. In case any Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such Note, you will receive, without a charge, a new Note or Notes of authorized denominations representing the principal amount of your remaining unredeemed Notes.

Any exercise of our option to redeem the Notes will be done in compliance with the 1940 Act, to the extent applicable.

If we redeem only some of the Notes, the Trustee will determine the method for selection of the particular Notes to be redeemed, in accordance with the 1940 Act to the extent applicable. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
 
 
 
Sinking fund
 
The Notes will not be subject to any sinking fund.
 
 
 
Repayment at option of Holders
 
Holders will not have the option to have the Notes repaid prior to the stated maturity date unless we undergo a fundamental change (as defined in this prospectus supplement). See “-Fundamental change repurchase right of Holders”.
 
 
 
Defeasance
 
The Notes are subject to defeasance by us.
 
 
 
Covenant defeasance
 
The Notes are subject to covenant defeasance by us.
 
 
 

S-5

Form of Notes
 
The Notes will be represented by global securities that will be deposited and registered in the name of The Depository Trust Company (“DTC”) or its nominee. This means that, except in limited circumstances, you will not receive certificates for the Notes. Beneficial interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the Notes through either DTC, if they are a participant, or indirectly through organizations which are participants in DTC.
 
 
 
Trustee, Paying Agent, Registrar and Transfer Agent
 
U.S. Bank National Association
 
 
 
Fundamental change repurchase right of Holders
 
If we undergo a fundamental change (as defined in this prospectus supplement) prior to maturity, you will have the right, at your option, to require us to repurchase for cash some or all of your Notes at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. See “Description of the Notes-Purchase of Notes by Us for Cash at the Option of Holders upon a Fundamental Change.”
 
 
 
Events of default
 
If an event of default on the Notes occurs, the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any) may be declared immediately due and payable, subject to certain conditions set forth in the Indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving the Company as defined in the Indenture.
 
 
 
Other covenants
 
In addition to the covenants described in the prospectus attached to this prospectus supplement, the following covenants shall apply to the Notes:
•    We agree that for the period of time during which the Notes are outstanding, we will not violate Section 18(a)(1)(A) as modified by Section 61(a) of the 1940 Act or any successor provisions.
•    If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end. All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.
 
 
 
Use of proceeds
 
We estimate that the net proceeds from this offering will be approximately $47,925,00 (or approximately $55,188,750 if the option to purchase up to an additional $7,500,000 aggregate principal amount of Notes solely to cover over-allotments, if any, is exercised in full) after deducting fees and estimated offering expenses of approximately $500,000 payable by us.

We expect to use a portion of the net proceeds from the sale of the Notes offered hereby to repay debt under our credit facility. We intend to use the remainder of the net proceeds of the offering to invest in high quality short term debt investments, and/or to make long term investments in accordance with our investment objective.
 
 
 
Global clearance and settlement procedures
 
Interests in the Notes will trade in DTC's Same Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. None of the Company, the Trustee or the paying agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
 
 
 
Governing law
 
The Notes and the Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

S-6

SELECTED CONDENSED FINANCIAL DATA
You should read the condensed consolidated financial information below with the Consolidated Financial Statements and notes thereto included in this prospectus supplement and the accompanying prospectus. Financial information below for the years ended June 30, 2018, 2017, 2016, 2015, and 2014 has been derived from the financial statements that were audited by our independent registered public accounting firm. The selected consolidated financial data at and for the three months ended September 30, 2018 and 2017 has been derived from unaudited financial data. Interim results for the three months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2019. Certain reclassifications have been made to the prior period financial information to conform to the current period presentation. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” starting on page S-27 for more information.
 
 
For the Three
Months Ended
September 30,
 
For the Year Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
 
2016
 
2015
 
2014
 
 
(in thousands except data relating to shares, per share and number of portfolio companies)
Performance Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest income
 
$
159,442

 
$
148,085

 
$
607,012

 
$
668,717

 
$
731,618

 
$
748,974

 
$
613,741

Total dividend income
 
14,927

 
544

 
13,046

 
5,679

 
26,501

 
7,663

 
26,837

Total other income
 
6,053

 
9,950

 
37,787

 
26,650

 
33,854

 
34,447

 
71,713

Total Investment Income
 
180,422

 
158,579

 
657,845

 
701,046

 
791,973

 
791,084

 
712,291

Interest and credit facility expenses
 
(37,908
)
 
(41,035
)
 
(155,039
)
 
(164,848
)
 
(167,719
)
 
(170,660
)
 
(130,103
)
Investment advisory expense
 
(51,247
)
 
(46,096
)
 
(189,759
)
 
(199,394
)
 
(219,305
)
 
(225,277
)
 
(198,296
)
Other expenses
 
(6,108
)
 
(7,716
)
 
(26,197
)
 
(30,722
)
 
(33,821
)
 
(32,400
)
 
(26,669
)
Total Operating Expenses
 
(95,263
)
 
(94,847
)
 
(370,995
)
 
(394,964
)
 
(420,845
)
 
(428,337
)
 
(355,068
)
Net Investment Income
 
85,159

 
63,732

 
286,850

 
306,082

 
371,128

 
362,747

 
357,223

Net realized and net change in unrealized (losses) gains
 
(1,364
)
 
(51,759
)
 
13,013

 
(53,176
)
 
(267,766
)
 
(16,408
)
 
(38,203
)
Net Increase in Net Assets from Operations
 
$
83,795

 
$
11,973

 
$
299,863

 
$
252,906

 
$
103,362

 
$
346,339

 
$
319,020

Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Increase in Net Assets from
Operations(1)
 
$
0.23

 
$
0.03

 
$
0.83

 
$
0.70

 
$
0.29

 
$
0.98

 
$
1.06

Dividends declared per share
 
$
(0.18
)
 
$
(0.23
)
 
$
(0.77
)
 
$
(1.00
)
 
$
(1.00
)
 
$
(1.19
)
 
$
(1.32
)
Weighted average shares of common stock outstanding
 
364,783,137

 
360,171,834

 
361,456,075

 
358,841,714

 
356,134,297

 
353,648,522

 
300,283,941

Assets and Liabilities Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments at Fair Value
 
$
5,936,683

 
$
5,687,117

 
5,727,279

 
$
5,838,305

 
$
5,897,708

 
$
6,609,558

 
$
6,253,739

Other Assets(4)
 
262,799

 
291,985

 
111,541

 
334,484

 
338,473

 
144,356

 
166,520

Total Assets(4)
 
6,199,482

 
5,979,102

 
5,838,820

 
6,172,789

 
6,236,181

 
6,753,914

 
6,420,259

Revolving Credit Facility
 
404,000

 
—

 
37,000

 
—

 
—

 
368,700

 
92,000

Convertible notes(4)
 
810,138

 
938,716

 
809,073

 
937,641

 
1,074,361

 
1,218,226

 
1,219,676

Public notes (4)
 
687,706

 
738,805

 
716,810

 
738,300

 
699,368

 
541,490

 
637,584

Prospect Capital InterNotes®(4)
 
757,012

 
902,471

 
748,926

 
966,254

 
893,210

 
811,180

 
766,781

Due to Prospect Administration and Prospect Capital Management
 
51,327

 
48,223

 
51,257

 
50,159

 
55,914

 
6,788

 
2,211

Other liabilities
 
58,355

 
63,896

 
68,707

 
125,483

 
77,411

 
104,481

 
83,825

Total Liabilities(4)
 
2,768,538

 
2,692,111

 
2,431,773

 
2,817,837

 
2,800,264

 
3,050,865

 
2,802,077

Net Assets
 
$
3,430,944

 
$
3,286,991

 
$
3,407,047

 
$
3,354,952

 
$
3,435,917

 
$
3,703,049

 
$
3,618,182

Investment Activity Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
No. of portfolio companies at period end
 
137

 
120

 
135

 
121

 
125

 
131

 
142

Acquisitions
 
$
254,642

 
$
221,151

 
$
1,730,657

 
$
1,489,470

 
$
979,102

 
$
1,867,477

 
$
2,933,365

Sales, repayments, and other disposals
 
$
55,166

 
$
310,984

 
$
1,831,286

 
$
1,413,882

 
$
1,338,875

 
$
1,411,562

 
$
767,978

Total return based on market value(2)
 
12.03
%
 
(14.40
)%
 
(7.42
)%
 
16.80
%
 
21.84
%
 
(20.84
)%
 
10.88
%
Total return based on net asset value(2)
 
2.99
%
 
1.22
 %
 
12.39
 %
 
8.98
%
 
7.15
%
 
11.47
 %
 
10.97
%
Weighted average yield on debt portfolio at period end(3)
 
13.5
%
 
11.8
 %
 
13.0
 %
 
12.2
%
 
13.2
%
 
12.7
 %
 
12.1
%
Weighted average yield on total portfolio at period end(5)
 
10.8
%
 
9.9
 %
 
10.5
 %
 
10.4
%
 
12.0
%
 
11.9
 %
 
11.9
%
_______________________________________________________________________________
(1)
Per share data is based on the weighted average number of common shares outstanding for the year/period presented (except for dividends to shareholders which is based on actual rate per share).

S-7

(2)
Total return based on market value is based on the change in market price per share between the opening and ending market prices per share in each year/period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in each year/period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. For a period less than a year, the return is not annualized.
(3)
Excludes equity investments and non-performing loans.
(4)
We have changed our method of presentation relating to debt issuance costs in accordance with ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30). Unamortized deferred financing costs of $40,526, $44,140, and $57,010 previously reported as an asset on the Consolidated Statements of Assets and Liabilities as of June 30, 2016, 2015, and 2014, respectively, have been reclassified as a direct deduction to the respective Unsecured Notes. See Critical Accounting Policies and Estimates for further discussion.
(5)
Includes equity investments and non-performing loans.



S-8

RISK FACTORS
Investing in our Notes involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus supplement and the accompanying prospectus, before you decide whether to make an investment in the Notes. If any of the adverse events or conditions described below or in the accompanying prospectus occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value, or NAV, and the value of the Notes and the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Relating to the Notes
Our amount of debt outstanding will increase as a result of this offering. Our current indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.
As of November 27, 2018, we and our subsidiaries had approximately $2.3 billion of unsecured senior indebtedness outstanding and $331.0 million of secured indebtedness outstanding.
The use of debt could have significant consequences on our future operations, including:
•
making it more difficult for us to meet our payment and other obligations under the Notes and our other outstanding debt;
•
resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in substantially all of our debt becoming immediately due and payable;
•
reducing the availability of our cash flow to fund investments, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;
•
subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our credit facility; and
•
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.
Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under our credit facility or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes and our other debt.
An increase in market interest rates could result in a decrease in the market value of the Notes.
The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes. In general, as market interest rates rise, debt securities bearing interest at fixed rates of interest decline in value. Consequently, if you purchase notes bearing interest at fixed rates of interest and market interest rates increase, the market values of those notes may decline. We cannot predict the future level of market interest rates.
The Notes will be effectively subordinated to any existing and future secured indebtedness and structurally subordinated to existing and future liabilities and other indebtedness of our subsidiaries.
The Notes will be our general, unsecured obligations and will rank equally in right of payment with all of our existing and future unsubordinated unsecured indebtedness, including without limitation, our Unsecured Notes. As a result, the Notes will be effectively subordinated to our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of our subsidiaries. Effective

S-9

subordination means that in any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors. Structural subordination means that creditors of a parent entity are subordinate to creditors of a subsidiary entity with respect to the subsidiary’s assets. These liabilities may include indebtedness, trade payables, guarantees, lease obligations and letter of credit obligations. The Notes do not restrict us or our subsidiaries from incurring indebtedness, including senior secured indebtedness in the future, nor do they limit the amount of indebtedness we can issue that is equal in right of payment to the Notes. As of November 27, 2018, we had $331.0 million borrowings under our credit facility. Our credit facility is secured by certain of our assets and the indebtedness thereunder is therefore effectively senior to the Notes to the extent of the value of such assets.
The Convertible Notes and Public Notes and certain Prospect Capital InterNotes® will be due prior to the Notes. We do not currently know whether we will be able to replace any such notes upon their respective maturities, or if we do, whether we will be able to do so on terms that are as favorable as such notes. In the event that we are not able to replace such notes at the time of their respective maturities, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders, our ability to repay the Notes and our ability to qualify as a regulated investment company, or “RIC.”
The Indenture governing the Notes will not contain restrictive covenants and will provide only limited protection, in the event of a change of control.
The Indenture under which the Notes will be issued will not contain financial or operating covenants or any other restrictive covenants that would limit our ability to engage in certain transactions that may adversely affect you. In particular, the Indenture will not contain covenants that limit our ability to pay dividends or make distributions on or redeem our capital stock or that limit our ability to incur additional indebtedness, including in a highly leveraged transaction or other similar transaction. We will only be required to offer to repurchase the Notes upon a change of control in the case of the transactions specified in the definition of a “fundamental change” under “Description of the Notes - Purchase of Notes by Us for Cash at the Option of Holders upon a Fundamental Change.”
Accordingly, subject to restrictions contained in our other debt agreements, we will be permitted to engage in certain transactions, such as acquisitions, refinancings or recapitalizations, that could affect our capital structure and the value of the Notes and our common stock but would not constitute a fundamental change or a non‑stock change of control under the Notes.
We may be unable to repurchase the Notes following a fundamental change.
Holders of the Notes have the right to require us to repurchase their Notes prior to their maturity upon the occurrence of a fundamental change as described under “Description of the Notes - Purchase of Notes by Us for Cash at the Option of Holders upon a Fundamental Change.” Any of our future debt agreements may contain similar provisions. We may not have sufficient funds or the ability to arrange necessary financing on acceptable terms at the time we are required to make repurchases of tendered Notes. In addition, our ability to repurchase the Notes may be limited by law or the terms of other agreements relating to our debt outstanding at the time, including our credit facility. If we fail to repurchase the Notes as required by the Indenture, it would constitute an event of default under the Indenture governing the Notes, which, in turn, would constitute an event of default under our credit facility.
Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase the Notes.
Upon the occurrence of a fundamental change, you have the right to require us to offer to repurchase the Notes. However, the fundamental change provisions will not afford protection to holders of the Notes in the event of certain transactions. For example, transactions such as leveraged recapitalizations, refinancings, restructurings or acquisitions initiated by us would not constitute a fundamental change event which may require us to repurchase the Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase the Notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of the Notes.

S-10

Provisions of the Notes could discourage an acquisition of us by a third party.
Certain provisions of the Notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the Notes will have the right, at their option, to require us to repurchase all of their Notes or any portion of the principal amount of such Notes in integral multiples of $25. These provisions could discourage an acquisition of us by a third party.
The Notes may not be approved by The New York Stock Exchange and an active trading market for the Notes may not develop, which could limit the market price of the Notes or your ability to sell them.
The Notes are a new issue of debt securities for which there currently is no trading market. Although we expect the Notes to be listed on The New York Stock Exchange, we cannot provide any assurances that The New York Stock Exchange will approve the listing of the Notes or that an active trading market will develop for the Notes or that you will be able to sell your Notes. If the Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. The underwriters have advised us that they intend to make a market in the Notes, but they are not obligated to do so. The underwriters may discontinue any market-making in the Notes at any time at their sole discretion. Accordingly, we cannot assure you that a liquid trading market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.
We may choose to redeem the Notes when prevailing interest rates are relatively low.
Beginning December 15, 2021, we may choose to redeem the Notes from time to time, especially when prevailing interest rates are lower than the rate borne by the Notes. If prevailing rates are lower at the time of redemption, you would not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes. Our redemption right also may adversely impact your ability to sell the Notes.
A downgrade, suspension or withdrawal of the rating assigned by a rating agency to us or the Notes, if any, could cause the liquidity or market value of the Notes to decline significantly.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. We do not undertake any obligation to maintain our rating, if any, or to advise holders of Notes of any changes in ratings.
The Notes are rated by S&P, Kroll Bond Rating Agency, Inc., or “Kroll” and Egan Jones Ratings Co. or “Egan Jones.” There can be no assurance that their rating will remain for any given period of time or that such rating will not be lowered or withdrawn entirely by S&P, Kroll or Egan Jones if in their respective judgment future circumstances relating to the basis of the rating, such as adverse changes in our company, so warrant.
We may be subject to certain corporate‑level taxes, which could adversely affect our cash flow and consequently adversely affect our ability to make payments on the Notes.
We may be subject to certain corporate‑level taxes regardless of whether we continue to qualify as a regulated investment company, or RIC. Additionally, should we fail to qualify as a RIC, we would be subject to corporate‑level taxes on all of our taxable income. The imposition of corporate‑level taxes could adversely affect our cash flow and consequently adversely affect our ability to make payments on the Notes.
The Indenture governing the Notes will contain limited protection for holders of the Notes.
The Indenture under which the Notes will be issued will contain limited protection to holders of the Notes. The terms of the Indenture and the Notes will not restrict our or our consolidated subsidiary’s ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on your investment in the Notes. In particular, the terms of the Indenture and the Notes will not place any restrictions on our or our consolidated subsidiary’s ability to:

S-11

▪
issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a) of the 1940 Act or any successor provisions;
▪
pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes;
▪
sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
▪
enter into transactions with affiliates;
▪
create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
▪
make investments; or
▪
create restrictions on the payment of dividends or other amounts to us from our consolidated subsidiaries.

Furthermore, except as set forth under “Description of the Notes - Interest Rate Adjustment,” the terms of the Indenture and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiary adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity other than certain limited restrictions on dividends and certain board structures or default provisions mandated by the 1940 Act.
Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.
Certain of our current debt instruments include more protections for their holders than the Indenture and the Notes. In addition, other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

S-12

DESCRIPTION OF THE NOTES
The Notes will be issued under the Indenture referred to in the accompanying prospectus between us and U.S. Bank National Association, as trustee, and a supplemental indenture establishing the terms of the Notes (collectively, the indenture and supplemental indenture is referred to as the “Indenture”). The following description of particular terms of the Notes supplements the more general description of the debt securities contained in the accompanying prospectus. If there are any inconsistencies between the information in this section and the information in the accompanying prospectus, the information in this section controls. You should read this section together with the section entitled “Description of Our Debt Securities” in the accompanying prospectus.
Together with the “Description of Our Debt Securities” in the accompanying prospectus, the following description provides a summary of the material provisions of the Notes and the Indenture and does not purport to be complete. We urge you to read the Indenture (including the form of global note contained therein), because it, and not this description, defines your rights as a holder of the Notes.
When we refer to “Prospect Capital Corporation,” the “Company,” “we,” “our” or “us” in this section, we refer only to Prospect Capital Corporation and not its consolidated subsidiaries. In addition, all references to interest in this prospectus supplement include additional interest, if any, payable as the sole remedy relating to the failure to comply with our reporting obligations pursuant to the provisions set forth below under the heading “- Events of Default; Notice and Waiver.”
Brief Description of the Notes
The Notes will:
•
initially be limited to $50,000,000 aggregate principal amount ($57,500,000 if the option is exercised in full);
•
bear interest at a rate of 6.875% per year, payable every March 15, June 15, September 15 and December 15, commencing on March 15, 2019, in each case having a record date of March 1, June 1, September 1 and December 1, subject to adjustment, if applicable, as described below under “-Interest Rate Adjustment”;
•
be issued in minimum denominations of $25 and integral multiples of $25 in excess thereof;
•
be redeemed in whole or in part at any time or from time to time at our option on or after December 15, 2021, upon not less than 30 days nor more than 90 days’ written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to the date of redemption. See the description under “-Optional Redemption” below;
•
be our general unsecured obligations, ranking equally with all of our other unsecured indebtedness (including, but not limited to, our Unsecured Notes) and senior in right of payment to any of our subordinated indebtedness, effectively subordinated in right of payment to our existing and future secured indebtedness and structurally subordinated to all existing and future debt of our subsidiaries;
•
be subject to repurchase by us at your option if a fundamental change occurs, at a cash repurchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any) to, but not including, the repurchase date;
•
are expected to be listed on The New York Stock Exchange; and
•
be due June 15, 2029.
Neither we nor our subsidiaries will be subject to any financial covenants under the Indenture. In addition, neither we nor our subsidiaries will be restricted under the Indenture from paying dividends, incurring debt or issuing or repurchasing our securities. You are not afforded protection under the Indenture in the event of a highly leveraged transaction or a change in control of us, except to the extent described below under “-Purchase of Notes by Us for Cash at the Option of Holders upon a Fundamental Change.”
No sinking fund is provided for the Notes and the Notes will be subject to defeasance.

S-13

The Notes will be represented by global securities that will be deposited and registered in the name of DTC or its nominee. This means that, except in limited circumstances, you will not receive certificates for the Notes. Beneficial interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the Notes through either DTC, if they are a participant, or indirectly through organizations which are participants in DTC. For information regarding registration of transfer and exchange of the global note held in DTC, see “Registration and Settlement” on page S-24.
Interest Rate Adjustment
The interest rate payable on the Notes will be subject to adjustment from time to time if an Interest Rate Adjustment Triggering Event occurs or, if following an Interest Rate Adjustment Triggering Event, S&P (or, if applicable, any Substitute Rating Agency (as defined below)) subsequently upgrades the debt rating assigned to the Notes, in each case in the manner described below.
If at any time (i) S&P, is not providing a rating on the Notes and (ii) we obtain or continue to have a rating on the Notes from Fitch Ratings Inc. (“Fitch”) or Moody’s Corporation (“Moody’s”), Fitch or Moody’s, as applicable, will be a “Substitute Rating Agency.”
If an Interest Rate Adjustment Triggering Event occurs in relation to the Notes, the interest rate on the Notes will increase from the interest rate set forth on the cover page of this prospectus supplement by 0.50%. If S&P (or, if applicable, any Substitute Rating Agency) at any time subsequently increases its rating on the Notes to “BBB-” or higher (or the equivalent ratings of any Substitute Rating Agency) after S&P (or, if applicable, any Substitute Rating Agency) previously lowered the rating on the Notes to “BB+” or lower (or the equivalent ratings of any Substitute Rating Agency), the interest rate on the Notes will be decreased such that the interest rate on the Notes equals the interest rate set forth on the cover page of this prospectus supplement. In no event will (i) the interest rate on the Notes be reduced to below the interest rate set forth on the cover page of this prospectus supplement or (ii) the total increase in the interest rate on the Notes exceed 0.50% above the interest rate set forth on the cover page of this prospectus supplement.
Any interest rate increase or decrease, as described above, will take effect on the first day of the interest period commencing after the date on which (i) an Interest Rate Adjustment Triggering Event has occurred or (ii) S&P (or, if applicable, any Substitute Rating Agency) at any time subsequently increases its rating on the Notes to “BBB-” or higher (or the equivalent ratings of any Substitute Rating Agency) as described above. If S&P (or, if applicable, any Substitute Rating Agency) changes its rating on the Notes (including by withdrawal of its rating at the Company’s request) more than once during any particular interest period, the last such change by S&P (or, if applicable, any Substitute Rating Agency) to occur will control for purposes of any increase or decrease in the interest rate with respect to the Notes. An interest period is the period commencing on an interest payment date and ending on the day preceding the next following interest payment date, provided that first interest period will commence on the day the Notes are delivered and will end on the day preceding the next following interest payment date.
If the interest rate on the Notes is increased as described above, the term “interest,” as used with respect to the Notes, will be deemed to include any such additional interest, unless the context otherwise requires.
For purposes of the interest rate adjustment provisions relating to the Notes as set forth in this section, the following terms will be applicable:
“Adjustment Rating Event” means on any day during the Relevant Period (i) the rating on the Notes is lowered by S&P (or a Substitute Rating Agency) to “BB+” or lower (or the equivalent ratings of any Substitute Rating Agency) or (ii) a Rating Withdrawal Event has occurred; provided, in the case of subsection (i) above that an Adjustment Rating Event shall not be deemed to have occurred in respect of an Asset Coverage Reduction (and, thus, shall not be deemed an Adjustment Rating Event) if S&P (or, if applicable, any Substitute Rating Agency) in connection with its lowering of the rating on the Notes does not publicly announce or inform the Trustee in writing at its request that the lowering was the result, in whole or in part, of the Asset Coverage Reduction.
“Asset Coverage Reduction” means at any time prior to the maturity of the Notes, the Company discloses (in accordance with Section 61(a)(2)(A) of the 1940 Act, which may include a filing with the Securities and Exchange Commission or a notice on the Company’s website) its election to reduce its required minimum asset coverage (as defined in the 1940 Act) from 200% to 150%, either pursuant to the approval of such reduction (i) by the Company’s board of directors in accordance with Section 61(a)(2)(D)(i)(I) of the 1940 Act or (ii) by the Company’s stockholders pursuant to Section 61(a)(2)(D)(ii)(II) of the 1940 Act.

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“Election Date” means the date on which the Company discloses the Asset Coverage Reduction pursuant to Section 61(a)(2)(A) of the 1940 Act.
“Interest Rate Adjustment Triggering Event” means the occurrence of either (i) both (1) an Asset Coverage Reduction and (2) an Adjustment Rating Event or (ii) a Rating Withdrawal Event at any time followed by an Asset Coverage Reduction.
“Rating Withdrawal Event” means S&P (or, if applicable, any Substitute Rating Agency) withdraws its debt rating assigned to the Notes at the request of the Company and the Company fails to continue to have or obtain a rating of the Notes from a Substitute Rating Agency of “BBB-” or higher (or the equivalent ratings of such Substitute Rating Agency).
“Relevant Period” means the period commencing on the Election Date of the Asset Coverage Reduction and ending 60 days following such date, whether or not such date is a business day, provided however, so long as the rating of the Notes is under publicly announced consideration for a possible downgrade by S&P (or, if applicable, any Substitute Rating Agency), the Relevant Period will be subject to extension until such time that S&P (or, if applicable, any Substitute Rating Agency) has completed its review.
Additional Notes
We may, without the consent of the holders of the Notes, increase the principal amount of the Notes by issuing additional Notes in the future on the same terms and conditions, except for any differences in the issue price and interest accrued prior to the issue date of the additional Notes and the original issue date; provided that such differences do not cause the additional Notes to constitute a different class of securities than the Notes for U.S. federal income tax purposes. The Notes offered by this prospectus supplement and any additional Notes would rank equally and ratably and would be treated as a single class for all purposes under the Indenture. No additional Notes may be issued if any event of default has occurred with respect to the Notes.
Ranking
The Notes will be our general, unsecured obligations and will rank equal in right of payment with all of our existing and future unsecured indebtedness (including, but not limited to, our Unsecured Notes) and senior in right of payment to any of our subordinated indebtedness. As a result, the Notes will be effectively subordinated to our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of our subsidiaries. As of November 27, 2018, we and our subsidiaries had approximately $2.6 billion of indebtedness outstanding, $331.0 million of which was secured indebtedness and $2.3 billion of which was unsecured indebtedness.
Payment at Maturity
On the maturity date, each holder will be entitled to receive on such date $25 in cash for each $25 in principal amount of Notes, together with accrued and unpaid interest (including additional interest, if any) to, but not including, the maturity date. With respect to the global note, principal and interest (including additional interest, if any) will be paid to DTC in immediately available funds. With respect to any certificated Notes, principal and interest (including additional interest, if any) will be payable at our office or agency in New York City, which initially will be the office or agency of the trustee in New York City.
Optional Redemption
The Notes may be redeemed in whole or in part at any time or from time to time at our option on or after December 15, 2021, upon not less than 30 days nor more than 90 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to the date of redemption.
A holder of the Notes may be prevented from exchanging or transferring the Notes when they are subject to redemption. In case any Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such Note, the holder will receive, without a charge, a new Note or Notes of authorized denominations representing the principal amount of the holder's remaining unredeemed Notes.
Any exercise of our option to redeem the Notes will be done in compliance with 1940 Act, to the extent applicable.

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If the Company redeems only some of the Notes, the trustee will determine the method for selection of the particular Notes to be redeemed, in accordance with the 1940 Act and the rules and regulations promulgated thereunder, to the extent applicable. Unless the Company defaults in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
Purchase of Notes by Us for Cash at the Option of Holders upon a Fundamental Change
If a fundamental change (as defined below) occurs at any time prior to the maturity of the Notes, you will have the right to require us to repurchase, at the repurchase price described below, all or part of your Notes for which you have properly delivered and not withdrawn a written repurchase notice. The Notes submitted for repurchase must be $25 in principal amount or $25 integral multiples in excess thereof.
The repurchase price will be payable in cash and will equal 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but excluding, the repurchase date. However, if the repurchase date is after a record date and on or prior to the corresponding interest payment date, the interest (including additional interest, if any) will be paid on the repurchase date to the holder of record on the record date.
We may be unable to repurchase your Notes in cash upon a fundamental change. Our ability to repurchase the Notes in cash in the future may be limited by the terms of our then-existing borrowing agreements. In addition, the occurrence of a fundamental change could cause an event of default under the terms of our then-existing borrowing agreements. We cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price in cash. See “Risk Factors-We may be unable to repurchase the Notes following a fundamental change” on page S-10 of this prospectus supplement.
A “fundamental change” will be deemed to have occurred upon the occurrence of both (a) a below investment grade ratings event (as defined below) and (b) any of the following events (each such events listed below shall be deemed a “fundamental change event”):
1.    the consummation of any transaction (including, without limitation, any merger or consolidation other than those excluded under clause (3) below) the result of which is that any “person” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our capital stock that is at the time entitled to vote by the holder thereof in the election of our board of directors (or comparable body);
2.     the adoption of a plan relating to our liquidation or dissolution; or
3.     the consolidation or merger of us with or into any other person, or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of our assets and those of our subsidiaries taken as a whole to any “person” (as this term is used in Section 13(d)(3) of the Exchange Act), other than:
•
any transaction that does not result in any reclassification, conversion, exchange or cancellation of all or substantially all of the outstanding shares of our capital stock;
•
any changes resulting from a subdivision or combination or a change solely in par value;
•
any transaction pursuant to which the holders of 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock of the continuing or surviving person immediately after giving effect to such transaction entitled to vote generally in elections of directors; or
•
any merger primarily for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity.
For purposes of determining the occurrence of a fundamental change, the term “below investment grade ratings event” means the Notes are downgraded below investment grade (as defined below) by each of the rating agencies (as defined below) on any date from the date of the public notice of an arrangement that results in the occurrence of a fundamental change event until the end of the 60-day period following public notice of the occurrence of a fundamental change event (which period shall

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be extended so long as any rating of the Notes is under publicly announced consideration for possible downgrade by a rating agency); provided that a downgrade contemplated by this paragraph otherwise arising by virtue of a particular reduction in a rating shall not be deemed to have occurred in respect of a particular fundamental change event (and thus shall not be deemed a downgrade as contemplated by this paragraph for purposes of the definition of fundamental change hereunder) if one of the rating agencies making a reduction in a rating to which this paragraph would otherwise apply does not announce or publicly confirm or inform the trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable fundamental change event (whether or not the applicable fundamental change event shall have occurred at the time of any downgrade contemplated by this paragraph). “Rating agencies” means S&P, Kroll, and Egan-Jones, or any successors thereto and “investment grade” means a rating of BBB- or better by the rating agencies (or if any such rating agency ceases to rate the Notes for reasons outside of the Company’s control, the equivalent investment grade rating from any “nationally recognized statistical rating organization” as defined in Section (3)(a)(62) of the Exchange Act selected by the Company as a replacement for such rating agency).
The definition of “fundamental change” includes a phrase relating to the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of our assets and those of our subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to repurchase the Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of our assets and those of our subsidiaries taken as a whole to another person or group may be uncertain.
On or before the 30th calendar day after the occurrence of a fundamental change, we will provide to all record holders of the Notes on the date of the fundamental change at their addresses shown in the register of the registrar and to beneficial owners to the extent required by applicable law, the trustee and the paying agent, a written notice of the occurrence of the fundamental change and the resulting repurchase right. Such notice shall state, among other things, the event causing the fundamental change and the procedures you must follow to require us to repurchase your Notes.
The repurchase date will be a date specified by us in the notice of a fundamental change that is not less than 20 nor more than 35 calendar days after the date of the notice of a fundamental change.
To exercise your repurchase right, you must deliver, prior to 5:00 p.m., New York City time, on the repurchase date, a written notice to the paying agent of your exercise of your repurchase right (together with the Notes to be repurchased, if certificated Notes have been issued). The repurchase notice must state:
•
if you hold a beneficial interest in a global Note, your repurchase notice must comply with appropriate DTC procedures; if you hold certificated Notes, the Notes certificate numbers;
•
the portion of the principal amount of the Notes to be repurchased, which must be $25 or $25 integral multiples in excess thereof; and
•
that the Notes are to be repurchased by us pursuant to the applicable provisions of the Notes and the Indenture.
You may withdraw your repurchase notice at any time prior to 5:00 p.m., New York City time, on the repurchase date by delivering a written notice of withdrawal to the paying agent. If a repurchase notice is given and withdrawn during that period, we will not be obligated to repurchase the Notes listed in the repurchase notice. The withdrawal notice must state:
•
if you hold a beneficial interest in a global Note, your withdrawal notice must comply with appropriate DTC procedures; if you hold certificated Notes, the certificate numbers of the withdrawn Notes;
•
the principal amount of the withdrawn Notes; and
•
the principal amount, if any, which remains subject to the repurchase notice.
Payment of the repurchase price for Notes for which a repurchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the Notes, together with necessary endorsements, to the paying agent, as the case may be. Payment of the repurchase price for the Notes will be made promptly following the later of the repurchase date and the time of book-entry transfer or delivery of the Notes, as the case may be.

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If the paying agent holds on the business day immediately following the repurchase date cash sufficient to pay the repurchase price of the Notes that holders have elected to require us to repurchase, then, as of the repurchase date:
•
the Notes will cease to be outstanding and interest (including additional interest, if any) will cease to accrue, whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the paying agent, as the case may be; and
•
all other rights of the holders of Notes will terminate, other than the right to receive the repurchase price upon delivery or transfer of the Notes.
In connection with any repurchase, we will, to the extent applicable:
•
comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act that may be applicable at the time of the offer to repurchase the Notes;
•
file a Schedule TO or any other schedule required in connection with any offer by us to repurchase the Notes; and
•
comply with all other federal and state securities laws in connection with any offer by us to repurchase the Notes.
This fundamental change repurchase right could discourage a potential acquirer of the Company. However, this fundamental change repurchase feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions. See “Risk Factors-Provisions of the Notes could discourage an acquisition of us by a third party” on page S-11 of this prospectus supplement.
Our obligation to repurchase the Notes upon a fundamental change would not necessarily afford you protection in the event of a highly leveraged or other transaction involving us that may adversely affect holders. We also could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a fundamental change but would increase the amount of our (or our subsidiaries’) outstanding debt. The incurrence of significant amounts of additional debt could adversely affect our ability to service our then existing debt, including the Notes. See “Risk Factors-Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to repurchase the Notes” on page S-10 of this prospectus supplement.
Consolidation, Merger and Sale of Assets by the Company
The Indenture will provide that we may not, in a single transaction or a series of related transactions, consolidate with or merge with or into any other person or sell, convey, transfer or lease our property and assets substantially as an entirety to another person, unless:
•
either (a) we are the continuing corporation or (b) the resulting, surviving or transferee person (if other than us) is a corporation or limited liability company organized and existing under the laws of the United States, any state thereof or the District of Columbia and such person assumes, by a supplemental indenture in a form reasonably satisfactory to the trustee, all of our obligations under the Notes and the Indenture;
•
immediately after giving effect to such transaction, no default or event of default has occurred and is continuing; and
•
we have delivered to the trustee certain certificates and opinions of counsel if so requested by the trustee.
In the event of any transaction described in and complying with the conditions listed in the immediately preceding paragraph in which the Company is not the continuing corporation, the successor person formed or remaining shall succeed, and be substituted for, and may exercise every right and power of, the Company, and the Company shall be discharged from its obligations, under the Notes and the Indenture.
This covenant includes a phrase relating to the sale, conveyance, transfer and lease of the property and assets of the Company “substantially as an entirety.” There is no precise, established definition of the phrase “substantially as an entirety” under New York law, which governs the Indenture and the Notes, or under the laws of Maryland, the Company’s state of

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incorporation. Accordingly, the ability of a holder of the Notes to require us to repurchase the Notes as a result of a sale, conveyance, transfer or lease of less than all of the property and assets of the Company may be uncertain.
An assumption by any person of the Company’s obligations under the Notes and the Indenture might be deemed for U.S. federal income tax purposes to be an exchange of the Notes for new Notes by the holders thereof, resulting in recognition of gain or loss for such purposes and possibly other adverse tax consequences to the holders. Holders should consult their own tax advisors regarding the tax consequences of such an assumption.
Events of Default; Notice and Waiver
In addition to the events of default and the other information with respect to events of default, see “Description of Our Debt Securities-Events of Default” beginning on page 154 of the accompanying prospectus, the following will be events of default under the Indenture:
•
we fail to pay the repurchase price payable in respect of any Notes when due;
•
we fail to provide notice of the effective date or actual effective date of a fundamental change on a timely basis as required in the Indenture;
•
we fail to perform or observe any other term, covenant or agreement in the Notes or the Indenture for a period of 60 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding;
•
we fail to pay any additional interest (as discussed below) when such interest becomes due and payable, which failure continues for a period of 30 days;
•
a failure to pay principal when due (whether at stated maturity or otherwise) or an uncured default that results in the acceleration of maturity, of any indebtedness for borrowed money of the Company or any of our “significant subsidiaries,” (which term shall have the meaning specified in Rule 1-02(w) of Regulation S-X), other than subsidiaries that are non-recourse or limited recourse subsidiaries, bankruptcy remote special purpose vehicles and any subsidiaries that are not consolidated with us for GAAP purposes, in an aggregate amount in excess of $50,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding; or
•
certain events involving our bankruptcy, insolvency or reorganization of the Company.
We are required to notify the trustee promptly upon becoming aware of the occurrence of any default under the Indenture known to us. The trustee is then required within 90 calendar days of being notified by us of the occurrence of any default to give to the registered holders of the Notes notice of all uncured defaults known to it. However, the trustee may withhold notice to the holders of the Notes of any default, except defaults in payment of principal or interest (including additional interest, if any) on the Notes, if the trustee, in good faith, determines that the withholding of such notice is in the interests of the holders. We are also required to deliver to the trustee, on or before a date not more than 120 calendar days after the end of each fiscal year, a written statement as to compliance with the Indenture, including whether or not any default has occurred.
If an event of default specified in the last bullet point listed above occurs and continues, the principal amount of the Notes and accrued and unpaid interest (including additional interest, if any) on the outstanding Notes will automatically become due and payable. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the principal amount of the Notes and accrued and unpaid interest (including additional interest, if any) on the outstanding Notes to be due and payable. Thereupon, the trustee may, in its discretion, proceed to protect and enforce the rights of the holders of the Notes by appropriate judicial proceedings.
After a declaration of acceleration, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in aggregate principal amount of the Notes outstanding, by written notice to us and the trustee, may rescind and annul such declaration if:

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•
we have paid (or deposited with the trustee a sum sufficient to pay) (1) all overdue interest (including additional interest, if any) on all Notes; (2) the principal amount of any Notes that have become due otherwise than by such declaration of acceleration; (3) to the extent that payment of such interest is lawful, interest upon overdue interest (including additional interest, if any); and (4) all sums paid or advanced by the trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the trustee, its agents and counsel; and
•
all events of default, other than the non-payment of the principal amount and any accrued and unpaid interest (including additional interest, if any) that have become due solely by such declaration of acceleration, have been cured or waived.
For more information on remedies if an event of default occurs, see “Description of Our Debt Securities-Events of Default” beginning on page 154 of the accompanying prospectus.
Notwithstanding the foregoing and the description in the accompanying prospectus, the Indenture will provide, if we so elect, that the sole remedy for an event of default relating to the failure to comply with the reporting obligations in the Indenture, which are described below under the caption “-Reports,” and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act (which also relates to the provision of reports), will, at our option, for the 365 days after the occurrence of such an event of default consist exclusively of the right to receive additional interest on the Notes at an annual rate equal to 0.50% of the principal amount of the Notes. In the event we do not elect to pay the additional interest upon an event of default in accordance with this paragraph, the Notes will be subject to acceleration as provided above. The additional interest will accrue on all outstanding Notes from and including the date on which an event of default relating to a failure to comply with the reporting obligations in the Indenture first occurs to but not including the 365th day thereafter (or such earlier date on which the event of default relating to the reporting obligations shall have been cured or waived). On such 365th day (or earlier, if the event of default relating to the reporting obligations is cured or waived prior to such 365th day), such additional interest will cease to accrue and the Notes will be subject to acceleration as provided above if the event of default is continuing. The provisions of the Indenture described in this paragraph will not affect the rights of holders of Notes in the event of the occurrence of any other event of default.
Waiver
The holders of a majority in aggregate principal amount of the Notes outstanding may, on behalf of the holders of all the Notes, waive any past default or event of default under the Indenture and its consequences, except that a holder cannot waive our failure to pay the repurchase price on the repurchase date in connection with a holder exercising its repurchase rights. For other exceptions to a holder’s waiver of past default or event of default under the Indenture, see “Description of Our Debt Securities-Events of Default” beginning on page 154 of the accompanying prospectus.
Modification
Changes Requiring Approval of Each Affected Holder
The Indenture (including the terms and conditions of the Notes) may not be modified or amended without the written consent or the affirmative vote of the holder of each Note affected by such change to:
•
reduce any amount payable upon repurchase of any Notes;
•
to add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication and delivery of debt securities, as set forth in the Indenture;
•
change our obligation to repurchase any Notes upon a fundamental change in a manner adverse to the rights of the holders; and
•
change our obligation to maintain an office or agency in New York City.
For other changes requiring approval of each affected holder, see “Description of our Debt Securities-Modification or Waiver” on page 155 of the accompanying prospectus.
Changes Requiring Majority Approval

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The Indenture (including the terms and conditions of the Notes) may be modified or amended, except as described above, with the written consent or affirmative vote of the holders of a majority in aggregate principal amount of the Notes then outstanding. For such changes requiring majority approval, see “Description of Our Debt Securities-Modification or Waiver” on page 155 of the accompanying prospectus.
Changes Requiring No Approval
The Indenture (including the terms and conditions of the Notes) may be modified or amended by us and the trustee, without the consent of the holder of any Notes, to, among other things:
•
provide for our repurchase obligations in connection with a fundamental change in the event of any reclassification of our common stock, merger or consolidation, or sale, conveyance, transfer or lease of our property and assets substantially as an entity;
•
secure the Notes;
•
provide for the assumption of our obligations to the holders of the Notes in the event of a merger or consolidation, or sale, conveyance, transfer or lease of our property and assets substantially as an entirety;
•
surrender any right or power conferred upon us;
•
add to our covenants for the benefit of the holders of the Notes;
•
cure any ambiguity or correct or supplement any inconsistent or otherwise defective provision contained in the Indenture;
•
conform the provisions of the Indenture to the description of the Notes contained in this prospectus supplement;
•
make any provision with respect to matters or questions arising under the Indenture that we may deem necessary or desirable and that shall not be inconsistent with provisions of the Indenture; provided that such change or modification does not, in the good faith opinion of our board of directors, adversely affect the interests of the holders of the Notes in any material respect;
•
add guarantees of obligations under the Notes; and
•
provide for a successor trustee.
Other
The consent of the holders of Notes is not necessary under the Indenture to approve the particular form of any proposed modification or amendment. It is sufficient if such consent approves the substance of the proposed modification or amendment. After a modification or amendment under the Indenture becomes effective, we are required to mail to the holders a notice briefly describing such modification or amendment. However, the failure to give such notice to all the holders, or any defect in the notice, will not impair or affect the validity of the modification or amendment.
Notes Not Entitled to Consent
Any Notes held by us or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with us shall be disregarded (from both the numerator and the denominator) for purposes of determining whether the holders of the requisite aggregate principal amount of the outstanding Notes have consented to a modification, amendment or waiver of the terms of the Indenture.
Reports
We shall deliver to the trustee, within 30 days after filing with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act; provided,

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that any such information, documents or reports filed electronically with the SEC pursuant to Section 13 or 15(d) of the Exchange Act shall be deemed filed with and delivered to the trustee and the holders at the same time as filed with the SEC.
If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end. All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.
Other Covenants
We agree that for the period of time during which the Notes are outstanding, we will not violate Section 18(a)(1)(A) as modified by Section 61(a) of the 1940 Act or any successor provisions. These provisions generally prohibit us from incurring additional borrowings, including through the issuance of additional securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings (or 150% after such borrowings if we were ever to elect to approve the reduced asset coverage requirements in accordance with the procedures set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act).
Satisfaction and Discharge
The Indenture shall upon the written request or order signed in the name of the Company, or the “Company Request,” cease to be of further effect with respect to any series of Notes specified in such Company Request (except as to any surviving rights of registration of transfer or exchange of Notes of such series expressly provided in the Indenture, any surviving rights of tender for repayment at the option of the holders and any right to receive additional amounts, as provided in the Indenture), and the trustee, upon receipt of a company order, and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture as to such series when:
(1) either:
(A) all Notes of such series theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other than (i) coupons appertaining to bearer securities surrendered for exchange for registered securities and maturing after such exchange, whose surrender is not required or has been waived as provided in the Indenture, (ii) Notes and coupons of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in the Indenture, (iii) coupons appertaining to the Notes called for redemption and maturing after the relevant redemption date, whose surrender has been waived as provided in the Indenture, and (iv) Notes and coupons of such series for whose payment money has theretofore been deposited in trust with the trustee or any paying agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust), as provided in the Indenture have been delivered to the trustee for cancellation; or
(B) all Notes of such series and, in the case of (i) or (ii) below, any coupons appertaining thereto not theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their stated maturity within one year, or
(iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust for such purpose, solely for the benefit of the holders, an amount in the currency in which the Notes of such series are payable, sufficient to pay and discharge the entire indebtedness on such Notes and such coupons not theretofore delivered to the trustee for cancellation, for principal (and premium, if any) and interest, if any, to the date of such deposit (in the case of Notes which have become due and payable) or to the stated maturity or redemption date, as the case may be;
(2) the Company has irrevocably paid or caused to be irrevocably paid all other sums payable under the Indenture by the Company; and

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(3) the Company has delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent in the Indenture provided for relating to the satisfaction and discharge of the Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of the Indenture, the obligations of the Company to the trustee and any predecessor trustee under the Indenture, the obligations of the Company to any authenticating agent under the Indenture and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1), the obligations of the trustee for application of the funds and the Notes deposited with the trustee and held in trust for payment shall survive any termination of the Indenture.
Governing Law
The Notes and the Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
Form, Denomination and Registration
The Notes will be issued:
•
in fully registered form;
•
without interest coupons; and
•
in denominations of $25 principal amount and integral multiples of $25.

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REGISTRATION AND SETTLEMENT
The Depository Trust Company
The Notes will be issued in book-entry only form. This means that we will not issue certificates for the Notes, except in the limited case described below. Instead, we will issue the global note in registered form. The global note will be held through DTC and will be registered in the name of Cede & Co., as nominee of DTC.
Accordingly, Cede & Co. will be the holder of record of the Notes. The Notes represented by the global note evidences a beneficial interest in the global note.
Beneficial interest in the global note will be shown on, and transfers are effected through, records maintained by DTC or its participants. In order to own a beneficial interest in the Notes, you must be an institution that has an account with DTC or have a direct or indirect account with such an institution. Transfers of ownership interests in the Notes will be accomplished by making entries in DTC participants’ books acting on behalf of beneficial owners.
So long as DTC or its nominee is the registered holder of the global note, DTC or its nominee, as the case may be, will be the sole holder and owner of the Notes represented thereby for all purposes, including payment of principal and interest, under the Indenture. Except as otherwise provided below, you will not be entitled to receive physical delivery of certificated Notes and will not be considered the holder of the Notes for any purpose under the Indenture. Accordingly, you must rely on the procedures of DTC and the procedures of the DTC participant through which you own your Note in order to exercise any rights of a holder of a Note under the Indenture. The laws of some jurisdictions require that certain purchasers of Notes take physical delivery of such Notes in certificated form. Those limits and laws may impair the ability to transfer beneficial interests in the Notes.
The global note representing the Notes will be exchangeable for certificated notes of like tenor and terms and of differing authorized denominations in a like aggregate principal amount, only if (1) DTC notifies us that it is unwilling or unable to continue as depositary for the global note or we become aware that DTC has ceased to be a clearing agency registered under the Exchange Act and, in any such case we fail to appoint a successor to DTC within 60 calendar days, (2) we, in our sole discretion, determine that the global note shall be exchangeable for certificated notes or (3) an event of default has occurred and is continuing with respect to the Notes under the Indenture. Upon any such exchange, the certificated notes shall be registered in the names of the beneficial owners of the global note representing the Notes.
The following is based on information furnished by DTC:
DTC will act as securities depositary for the Notes. The Notes will be issued as fully-registered Notes registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered global note will be issued for all of the principal amount of the Notes.
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments from over 100 countries that DTC’s direct participants deposit with DTC.
DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, as well as by The New York Stock Exchange, Inc., the American Stock Exchange LLC, and the Financial Industry Regulatory Authority, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The DTC rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of the Notes under the DTC system must be made by or through direct participants, which will receive a credit for the Notes on DTC’s records. The beneficial interest of each actual purchaser of the Notes is in turn to be recorded on the direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchase. Beneficial owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the

S-24

transaction. Transfers of beneficial interests in the Notes are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their beneficial interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by direct participants with DTC will be registered in the name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of the Notes with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the Notes; DTC’s records reflect only the identity of the direct participants to whose accounts such Notes will be credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial owners of the Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Notes, such as redemption, tenders, defaults, and proposed amendments to the security documents. For example, beneficial owners of the Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to beneficial owners. In the alternative, beneficial owners may wish to provide their names and addresses to the registrar of the Notes and request that copies of the notices be provided to them directly. Any such request may or may not be successful.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Notes unless authorized by a direct participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible after the regular record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those direct participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).
We will pay principal and or interest payments on the Notes in same-day funds directly to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts on the applicable payment date in accordance with their respective holdings shown on DTC’s records upon DTC’s receipt of funds and corresponding detail information. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of these participants and not of DTC or any other party, subject to any statutory or regulatory requirements that may be in effect from time to time. Payment of principal and interest to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is our responsibility, disbursement of such payments to direct participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners is the responsibility of the direct or indirect participant.
We will send any redemption notices to DTC. If less than all of the Notes are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.
A beneficial owner, or its authorized representative, shall give notice to elect to have its Notes repaid by us, through its direct or indirect participant, to the trustee, and shall effect delivery of such Notes by causing the direct participant to transfer that participant’s interest in the global note representing the Notes, on DTC’s records, to the trustee. The requirement for physical delivery of the Notes in connection with a demand for repayment will be deemed satisfied when the ownership rights in the global note representing the Notes are transferred by the direct participants on DTC’s records.
DTC may discontinue providing its services as securities depository for the Notes at any time by giving us reasonable notice. Under such circumstances, if a successor securities depositary is not obtained, we will print and deliver certificated Notes. We may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depositary). In that event, we will print and deliver certificated Notes.
The information in this section concerning DTC and DTC’s system has been obtained from sources that we believe to be reliable, but neither we, the underwriters nor any agent takes any responsibility for its accuracy.
Registration, Transfer and Payment of Certificated Notes
If we ever issue Notes in certificated form, those Notes may be presented for registration, transfer and payment at the office of the registrar or at the office of any transfer agent designated and maintained by us. We have originally designated U.S. Bank National Association to act in those capacities for the Notes. The registrar or transfer agent will make the transfer or registration only if it is satisfied with the documents of title and identity of the person making the request. There will not be a service charge for any exchange or registration of transfer of the Notes, but we may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange. At any time, we may change transfer agents or approve a change in the location through which any transfer agent acts. We also may designate additional

S-25

transfer agents for any Notes at any time.
We will not be required to: (1) issue, exchange or register the transfer of any Note to be redeemed for a period of 15 days after the selection of the Notes to be redeemed; (2) exchange or register the transfer of any Note that was selected, called or is being called for redemption, except the unredeemed portion of any Note being redeemed in part; or (3) exchange or register the transfer of any Note as to which an election for repayment by the holder has been made, except the unrepaid portion of any Note being repaid in part.
We will pay principal of and interest on any certificated Notes at the offices of the paying agents we may designate from time to time. Generally, we will pay interest on a note by check on any interest payment date other than at stated maturity or upon earlier redemption or repayment to the person in whose name the note is registered at the close of business on the regular record date for that payment. We will pay principal and interest at stated maturity or upon earlier redemption or repayment in same-day funds against presentation and surrender of the applicable Notes.

S-26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All figures in this item are in thousands except share, per share and other data.)
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this prospectus supplement and accompanying prospectus. Historical results set forth are not necessarily indicative of our future financial position and results of operations.
Overview
The terms “Prospect,” “the Company,” “we,” “us” and “our” mean Prospect Capital Corporation and its subsidiaries unless the context specifically requires otherwise.

Prospect is a financial services company that primarily lends to and invests in middle market privately-held companies. We are a closed-end investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we have elected to be treated as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). We were organized on April 13, 2004 and were funded in an initial public offering completed on July 27, 2004.

On May 15, 2007, we formed a wholly-owned subsidiary Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly-owned subsidiary Prospect Small Business Lending, LLC (“PSBL”) was formed on January 27, 2014 and purchases small business whole loans on a recurring basis from online small business loan originators, including On Deck Capital, Inc. (“OnDeck”). On September 30, 2014, we formed a wholly-owned subsidiary Prospect Yield Corporation, LLC (“PYC”) and effective October 23, 2014, PYC holds our investments in collateralized loan obligations (“CLOs”). Each of these subsidiaries have been consolidated since operations commenced.
We consolidate certain of our wholly-owned and substantially wholly-owned holding companies formed by us in order to facilitate our investment strategy. The following companies are included in our consolidated financial statements and are collectively referred to as the “Consolidated Holding Companies”: APH Property Holdings, LLC (“APH”); Arctic Oilfield Equipment USA, Inc. (“Arctic Equipment”); CCPI Holdings Inc.; CP Holdings of Delaware LLC (“CP Holdings”); Credit Central Holdings of Delaware, LLC; Energy Solutions Holdings Inc.; First Tower Holdings of Delaware LLC (“First Tower Delaware”); Harbortouch Holdings of Delaware Inc.; MITY Holdings of Delaware Inc.; Nationwide Acceptance Holdings LLC; NMMB Holdings, Inc. (“NMMB Holdings”); NPH Property Holdings, LLC (“NPH”); STI Holding, Inc.; UPH Property Holdings, LLC (“UPH”); Valley Electric Holdings I, Inc.; Valley Electric Holdings II, Inc.; and Wolf Energy Holdings Inc. (“Wolf Energy Holdings”). On October 10, 2014, concurrent with the sale of the operating company, our ownership increased to 100% of the outstanding equity of ARRM Services, Inc., which was renamed SB Forging Company, Inc. (“SB Forging”). As such, we began consolidating SB Forging on October 11, 2014. Effective May 23, 2016, in connection with the merger of American Property REIT Corp. (“APRC”) and United Property REIT Corp. (“UPRC”) with and into National Property REIT Corp. (“NPRC”), APH and UPH merged with and into NPH, and were dissolved. Effective April 6, 2018, Arctic Equipment merged with and into CP Energy Services, Inc. (“CP Energy”), a substantially wholly-owned subsidiary of CP Holdings, with CP Energy continuing as the surviving entity.
We are externally managed by our investment adviser, Prospect Capital Management L.P. (“Prospect Capital Management” or the “Investment Adviser”). Prospect Administration LLC (“Prospect Administration”), a wholly-owned subsidiary of the Investment Adviser, provides administrative services and facilities necessary for us to operate.
Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. We invest primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. We work with the management teams or financial sponsors to seek investments with historical cash flows, asset collateral or contracted pro-forma cash flows.
We currently have nine strategies that guide our origination of investment opportunities: (1) lending to companies controlled by private equity sponsors, (2) lending to companies not controlled by private equity sponsors, (3) purchasing controlling equity positions and lending to operating companies, (4) purchasing controlling equity positions and lending to financial services companies, (5) purchasing controlling equity positions and lending to real estate companies, (6) purchasing controlling equity positions and lending to aircraft leasing companies, (7) investing in structured credit, (8) investing in syndicated debt and (9) investing in consumer and small business loans and asset-backed securitizations. We may also invest in other strategies and opportunities from time to time that we view as attractive. We continue to evaluate other origination strategies in the ordinary course of business with no specific top-down allocation to any single origination strategy.

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Lending to Companies Controlled by Private Equity Sponsors - We make agented loans to companies which are controlled by private equity sponsors. This debt can take the form of first lien, second lien, unitranche or unsecured loans. These loans typically have equity subordinate to our loan position. Historically, this strategy has comprised approximately 40%-60% of our portfolio.
Lending to Companies not Controlled by Private Equity Sponsors - We make loans to companies which are not controlled by private equity sponsors, such as companies that are controlled by the management team, the founder, a family or public shareholders. This origination strategy may have less competition to provide debt financing than the private-equity-sponsor origination strategy because such company financing needs are not easily addressed by banks and often require more diligence preparation. This origination strategy can result in investments with higher returns or lower leverage than the private-equity-sponsor origination strategy. Historically, this strategy has comprised up to approximately 15% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Operating Companies - This strategy involves purchasing yield-producing debt and controlling equity positions in non-financial-services operating companies. We believe that we can provide enhanced certainty of closure and liquidity to sellers and we look for management to continue on in their current roles. This strategy has comprised approximately 5%-15% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Financial Services Companies - This strategy involves purchasing yield-producing debt and control equity investments in financial services companies, including consumer direct lending, sub-prime auto lending and other strategies. These investments are often structured in tax-efficient partnerships, enhancing returns. This strategy has comprised approximately 5%-15% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Real Estate Companies - We purchase debt and controlling equity positions in tax-efficient real estate investment trusts (“REIT” or “REITs”). NPRC’s, an operating company and the surviving entity of the May 23, 2016 merger with APRC and UPRC, real estate investments are in various classes of developed and occupied real estate properties that generate current yields, including multi-family properties, student housing, and self-storage. NPRC seeks to identify properties that have historically significant occupancy rates and recurring cash flow generation. NPRC generally co-invests with established and experienced property management teams that manage such properties after acquisition. Additionally, NPRC purchases loans originated by certain consumer loan facilitators. It purchases each loan in its entirety (i.e., a “whole loan”). The borrowers are consumers, and the loans are typically serviced by the facilitators of the loans. This investment strategy has comprised approximately 10%-20% of our business.
Purchasing Controlling Equity Positions and Lending to Aircraft Leasing Companies - We invest in debt as well as equity in companies with aircraft assets subject to commercial leases to airlines across the globe. We believe that these investments can present attractive return opportunities due to cash flow consistency from long-term leases coupled with hard asset residual value. We believe that these investment companies seek to deliver risk-adjusted returns with strong downside protection by analyzing relative value characteristics across a variety of aircraft types and vintages. This strategy historically has comprised less than 5% of our portfolio.
Investing in Structured Credit - We make investments in CLOs, often taking a significant position in the subordinated interests (equity) and debt of the CLOs. The underlying portfolio of each CLO investment is diversified across approximately 100 to 200 broadly syndicated loans and does not have direct exposure to real estate, mortgages, or consumer-based credit assets. The CLOs in which we invest are managed by established collateral management teams with many years of experience in the industry. This strategy has comprised approximately 10%-20% of our portfolio.
Investing in Syndicated Debt - On a primary or secondary basis, we purchase primarily senior and secured loans and high yield bonds that have been sold to a club or syndicate of buyers. These investments are often purchased with a long term, buy-and-hold outlook, and we often look to provide significant input to the transaction by providing anchoring orders. This strategy has comprised approximately 5%-10% of our portfolio.
Investing in Consumer and Small Business Loans and Asset-Backed Securitizations - We purchase loans originated by certain consumer and small-and-medium-sized business (“SME”) loan platforms. We generally purchase each loan in its entirety (i.e., a “whole loan”) and we invest in asset-backed securitizations collateralized by consumer or small business loans. The borrowers are consumers and SMEs and the loans are typically serviced by the platforms of the loans. This investment strategy has comprised up to approximately 0% of our portfolio.

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We invest primarily in first and second lien secured loans and unsecured debt, which in some cases includes an equity component. First and second lien secured loans generally are senior debt instruments that rank ahead of unsecured debt of a given portfolio company. These loans also have the benefit of security interests on the assets of the portfolio company, which may rank ahead of or be junior to other security interests. Our investments in CLOs are subordinated to senior loans and are generally unsecured. We invest in debt and equity positions of CLOs which are a form of securitization in which the cash flows of a portfolio of loans are pooled and passed on to different classes of owners in various tranches. Our CLO investments are derived from portfolios of corporate debt securities which are generally risk rated from BB to B.
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 September 30, 2018, as shown in our Consolidated Schedule of Investments, the cost basis and fair value of our investments in controlled companies was $2,331,620 and $2,487,337, respectively. This structure gives rise to several of the risks described in our public documents and highlighted elsewhere in this prospectus supplement and the accompanying prospectus. 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.

First Quarter Highlights
Investment Transactions
We seek to be a long-term investor with our portfolio companies. During the three months ended September 30, 2018, we acquired $44,927 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $200,390, and recorded paid in kind (“PIK”) interest of $9,325, resulting in gross investment originations of $254,642. During the three months ended September 30, 2018, we received full repayments on 2 investments and received several partial prepayments and amortization payments totaling $55,166.

Debt Issuances and Redemptions
During the three months ended September 30, 2018, we redeemed $29,360 aggregate principal amount of Prospect Capital InterNotes® at par with a weighted average interest rate of 4.70% in order to replace shorter maturity debt with longer-term debt, and repaid $2,434 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 September 30, 2018 was $255.
During the three months ended September 30, 2018 we issued $39,757 aggregate principal amount of Prospect Capital InterNotes® with a stated and weighted average interest rate of 5.48%, to extend our borrowing base. The newly issued notes mature between July 15, 2023 and September 15, 2028 and generated net proceeds of $39,093.
On September 26, 2018, we repurchased the remaining $153,536 aggregate principal amount of the 5.00% 2019 Notes at a price of 101.645, including commissions. The transaction resulted in our recognizing a loss of $2,874 during the three months ended September 30, 2018.
On September 27, 2018, we issued $100,000 aggregate principal amount of unsecured notes that mature on January 15, 2024 (the “6.375% 2024 Notes”). The 6.375% 2024 Notes settled on October 1, 2018. The 6.375% 2024 Notes bear interest at a rate of 6.375% per year, payable semi-annually on January 15 and July 15 of each year, beginning January 15, 2019. Total proceeds from the issuance of the 6.375% 2024 Notes, net of underwriting discounts and offering costs, were $98,985. Net proceeds are reflected in Due from Broker on the Consolidated Statements of Assets and Liabilities.
Equity Issuances
On July 19, 2018, August 23, 2018, and September 20, 2018, we issued 282,592, 270,136, and 262,473 shares of our common stock in connection with the dividend reinvestment plan, respectively.

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Investment Holdings
As of September 30, 2018, we continue to pursue our investment strategy. At September 30, 2018, approximately $5,936,683, or 173.0%, of our net assets are invested in 137 long-term portfolio investments and CLOs.
During the three months ended September 30, 2018, we originated $254,642 of new investments, primarily composed of $212,548 of debt and equity financing to non-controlled portfolio investments and $42,094 of debt and equity financing to controlled investments. 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, though we also continue to close select junior debt and equity investments. Our annualized current yield was 13.5% and 13.0% as of September 30, 2018 and June 30, 2018, respectively, across all performing interest bearing investments, excluding equity investments and non-accrual loans. Our annualized current yield was 10.8% and 10.5% as of September 30, 2018 and June 30, 2018, respectively, across all investments. The increase in yield across our performing interest bearing investments, excluding equity investments and non-accrual loans, is partially due to the increase in LIBOR above our floors amongst our interest bearing investments. Monetization of equity positions that we hold and loans on non-accrual status are not included in this yield calculation. 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.
We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of 25% or more of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through the possession outright or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. As of September 30, 2018, we own controlling interests in the following portfolio companies: CCPI Inc. (“CCPI”); 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”); MITY, Inc. (“MITY”); NPRC; Nationwide Loan Company LLC (f/k/a Nationwide Acceptance LLC) (“Nationwide”); NMMB, Inc. (“NMMB”); Pacific World Corporation (“Pacific World”); R-V Industries, Inc.; SB Forging Company II, Inc. (f/k/a Gulf Coast Machine & Supply Company) (“Gulfco”); USES Corp. (“USES”); Valley Electric Company, Inc. (“Valley Electric”); and Wolf Energy, LLC (“Wolf Energy”). As of September 30, 2018, we also own affiliated interests in Nixon, Inc. (“Nixon”), Targus Cayman HoldCo Limited (“Targus”), Edmentum Ultimate Holdings, LLC (“Edmentum”) and United Sporting Companies, Inc. (“USC”).
The following shows the composition of our investment portfolio by level of control as of September 30, 2018 and June 30, 2018:
 
September 30, 2018
 
June 30, 2018
Level of Control
Cost
% of Portfolio
Fair Value
% of Portfolio
 
Cost
% of Portfolio
Fair Value
% of Portfolio
Control Investments
$
2,331,620

38.6
%
$
2,487,337

41.9
%
 
$
2,300,526

39.5
%
$
2,404,326

42.0
%
Affiliate Investments
175,235

2.9
%
95,993

1.6
%
 
55,637

0.9
%
58,436

1.0
%
Non-Control/Non-Affiliate Investments
3,532,959

58.5
%
3,353,353

56.5
%
 
3,475,295

59.6
%
3,264,517

57.0
%
Total Investments
$
6,039,814

100.0
%
$
5,936,683

100.0
%
 
$
5,831,458

100.0
%
$
5,727,279

100.0
%

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The following shows the composition of our investment portfolio by type of investment as of September 30, 2018 and June 30, 2018:
 
September 30, 2018
 
June 30, 2018
Type of Investment
Cost
% of Portfolio
Fair Value
% of Portfolio
 
Cost
% of Portfolio
Fair Value
% of Portfolio
Revolving Line of Credit
$
30,002

0.5
%
$
29,871

0.5
%
 
$
38,659

0.7
%
$
38,559

0.7
%
Senior Secured Debt
2,737,167

45.4
%
2,601,554

43.8
%
 
2,602,018

44.6
%
2,481,353

43.3
%
Subordinated Secured Debt
1,360,127

22.5
%
1,290,476

21.7
%
 
1,318,028

22.6
%
1,260,525

22.0
%
Subordinated Unsecured Debt
38,712

0.6
%
31,178

0.5
%
 
38,548

0.7
%
32,945

0.6
%
Small Business Loans
—

—
%
—

—
%
 
30

—
%
17

—
%
CLO Debt
26,085

0.4
%
27,424

0.5
%
 
6,159

0.1
%
6,159

0.1
%
CLO Residual Interest
1,106,222

18.3
%
937,899

15.8
%
 
1,096,768

18.8
%
954,035

16.7
%
Preferred Stock
92,346

1.5
%
78,148

1.3
%
 
92,346

1.6
%
75,986

1.3
%
Common Stock
455,569

7.5
%
567,988

9.6
%
 
445,364

7.6
%
517,858

9.0
%
Membership Interest
193,584

3.3
%
259,129

4.4
%
 
193,538

3.3
%
257,799

4.5
%
Participating Interest(1)
—

—
%
112,084

1.9
%
 
—

—
%
101,126

1.8
%
Escrow Receivable
—

—
%
932

—
%
 
—

—
%
917

—
%
Total Investments
$
6,039,814

100.0
%
$
5,936,683

100.0
%
 
$
5,831,458

100.0
%
$
5,727,279

100.0
%
(1)
Participating Interest includes our participating equity investments, such as net profits interests, net operating income interests, net revenue interests, and overriding royalty interests.
The following shows our investments in interest bearing securities by type of investment as of September 30, 2018 and June 30, 2018:
 
September 30, 2018
 
June 30, 2018
Type of Investment
Cost
% of Portfolio
Fair Value
% of Portfolio
 
Cost
% of Portfolio
Fair Value
% of Portfolio
First Lien
$
2,766,992

52.2
%
$
2,631,248

53.5
%
 
$
2,632,843

51.6
%
$
2,512,078

52.6
%
Second Lien
1,360,304

25.7
%
1,290,653

26.2
%
 
1,325,862

26.0
%
1,268,359

26.6
%
Unsecured
38,712

0.7
%
31,178

0.6
%
 
38,548

0.8
%
32,945

0.7
%
Small Business Loans
—

—
%
—

—
%
 
30

—
%
17

—
%
CLO Debt
26,085

0.5
%
27,424

0.6
%
 
6,159

0.1
%
6,159

0.1
%
CLO Residual Interest
1,106,222

20.9
%
937,899

19.1
%
 
1,096,768

21.5
%
954,035

20.0
%
Total Debt Investments
$
5,298,315

100.0
%
$
4,918,402

100.0
%
 
$
5,100,210

100.0
%
$
4,773,593

100.0
%

S-31

The following shows the composition of our investment portfolio by geographic location as of September 30, 2018 and June 30, 2018:
 
September 30, 2018
 
June 30, 2018
Geographic Location
Cost
% of Portfolio
Fair Value
% of Portfolio
 
Cost
% of Portfolio
Fair Value
% of Portfolio
Canada
$
5,973

0.1
%
$
5,973

0.1
%
 
$
16,809

0.3
%
$
17,816

0.3
%
Cayman Islands
1,132,307

18.7
%
965,323

16.3
%
 
1,102,927

18.9
%
960,194

16.8
%
France
12,572

0.2
%
12,566

0.2
%
 
12,490

0.2
%
12,334

0.2
%
MidAtlantic US
523,769

8.7
%
523,769

8.8
%
 
410,644

7.0
%
410,644

7.2
%
Midwest US
387,054

6.4
%
461,870

7.8
%
 
395,622

6.8
%
413,757

7.2
%
Northeast US
701,670

11.6
%
753,146

12.7
%
 
677,204

11.6
%
701,851

12.3
%
Northwest US
108,586

1.8
%
121,014

2.0
%
 
103,906

1.8
%
90,288

1.6
%
Puerto Rico
84,509

1.4
%
82,932

1.4
%
 
84,713

1.5
%
83,507

1.5
%
Southeast US
1,229,946

20.5
%
1,403,936

23.7
%
 
1,243,430

21.3
%
1,524,379

26.6
%
Southwest US
727,270

12.0
%
636,736

10.7
%
 
723,038

12.4
%
599,914

10.4
%
Western US
1,126,158

18.6
%
969,418

16.3
%
 
1,060,675

18.2
%
912,594

15.9
%
Total Investments
$
6,039,814

100.0
%
$
5,936,683

100.0
%
 
$
5,831,458

100.0
%
$
5,727,278

100.0
%

S-32

The following shows the composition of our investment portfolio by industry as of September 30, 2018 and June 30, 2018:
 
September 30, 2018
 
June 30, 2018
Industry
Cost
% of Portfolio
Fair Value
% of Portfolio
 
Cost
% of Portfolio
Fair Value
% of Portfolio
Aerospace & Defense
$
71,961

1.2
%
$
87,375

1.5
%
 
$
69,837

1.2
%
$
82,278

1.4
%
Auto Components
25,388

0.4
%
24,851

0.4
%
 
12,681

0.2
%
12,887

0.2
%
Building Products
19,824

0.3
%
20,000

0.3
%
 
9,905

0.2
%
10,000

0.2
%
Capital Markets
26,531

0.4
%
26,675

0.4
%
 
19,799

0.3
%
20,000

0.3
%
Commercial Services & Supplies
383,195

6.3
%
325,949

5.5
%
 
386,187

6.6
%
330,024

5.8
%
Communications Equipment
47,872

0.8
%
48,000

0.8
%
 
39,860

0.7
%
40,000

0.7
%
Construction & Engineering
69,515

1.2
%
81,943

1.4
%
 
64,415

1.1
%
50,797

0.9
%
Consumer Finance
474,512

7.9
%
570,417

9.6
%
 
485,381

8.3
%
586,978

10.2
%
Distributors
301,282

5.0
%
224,861

3.8
%
 
470,750

8.1
%
402,465

7.0
%
Diversified Consumer Services
156,555

2.6
%
143,942

2.4
%
 
173,695

3.0
%
163,152

2.8
%
Electronic Equipment, Instruments & Components
54,667

0.9
%
62,555

1.1
%
 
54,805

0.9
%
62,964

1.1
%
Energy Equipment & Services
259,065

4.3
%
192,318

3.2
%
 
257,371

4.4
%
170,574

3.0
%
Entertainment
46,822

0.8
%
46,941

0.8
%
 
—

—
%
—

—
%
Equity Real Estate Investment Trusts (REITs)
510,063

8.4
%
839,637

14.1
%
 
499,858

8.6
%
811,915

14.2
%
Food Products
9,888

0.2
%
9,888

0.2
%
 
9,884

0.2
%
9,886

0.2
%
Health Care Equipment & Supplies
42,845

0.7
%
42,845

0.7
%
 
43,279

0.7
%
43,279

0.8
%
Health Care Providers & Services
441,972

7.3
%
423,853

7.1
%
 
421,198

7.2
%
404,130

7.1
%
Hotels & Personal Products
—

—
%
—

—
%
 
24,938

0.4
%
24,938

0.4
%
Hotels, Restaurants & Leisure
37,108

0.6
%
37,108

0.6
%
 
37,295

0.6
%
37,295

0.6
%
Household Products
24,875

0.4
%
24,875

0.4
%
 
—

—
%
—

—
%
Household Durables
39,486

0.7
%
37,653

0.6
%
 
42,539

0.7
%
41,623

0.7
%
Insurance
2,987

—
%
2,987

0.1
%
 
2,986

0.1
%
2,986

0.1
%
Interactive Media & Services
48,718

0.8
%
48,718

0.8
%
 
—

—
%
—

—
%
Internet & Direct Marketing Retail
—

—
%
—

—
%
 
39,813

0.7
%
39,813

0.7
%
Internet Software & Services
—

—
%
—

—
%
 
229,717

4.0
%
229,791

4.0
%
IT Services
294,918

4.9
%
295,294

5.0
%
 
182,183

3.1
%
182,578

3.2
%
Leisure Products
43,463

0.7
%
43,552

0.7
%
 
45,531

0.8
%
45,626

0.8
%
Machinery
35,488

0.6
%
24,782

0.4
%
 
35,488

0.6
%
31,886

0.6
%
Media
158,762

2.6
%
157,653

2.7
%
 
143,063

2.5
%
140,365

2.4
%
Online Lending
318,909

5.2
%
232,326

4.0
%
 
327,159

5.6
%
243,078

4.2
%
Paper & Forest Products
11,337

0.2
%
11,337

0.2
%
 
11,328

0.2
%
11,226

0.2
%
Personal Products
228,325

3.8
%
164,158

2.8
%
 
228,575

3.9
%
165,020

2.9
%
Pharmaceuticals
11,882

0.2
%
12,000

0.2
%
 
11,882

0.2
%
12,000

0.2
%
Professional Services
161,174

2.7
%
165,608

2.8
%
 
74,272

1.3
%
76,991

1.3
%
Real Estate Management & Development
41,580

0.7
%
41,580

0.7
%
 
41,860

0.7
%
41,860

0.7
%
Software
69,462

1.2
%
70,259

1.2
%
 
66,435

1.1
%
67,265

1.2
%
Technology Hardware, Storage & Peripherals
12,388

0.2
%
12,500

0.2
%
 
12,384

0.2
%
12,500

0.2
%
Textiles, Apparel & Luxury Goods
319,074

5.3
%
329,288

5.5
%
 
46,429

0.8
%
60,220

1.1
%
Tobacco
14,399

0.2
%
14,399

0.2
%
 
14,392

0.3
%
14,392

0.3
%
Trading Companies & Distributors
63,700

1.1
%
45,129

0.8
%
 
63,863

1.1
%
56,199

1.0
%
Transportation Infrastructure
27,515

0.5
%
28,104

0.5
%
 
27,494

0.5
%
28,104

0.5
%
Subtotal
$
4,907,507

81.3
%
$
4,971,360

83.7
%
 
$
4,728,531

81.1
%
$
4,767,085

83.2
%
Structured Finance(1)
$
1,132,307

18.7
%
$
965,323

16.3
%
 
$
1,102,927

18.9
%
$
960,194

16.8
%
Total Investments
$
6,039,814

100.0
%
$
5,936,683

100.0
%
 
$
5,831,458

100.0
%
$
5,727,279

100.0
%
(1) Our CLO investments do not have industry concentrations and as such have been separated in the table above.

S-33

Portfolio Investment Activity
During the three months ended September 30, 2018, we acquired $44,927 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $200,390, and recorded PIK interest of $9,325, resulting in gross investment originations of $254,642. The more significant of these transactions are briefly described below.
During the period from July 13, 2018 to July 16, 2018, we made follow-on first lien term loan investments of $105,000 in Town & Country Holdings, Inc., to support acquisitions. The first lien term loan bears interest at the greater of 10.00% or LIBOR plus 8.50% and has a final maturity of January 26, 2023.
On August 1, 2018, we purchased from a third party $14,000 of First Lien Senior Secured Term Loan A/B issued by InterDent, Inc. at par. On September 19, 2018, we made a $5,000 Senior Secured Term Loan D follow-on investment. The First Lien Senior Secured Term Loan A/B bears interest at the greater of 1.00% or LIBOR plus 0.25% and has a final maturity of September 5, 2020. The Senior Secured Term Loan D bears interest at 1.00% PIK interest and has a final maturity of September 5, 2020.
On August 6, 2018, we made a $17,500 senior secured investment in Halyard MD OPCO, LLC, a healthcare IT and advertising technology business that enables targeted advertising campaigns to healthcare providers and patients. Our investment is comprised of a $12,000 first lien term loan, a $2,000 unfunded revolving credit facility, and a $3,500 unfunded delayed draw investment. The first lien term loan bears interest at the greater of 10.00% or LIBOR plus 8.00% and has a final maturity of August 6, 2023. The unfunded revolving credit facility and delayed draw bear interest at the greater of 10.00% or LIBOR plus 8.00% and has a final maturity of August 6, 2019.
During the period from July 19, 2018 through September 20, 2018, we provided $10,206 of equity financing to NPRC, which was used to acquire additional real estate properties.
During the period from August 3, 2018 to September 6, 2018, we made follow-on second lien term loan investments of $10,000 in Janus International Group, LLC. The senior lien term loan bears interest at the greater of 8.75% or LIBOR plus 7.75% and has a final maturity of February 12, 2026.
During the period from August 14, 2018 to September 24, 2018, we made follow-on second lien term loan investments of $13,000 in K&N Parent, Inc. The second lien term loan bears interest at the greater of 9.75% or LIBOR plus 8.75% and has a final maturity of October 21, 2024.
On September 14, 2018, we made a $10,100 Senior Secured Term Loan A and a $10,100 Senior Secured Term Loan B debt investment in Centerfield Media Holding Company, a provider of customer acquisition and conversion services, to fund an acquisition.The Senior Secured Term Loan A bears interest at the greater of 9.00% or LIBOR plus 7.00% and has a final maturity of January 17, 2022. The Senior Secured Term Loan B bears interest at the greater of 14.50% or LIBOR plus 12.50% and has a final maturity of January 17, 2022.
During the three months ended September 30, 2018, we received full repayments on two investments and received several partial prepayments and amortization payments totaling $55,166, which resulted in net realized gains totaling $1,041. The more significant of these transactions are briefly described below.
On September 7, 2018, CURO Financial Technologies Corp. fully repaid the $10,896 Senior Secured Note receivable to us.

S-34

The following table provides a summary of our investment activity for each quarter within the three years ending September 30, 2018:
Quarter Ended
 
Acquisitions(1)
 
Dispositions(2)
September 30, 2016
 
347,150

 
114,331

December 31, 2016
 
469,537

 
644,995

March 31, 2017
 
449,607

 
302,513

June 30, 2017
 
223,176

 
352,043

September 30, 2017
 
222,151

 
310,894

December 31, 2017
 
738,737

 
1,041,126

March 31, 2018
 
429,928

 
116,978

June 30, 2018
 
339,841

 
362,287

September 30, 2018
 
254,642

 
55,166

(1)
Includes investments in new portfolio companies, follow-on investments in existing portfolio companies, refinancings and PIK interest.
(2)
Includes sales, scheduled principal payments, prepayments and refinancings.
Investment Valuation
In determining the range of values for debt instruments, except CLOs and debt investments in controlling portfolio companies, management and the independent valuation firm estimated corporate and security credit ratings and identified corresponding yields to maturity for each loan from relevant market data. A discounted cash flow technique was then prepared using the appropriate yield to maturity as the discount rate, to determine a range of values. In determining the range of values for debt investments of controlled companies and equity investments, the enterprise value was determined by applying earnings before interest, income tax, depreciation and amortization (“EBITDA”) multiples, the discounted cash flow technique, net income and/or book value multiples for similar guideline public companies and/or similar recent investment transactions. For stressed debt and equity investments, a liquidation analysis was prepared.
In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.
With respect to our online consumer and SME lending initiative, we invest primarily in marketplace loans through marketplace lending platforms.  We do not conduct loan origination activities ourselves. Therefore, our ability to purchase consumer and SME loans, and our ability to grow our portfolio of consumer and SME loans, are directly influenced by the business performance and competitiveness of the marketplace loan origination business of the marketplace lending platforms from which we purchase consumer and SME loans. In addition, our ability to analyze the risk-return profile of consumer and SME loans is significantly dependent on the marketplace platforms’ ability to effectively evaluate a borrower's credit profile and likelihood of default. If we are unable to effectively evaluate borrowers' credit profiles or the credit decisioning and scoring models implemented by each platform, we may incur unanticipated losses which could adversely impact our operating results.
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 $5,936,683.
Our portfolio companies are generally lower middle market companies, outside of the financial sector, with less than $100,000 of annual EBITDA. We believe our investment portfolio has experienced less volatility than others because we believe there are more buy and hold investors who own these less liquid investments.

S-35

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. Several of our controlled companies discussed below experienced such changes and we recorded corresponding fluctuations in valuations during the three months ended September 30, 2018.
CP Energy Services Inc.
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.
The fair value of our investment in CP Energy increased to $142,640 as of September 30, 2018, reflecting a discount of $36,836 to its amortized cost, compared to a discount of $56,215 to its amortized cost as of June 30, 2018. The increase in fair value was driven by an improvement in operating performance driven by revenue growth and increased profitability.
Credit Central Loan Company, LLC
Prospect owns 100% of the equity of Credit Central Holdings of Delaware, LLC (“Credit Central Delaware”), a Consolidated Holding Company. Credit Central Delaware owns 98.26% of Credit Central Loan Company, LLC (f/k/a Credit Central Holdings, LLC (“Credit Central”)) as of September 30, 2018 and June 30, 2018, with entities owned by Credit Central management owning the remaining 1.74% of the equity. Credit Central is a branch-based provider of installment loans.
The fair value of our investment in Credit Central decreased to $70,588, representing a premium of 14% to its amortized cost basis, as of September 30, 2018, from $76,677, representing a premium of 25% to its amortized cost basis, as of June 30, 2018. The decrease in fair value was driven by a decline in comparable public company trading multiples and in Credit Central’s financial performance.
National Property REIT Corp.
NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. NPRC is held for purposes of investing, operating, financing, leasing, managing and selling a portfolio of real estate assets and engages in any and all other activities that may be necessary, incidental, or convenient to perform the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, and multi-family properties. NPRC may acquire real estate assets directly or through joint ventures by making a majority equity investment in a property-owning entity. Additionally, through its wholly-owned subsidiaries, NPRC invests in online consumer loans. Effective May 23, 2016, APRC and UPRC merged with and into NPRC, to consolidate all of our real estate holdings, with NPRC as the surviving entity. As of September 30, 2018, we own 100% of the fully-diluted common equity of NPRC.
During the three months ended September 30, 2018, we provided $10,206 of equity financing to NPRC to fund capital expenditures for existing properties. In addition, we received partial repayments of $8,221of our loans previously outstanding with NPRC and its wholly owned subsidiary.
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 $1 to $50, with fixed terms ranging from 24 to 84 months. As of September 30, 2018, the outstanding investment in online consumer loans by certain of NPRC’s wholly-owned subsidiaries was comprised of 52,559 individual loans and residual interest in four securitizations, and had an aggregate fair value of $308,267. The average outstanding individual loan balance is approximately $5 and the loans mature on dates ranging from October 1, 2018 to April 19, 2025 with a weighted-average outstanding term of 26 months as of September 30, 2018. Fixed interest rates range from 4.0% to 36.0% with a weighted-average current interest rate of 23.9%. As of September 30, 2018, our investment in NPRC and its wholly-owned subsidiaries relating to online consumer lending had a fair value of $232,326.
As of September 30, 2018, based on outstanding principal balance, 7.1% of the portfolio was invested in super prime loans (borrowers with a Fair Isaac Corporation (“FICO”) score, of 720 or greater), 19.9% of the portfolio in prime loans (borrowers with a FICO score of 660 to 719) and 73.0% of the portfolio in near prime loans (borrowers with a FICO score of 580 to 659).

S-36

Loan Type
 
Outstanding Principal Balance
 
Fair Value
 
Interest Rate Range
 
Weighted Average Interest Rate*
Super Prime
 
$
18,093

 
$
17,495

 
4.0% - 26.0%
 
12.5%
Prime
 
50,792

 
47,786

 
4.0% - 36.0%
 
17.1%
Near Prime
 
186,177

 
171,273

 
6.0% - 36.0%
 
26.9%
*Weighted by outstanding principal balance of the online consumer loans.

As of September 30, 2018, our investment in NPRC and its wholly-owned subsidiaries had an amortized cost of $828,972 and a fair value of $1,071,963, including our investment in online consumer lending as discussed above. The fair value of $839,637 related to NPRC’s real estate portfolio was comprised of forty-five multi-families properties, twelve self-storage units, eight student housing 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 September 30, 2018.
No.
 
Property Name
 
City
 
Acquisition
Date
 
Purchase
Price
 
Mortgage
Outstanding
1
 
Filet of Chicken
 
Forest Park, GA
 
10/24/2012
 
$
7,400

 
$
—

2
 
5100 Live Oaks Blvd, LLC
 
Tampa, FL
 
1/17/2013
 
63,400

 
46,292

3
 
Lofton Place, LLC
 
Tampa, FL
 
4/30/2013
 
26,000

 
20,216

4
 
Arlington Park Marietta, LLC
 
Marietta, GA
 
5/8/2013
 
14,850

 
9,624

5
 
NPRC Carroll Resort, LLC
 
Pembroke Pines, FL
 
6/24/2013
 
225,000

 
175,108

6
 
Cordova Regency, LLC
 
Pensacola, FL
 
11/15/2013
 
13,750

 
11,375

7
 
Crestview at Oakleigh, LLC
 
Pensacola, FL
 
11/15/2013
 
17,500

 
13,845

8
 
Inverness Lakes, LLC
 
Mobile, AL
 
11/15/2013
 
29,600

 
24,700

9
 
Kings Mill Pensacola, LLC
 
Pensacola, FL
 
11/15/2013
 
20,750

 
17,550

10
 
Plantations at Pine Lake, LLC
 
Tallahassee, FL
 
11/15/2013
 
18,000

 
14,092

11
 
Verandas at Rocky Ridge, LLC
 
Birmingham, AL
 
11/15/2013
 
15,600

 
10,205

12
 
City West Apartments II, LLC
 
Orlando, FL
 
11/19/2013
 
23,562

 
22,997

13
 
Vinings Corner II, LLC
 
Smyrna, GA
 
11/19/2013
 
35,691

 
32,525

14
 
Atlanta Eastwood Village LLC
 
Stockbridge, GA
 
12/12/2013
 
25,957

 
22,455

15
 
Atlanta Monterey Village LLC
 
Jonesboro, GA
 
12/12/2013
 
11,501

 
10,925

16
 
Atlanta Hidden Creek LLC
 
Morrow, GA
 
12/12/2013
 
5,098

 
4,677

17
 
Atlanta Meadow Springs LLC
 
College Park, GA
 
12/12/2013
 
13,116

 
12,862

18
 
Atlanta Meadow View LLC
 
College Park, GA
 
12/12/2013
 
14,354

 
12,916

19
 
Atlanta Peachtree Landing LLC
 
Fairburn, GA
 
12/12/2013
 
17,224

 
15,300

20
 
NPH Carroll Bartram Park, LLC
 
Jacksonville, FL
 
12/31/2013
 
38,000

 
27,035

21
 
Crestview at Cordova, LLC
 
Pensacola, FL
 
1/17/2014
 
8,500

 
7,755

22
 
NPH Carroll Atlantic Beach, LLC
 
Atlantic Beach, FL
 
1/31/2014
 
13,025

 
8,401

23
 
Taco Bell, OK
 
Yukon, OK
 
6/4/2014
 
1,719

 
—

24
 
Taco Bell, MO
 
Marshall, MO
 
6/4/2014
 
1,405

 
—

25
 
23 Mile Road Self Storage, LLC
 
Chesterfield, MI
 
8/19/2014
 
5,804

 
4,350

26
 
36th Street Self Storage, LLC
 
Wyoming, MI
 
8/19/2014
 
4,800

 
3,600

27
 
Ball Avenue Self Storage, LLC
 
Grand Rapids, MI
 
8/19/2014
 
7,281

 
5,460

28
 
Ford Road Self Storage, LLC
 
Westland, MI
 
8/29/2014
 
4,642

 
3,480

29
 
Ann Arbor Kalamazoo Self Storage, LLC
 
Ann Arbor, MI
 
8/29/2014
 
4,458

 
3,345

30
 
Ann Arbor Kalamazoo Self Storage, LLC
 
Ann Arbor, MI
 
8/29/2014
 
8,927

 
6,695

31
 
Ann Arbor Kalamazoo Self Storage, LLC
 
Kalamazoo, MI
 
8/29/2014
 
2,363

 
1,775

32
 
Canterbury Green Apartments Holdings LLC
 
Fort Wayne, IN
 
9/29/2014
 
85,500

 
86,635

33
 
Abbie Lakes OH Partners, LLC
 
Canal Winchester, OH
 
9/30/2014
 
12,600

 
14,236

34
 
Kengary Way OH Partners, LLC
 
Reynoldsburg, OH
 
9/30/2014
 
11,500

 
15,942

35
 
Lakeview Trail OH Partners, LLC
 
Canal Winchester, OH
 
9/30/2014
 
26,500

 
28,986

36
 
Lakepoint OH Partners, LLC
 
Pickerington, OH
 
9/30/2014
 
11,000

 
14,480

37
 
Sunbury OH Partners, LLC
 
Columbus, OH
 
9/30/2014
 
13,000

 
15,363

38
 
Heatherbridge OH Partners, LLC
 
Blacklick, OH
 
9/30/2014
 
18,416

 
18,328


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No.
 
Property Name
 
City
 
Acquisition
Date
 
Purchase
Price
 
Mortgage
Outstanding
39
 
Jefferson Chase OH Partners, LLC
 
Blacklick, OH
 
9/30/2014
 
$
13,551

 
$
19,500

40
 
Goldenstrand OH Partners, LLC
 
Hilliard, OH
 
10/29/2014
 
7,810

 
11,900

41
 
Jolly Road Self Storage, LLC
 
Okemos, MI
 
1/16/2015
 
7,492

 
5,620

42
 
Eaton Rapids Road Self Storage, LLC
 
Lansing West, MI
 
1/16/2015
 
1,741

 
1,305

43
 
Haggerty Road Self Storage, LLC
 
Novi, MI
 
1/16/2015
 
6,700

 
5,025

44
 
Waldon Road Self Storage, LLC
 
Lake Orion, MI
 
1/16/2015
 
6,965

 
5,225

45
 
Tyler Road Self Storage, LLC
 
Ypsilanti, MI
 
1/16/2015
 
3,507

 
2,630

46
 
SSIL I, LLC
 
Aurora, IL
 
11/5/2015
 
34,500

 
26,450

47
 
Vesper Tuscaloosa, LLC
 
Tuscaloosa, AL
 
9/28/2016
 
54,500

 
43,115

48
 
Vesper Iowa City, LLC
 
Iowa City, IA
 
9/28/2016
 
32,750

 
24,825

49
 
Vesper Corpus Christi, LLC
 
Corpus Christi, TX
 
9/28/2016
 
14,250

 
10,800

50
 
Vesper Campus Quarters, LLC
 
Corpus Christi, TX
 
9/28/2016
 
18,350

 
14,175

51
 
Vesper College Station, LLC
 
College Station, TX
 
9/28/2016
 
41,500

 
32,057

52
 
Vesper Kennesaw, LLC
 
Kennesaw, GA
 
9/28/2016
 
57,900

 
48,658

53
 
Vesper Statesboro, LLC
 
Statesboro, GA
 
9/28/2016
 
7,500

 
6,087

54
 
Vesper Manhattan KS, LLC
 
Manhattan, KS
 
9/28/2016
 
23,250

 
15,371

55
 
JSIP Union Place, LLC
 
Franklin, MA
 
12/7/2016
 
64,750

 
51,800

56
 
9220 Old Lantern Way, LLC
 
Laurel, MD
 
1/30/2017
 
187,250

 
153,580

57
 
7915 Baymeadows Circle Owner, LLC
 
Jacksonville, FL
 
10/31/2017
 
95,700

 
76,560

58
 
8025 Baymeadows Circle Owner, LLC
 
Jacksonville, FL
 
10/31/2017
 
15,300

 
12,240

59
 
23275 Riverside Drive Owner, LLC
 
Southfield, MI
 
11/8/2017
 
52,000

 
44,044

60
 
23741 Pond Road Owner, LLC
 
Southfield, MI
 
11/8/2017
 
16,500

 
14,185

61
 
150 Steeplechase Way Owner, LLC
 
Largo, MD
 
1/10/2018
 
44,500

 
36,668

62
 
Laurel Pointe Holdings, LLC
 
Forest Park, GA
 
5/9/2018
 
33,005

 
26,400

63
 
Bradford Ridge Holdings, LLC
 
Forest Park, GA
 
5/9/2018
 
12,500

 
10,000

64
 
Olentangy Commons Owner LLC
 
Columbus, OH
 
6/1/2018
 
113,000

 
92,876

65
 
Villages of Wildwood Holdings LLC
 
Fairfield, OH
 
7/20/2018
 
46,500

 
39,525

66
 
Falling Creek Holdings LLC
 
Richmond, VA
 
8/8/2018
 
25,000

 
19,335

67
 
Crown Pointe Passthrough LLC
 
Danbury, CT
 
8/30/2018
 
108,500

 
89,400

68
 
Ashwood Ridge Holdings LLC
 
Jonesboro, GA
 
9/21/2018
 
9,600

 
7,300

 
 
 
 
 
 
 
 
$
2,034,164

 
$
1,690,186

The fair value of our investment increased in NPRC to $1,071,963 as of September 30, 2018, a premium of $242,991 from its amortized cost, compared to the $227,989 premium recorded at June 30, 2018. This increase is primarily attributable to increases in property values, driven by an increase in net operating income and a decline in capitalization rates.
R-V Industries, Inc.
Prospect owns 88.27% of the fully-diluted equity of R-V Industries, Inc. (“R-V”), with R-V management owning the remaining 11.73% of the equity. R-V is an industrial engineering and metal fabrication company specializing in designing, building, and installing industrial process equipment for customers throughout the U.S. and worldwide.
The fair value of our investment in R-V decreased to $24,782, representing a discount of 30% to its amortized cost basis, as of September 30, 2018, from $31,887, representing a premium of 10% to its amortized cost basis, as of June 30, 2018. The decrease in fair value was driven by a decline in operating performance.
Valley Electric Company, Inc.

Prospect owns 100% of the common stock of Valley Electric Holdings I, Inc. (“Valley Holdings I”), a Consolidated Holding
Company. Valley Holdings I owns 100% of Valley Electric Holdings II, Inc. (“Valley Holdings II”), a Consolidated Holding
Company. Valley Holdings II owns 94.99% of Valley Electric Company, Inc. (“Valley Electric”), with Valley Electric management owning the remaining 5.01% of the equity. Valley Electric owns 100% of the equity of VE Company, Inc., which owns 100% of the equity of Valley Electric Co. of Mt. Vernon, Inc. (“Valley”), a leading provider of specialty electrical services in the state of Washington and among the top electrical contractors in the United States. Due to increased demand for specialty electrical services

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and higher project margins, the fair value of our investment in Valley Electric increased to $81,943 as of September 30, 2018, a premium of $12,428 from its amortized cost, compared to the $13,618 unrealized depreciation recorded at June 30, 2018.

Our controlled investments, other than those discussed above, are valued at $60,672 below cost and did not experience significant changes in operating performance or value. Overall, combined with those portfolio companies discussed above, our controlled investments at September 30, 2018 are valued at $155,717 above their amortized cost.
We hold four affiliate investments at September 30, 2018, which are valued at $79,242 below their amortized cost. This discount is primarily driven by our affiliate investment in USC, which is valued at a discount to amortized cost of $76,421.

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. However, as of September 30, 2018, one of our non-control/ non-affiliate investments, Universal Turbine Parts, LLC (“UTP”) is valued at discount to amortized cost of $18,571. As of September 30, 2018, our CLO investment portfolio is valued at a $166,984 discount to amortized cost. Excluding UTP and the CLO investment portfolio, non-control/non-affiliate investments at September 30, 2018 are valued at $5,949 above their amortized cost and did not experience significant changes in operating performance or value.
Capitalization
Our investment activities are capital intensive and the availability and cost of capital is a critical component of our business. We capitalize our business with a combination of debt and equity. Our debt as of September 30, 2018 consists of: a Revolving Credit Facility availing us of the ability to borrow debt subject to borrowing base determinations; Convertible Notes which we issued in December 2012, April 2014 and April 2017 (with a follow-on issuance in May 2018); Public Notes which we issued in March 2013, December 2015 (and from time to time through our 2024 Notes Follow-on Program), June 2018 (and from time to time through our 2028 Notes Follow-on Program), and September 2018; and Prospect Capital InterNotes® which we issue from time to time. Our equity capital is comprised entirely of common equity.
The following table shows our outstanding debt as of September 30, 2018:
 
Principal Outstanding
 
Unamortized Discount & Debt Issuance Costs
 
Net Carrying Value
 
Fair Value
(1)
 
Effective Interest Rate
 
Revolving Credit Facility(2)
$
404,000

 
$
8,202

 
$
404,000

(3
)
$
404,000

 
1ML+2.20%

(6
)
 
 
 
 
 
 
 
 
 
 
 
2019 Notes
101,647

 
183

 
101,464

 
102,282

(4
)
6.51
%
(7
)
2020 Notes
392,000

 
3,705

 
388,295

 
395,579

(4
)
5.38
%
(7
)
2022 Notes
328,500

 
8,121

 
320,379

 
325,458

(4
)
5.71
%
(7
)
Convertible Notes
822,147

 
12,009

 
810,138

 
823,319

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023 Notes
320,000

 
3,874

 
316,126

 
325,837

(4
)
6.09
%
(7
)
2024 Notes
214,847

 
4,898

 
209,949

 
215,105

(4
)
6.76
%
(7
)
2028 Notes
65,078

 
2,132

 
62,946

 
64,454

(4
)
6.74
%
(7
)
6.375% 2024 Notes
100,000

 
1,315

 
98,685

 
99,460

(4
)
6.63
%
(7
)
Public Notes
699,925

 
12,219

 
687,706

 
704,856

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prospect Capital InterNotes®
768,887

 
11,875

 
757,012

 
790,235

(5
)
5.81
%
(8
)
Total
$
2,694,959

 
$
44,305

 
$
2,658,856

 
$
2,722,410

 
 
 
(1)
As permitted by ASC 825-10-25, we have not elected to value our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® at fair value. The fair value of these debt obligations are categorized as Level 2 under ASC 820 as of September 30, 2018.
(2)
The maximum draw amount of the Revolving Credit facility as of September 30, 2018 is $795,000.

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(3)
Net Carrying Value excludes deferred financing costs associated with the Revolving Credit Facility. See Critical Accounting Policies and Estimates for accounting policy details.
(4)
We use available market quotes to estimate the fair value of the Convertible Notes and Public Notes.
(5)
The fair value of Prospect Capital InterNotes® is estimated by discounting remaining payments using current Treasury rates plus spread based on observable market inputs.
(6)
Represents the rate on drawn down and outstanding balances. Deferred debt issuance costs are amortized on a straight-line method over the stated life of the obligation.
(7)
The effective interest rate is equal to the effect of the stated interest, the accretion of original issue discount and amortization of debt issuance costs. For the 2024 Notes and the 2028 Notes, the rate presented is a combined effective interest rate of their respective original Note issuances and Note Follow-on Programs..
(8)
For the Prospect Capital InterNotes®, the rate presented is the weighted average effective interest rate. Interest expense and deferred debt issuance costs, which are amortized on a straight-line method over the stated life of the obligation which approximates level yield, are weighted against the average year-to-date principal balance.
The following table shows the contractual maturities of our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of September 30, 2018:
 
Payments Due by Period
 
Total
 
Less than 1 Year
 
1 – 3 Years
 
3 – 5 Years
 
After 5 Years
Revolving Credit Facility
$
404,000

 
$
—

 
$
—

 
$
—

 
$
404,000

Convertible Notes
822,147

 
101,647

 
392,000

 
328,500

 
—

Public Notes
699,925

 
—

 
—

 
320,000

 
379,925

Prospect Capital InterNotes®
768,887

 
—

 
285,650

 
226,047

 
257,190

Total Contractual Obligations
$
2,694,959

 
$
101,647

 
$
677,650

 
$
874,547

 
$
1,041,115

The following table shows the contractual maturities of our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of June 30, 2018:
 
Payments Due by Period
 
Total
 
Less than 1 Year
 
1 – 3 Years
 
3 – 5 Years
 
After 5 Years
Revolving Credit Facility
$
37,000

 
$
—

 
$
37,000

 
$
—

 
$
—

Convertible Notes
822,147

 
101,647

 
392,000

 
328,500

 
—

Public Notes
727,817

 
—

 
153,536

 
320,000

 
254,281

Prospect Capital InterNotes®
760,924

 
—

 
276,484

 
246,525

 
237,915

Total Contractual Obligations
$
2,347,888

 
$
101,647

 
$
859,020

 
$
895,025

 
$
492,196

Historically, we have funded a portion of our cash needs through borrowings from banks, issuances of senior securities, including secured, unsecured and convertible debt securities, or issuances of common equity. For flexibility, we maintain a universal shelf registration statement that allows for the public offering and sale of our debt securities, common stock, preferred stock, subscription rights, and warrants and units to purchase such securities in an amount up to $5,000,000 less issuances to date. As of September 30, 2018, we can issue up to $4,221,013 of additional debt and equity securities in the public market under this shelf registration. We may from time to time issue securities pursuant to the shelf registration statement or otherwise pursuant to private offerings. The issuance of debt or equity securities will depend on future market conditions, funding needs and other factors and there can be no assurance that any such issuance will occur or be successful.
Each of our Convertible Notes, Public Notes and Prospect Capital InterNotes® (collectively, our “Unsecured Notes”) are our general, unsecured obligations and rank equal in right of payment with all of our existing and future unsecured indebtedness and will be senior in right of payment to any of our subordinated indebtedness that may be issued in the future. The Unsecured Notes are effectively subordinated to our existing secured indebtedness, such as our credit facility, and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of any of our subsidiaries.

S-40

Revolving Credit Facility
On August 29, 2014, we renegotiated our previous credit facility and closed an expanded five and a half year revolving credit facility (the “2014 Facility”). The lenders had extended commitments of $885,000 under the 2014 Facility as of September 30, 2018. The 2014 Facility included an accordion feature which allowed commitments to be increased up to $1,500,000 in the aggregate. Interest on borrowings under the 2014 Facility is one-month LIBOR plus 225 basis points. Additionally, the lenders charged a fee on the unused portion of the 2014 Facility equal to either 50 basis points if at least 35% of the credit facility was drawn or 100 basis points otherwise.
On August 1, 2018, we renegotiated the 2014 Facility and closed an expanded five and a half year revolving credit facility (the “2018 Facility” and collectively with the 2014 Facility, the “Revolving Credit Facility”). The lenders have extended commitments of $795,000 under the 2018 Facility as of September 30, 2018.The 2018 Facility includes an accordion feature which allows commitments to be increased up to $1,500,000 in the aggregate. The 2018 Facility matures on March 27, 2024. It includes a revolving period that extends through March 27, 2022, followed by an additional two-year amortization period, with distributions allowed to Prospect after the completion of the revolving period. During such two-year amortization period, all principal payments on the pledged assets will be applied to reduce the balance. At the end of the two-year amortization period, the remaining balance will become due, if required by the lenders.

The 2018 Facility contains restrictions pertaining to the geographic and industry concentrations of funded loans, maximum size of funded loans, interest rate payment frequency of funded loans, maturity dates of funded loans and minimum equity requirements. The 2018 Facility also contains certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, violation of which could result in the early termination of the 2018 Facility. The 2018 Facility also requires the maintenance of a minimum liquidity requirement. As of September 30, 2018, we were in compliance with the applicable covenants.
Interest on borrowings under the 2018 Facility is one-month LIBOR plus 220 basis points. Additionally, the lenders charge a fee on the unused portion of the credit facility equal to either 50 basis points if more than 60% of the credit facility is drawn, or 100 basis points if more than 35% and an amount less than or equal to 60% of the credit facility is drawn, or 150 basis points if an amount less than or equal to 35% of the credit facility is drawn. The 2018 Facility requires us to pledge assets as collateral in order to borrow under the credit facility.
As of September 30, 2018 and June 30, 2018, we had $336,167 and $547,205, respectively, available to us for borrowing under the Revolving Credit Facility, with $404,000 and $37,000 outstanding as of September 30, 2018 and June 30, 2018, respectively. As additional eligible investments are transferred to PCF and pledged under the Revolving Credit Facility, PCF will generate additional availability up to the current commitment amount of $795,000. As of September 30, 2018, the investments, including cash, used as collateral for the Revolving Credit Facility had an aggregate fair value of $1,513,897, which represents 25.0% of our total investments, including cash. These assets are held and owned by PCF, a bankruptcy remote special purpose entity, and as such, these investments are not available to our general creditors. The release of any assets from PCF requires the approval of the facility agent.
In connection with the origination and amendments of the Revolving Credit Facility, we incurred $8,431 of new fees and $1,473 were carried over for continuing participants from the previous facility, all of which are being amortized over the term of the facility in accordance with ASC 470-50. As of September 30, 2018, $8,202 remains to be amortized and is reflected as deferred financing costs on the Consolidated Statements of Assets and Liabilities. As of September 30, 2018, $325 of fees were expensed relating to credit providers in the 2014 Facility who did not commit to the 2018 Facility.
During the three months ended September 30, 2018 and September 30, 2017, we recorded $4,365 and $2,954, respectively, of interest costs, unused fees and amortization of financing costs on the Revolving Credit Facility as interest expense.
Convertible Notes
On April 16, 2012, we issued $130,000 aggregate principal amount of convertible notes that matured on October 15, 2017 (the “2017 Notes”). The 2017 Notes bore interest at a rate of 5.375% per year, payable semi-annually on April 15 and October 15 of each year, beginning October 15, 2012. Total proceeds from the issuance of the 2017 Notes, net of underwriting discounts and offering costs, were $126,035. On March 28, 2016, we repurchased $500 aggregate principal amount of the 2017 Notes at a price of 98.25, including commissions. The transaction resulted in our recognizing a $9 gain for the period ended March 31, 2016. On April 6, 2017, we repurchased $78,766 aggregate principal amount of the 2017 Notes at a price of 102.0, including commissions. The transaction resulted in our recognizing a $1,786 loss during the three months ended June 30, 2017. On October 15, 2017, we repaid the outstanding principal amount of $50,734 of the 2017 Notes, plus interest. No gain or loss was realized on the transaction.

S-41

On August 14, 2012, we issued $200,000 aggregate principal amount of convertible notes that matured on March 15, 2018 (the “2018 Notes”). The 2018 Notes bore interest at a rate of 5.75% per year, payable semi-annually on March 15 and September 15 of each year, beginning March 15, 2013. Total proceeds from the issuance of the 2018 Notes, net of underwriting discounts and offering costs, were $193,600. On April 6, 2017, we repurchased $114,581 aggregate principal amount of the 2018 Notes at a price of 103.5, including commissions. The transaction resulted in our recognizing a $4,700 loss during the three months ended June 30, 2017. On March 15, 2018, we repaid the outstanding principal amount of $85,419 of the 2018 Notes, plus interest. No gain or loss was realized on the transaction.
On December 21, 2012, we issued $200,000 aggregate principal amount of convertible notes that mature on January 15, 2019 (the “2019 Notes”), unless previously converted or repurchased in accordance with their terms. The 2019 Notes bear interest at a rate of 5.875% per year, payable semi-annually on January 15 and July 15 of each year, beginning July 15, 2013. Total proceeds from the issuance of the 2019 Notes, net of underwriting discounts and offering costs, were $193,600. On May 30, 2018, we repurchased $98,353 aggregate principal amount of the 2019 Notes at a price of 102.0, including commissions. The transaction resulted in our recognizing a $2,383 loss during the three months ended June 30, 2018. As of September 30, 2018, the outstanding aggregate principal amount of the 2019 Notes is $101,647.
On April 11, 2014, we issued $400,000 aggregate principal amount of convertible notes that mature on April 15, 2020 (the “2020 Notes”), unless previously converted or repurchased in accordance with their terms. The 2020 Notes bear interest at a rate of 4.75% per year, payable semi-annually on April 15 and October 15 each year, beginning October 15, 2014. Total proceeds from the issuance of the 2020 Notes, net of underwriting discounts and offering costs, were $387,500. On January 30, 2015, we repurchased $8,000 aggregate principal amount of the 2020 Notes at a price of 93.0, including commissions. As a result of this transaction, we recorded a gain of $332, in the amount of the difference between the reacquisition price and the net carrying amount of the notes, net of the proportionate amount of unamortized debt issuance costs. As of September 30, 2018, the outstanding aggregate principal amount of the 2020 Notes is $392,000.
On April 11, 2017, we issued $225,000 aggregate principal amount of convertible notes that mature on July 15, 2022 (the “Original 2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Original 2022 Notes bear interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2017. Total proceeds from the issuance of the Original 2022 Notes, net of underwriting discounts and offering costs, were $218,010. On May 18, 2018, we issued an additional $103,500 aggregate principal amount of convertible notes that mature on July 15, 2022 (the “Additional 2022 Notes”, and together with the Original 2022 Notes, the “2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Additional 2022 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2022 Notes and bear interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2018. Total proceeds from the issuance of the Additional 2022 Notes, net of underwriting discounts and offering costs, were $100,749. Following the issuance of the Additional 2022 Notes and as of September 30 2018, the outstanding aggregate principal amount of the 2022 Notes is $328,500.
Certain key terms related to the convertible features for the 2019 Notes, the 2020 Notes and the 2022 Notes (collectively, the “Convertible Notes”) are listed below.
 
 
2019 Notes

 
2020 Notes

 
2022 Notes

Initial conversion rate(1)
 
79.7766

 
80.6647

 
100.2305

Initial conversion price
 
$
12.54

 
$
12.40

 
$
9.98

Conversion rate at September 30, 2018(1)(2)
 
79.8360

 
80.6670

 
100.2305

Conversion price at September 30, 2018(2)(3)
 
$
12.53

 
$
12.40

 
$
9.98

Last conversion price calculation date
 
12/21/2017

 
4/11/2018

 
4/11/2018

Dividend threshold amount (per share)(4)
 
$
0.110025

 
$
0.110525

 
$
0.083330

(1)
Conversion rates denominated in shares of common stock per $1 principal amount of the Convertible Notes converted. 
(2)
Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)
The conversion price will increase only if the current monthly dividends (per share) exceed the dividend threshold amount (per share).
(4)
The conversion rate is increased if monthly cash dividends paid to common shares exceed the monthly dividend threshold amount, subject to adjustment. Current dividend rates are at or below the minimum dividend threshold amount for further conversion rate adjustments for all bonds.

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Upon conversion, unless a holder converts after a record date for an interest payment but prior to the corresponding interest payment date, the holder will receive a separate cash payment with respect to the notes surrendered for conversion representing accrued and unpaid interest to, but not including, the conversion date. Any such payment will be made on the settlement date applicable to the relevant conversion on the Convertible Notes.
No holder of Convertible Notes will be entitled to receive shares of our common stock upon conversion to the extent (but only to the extent) that such receipt would cause such converting holder to become, directly or indirectly, a beneficial owner (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of more than 5.0% of the shares of our common stock outstanding at such time. The 5.0% limitation shall no longer apply following the effective date of any fundamental change. We will not issue any shares in connection with the conversion or redemption of the Convertible Notes which would equal or exceed 20% of the shares outstanding at the time of the transaction in accordance with NASDAQ rules.
Subject to certain exceptions, holders may require us to repurchase, for cash, all or part of their Convertible Notes upon a fundamental change at a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and unpaid interest up to, but excluding, the fundamental change repurchase date. In addition, upon a fundamental change that constitutes a non-stock change of control we will also pay holders an amount in cash equal to the present value of all remaining interest payments (without duplication of the foregoing amounts) on such Convertible Notes through and including the maturity date.
In connection with the issuance of the Convertible Notes, we incurred $27,323 of fees which are being amortized over the terms of the notes, of which $12,009 remains to be amortized and is included as a reduction within Convertible Notes on the Consolidated Statement of Assets and Liabilities as of September 30, 2018.
During the three months ended September 30, 2018 and September 30, 2017, we recorded $11,435 and $13,656, respectively, of interest costs and amortization of financing costs on the Convertible Notes as interest expense.
Public Notes
On March 15, 2013, we issued $250,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Original 2023 Notes”). The Original 2023 Notes bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2013. Total proceeds from the issuance of the Original 2023 Notes, net of underwriting discounts and offering costs, were $243,641. On June 20, 2018, we issued an additional $70,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Additional 2023 Notes”, and together with the Original 2023 Notes, the “2023 Notes”). The Additional 2023 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2023 Notes and bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2018. Total proceeds from the issuance of the Additional 2023 Notes, net of underwriting discounts, were $69,403. As of September 30, 2018, the outstanding aggregate principal amount of the 2023 Notes is $320,000.

On April 7, 2014, we issued $300,000 aggregate principal amount of unsecured notes that mature on July 15, 2019 (the “5.00% 2019 Notes”). Included in the issuance is $45,000 of Prospect Capital InterNotes® that were exchanged for the 5.00% 2019 Notes. The 5.00% 2019 Notes bear interest at a rate of 5.00% per year, payable semi-annually on January 15 and July 15 of each year, beginning July 15, 2014. Total proceeds from the issuance of the 5.00% 2019 Notes, net of underwriting discounts and offering costs, were $295,998. On June 7, 2018, we commenced a tender offer to purchase for cash any and all of the $300,000 aggregate principal amount outstanding of the 5.00% 2019 Notes. On June 20, 2018, $146,464 aggregate principal amount of the 5.00% 2019 Notes, representing 48.8% of the previously outstanding 5.00% 2019 Notes, were validly tendered and accepted. The transaction resulted in our recognizing a loss of $3,705 during the three months ended June 30, 2018. On September 26, 2018, we repurchased the remaining $153,536 aggregate principal amount of the 5.00% 2019 Notes at a price of 101.645, including commissions. The transaction resulted in our recognizing a loss of $2,874 during the three months ended September 30, 2018.

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On December 10, 2015, we issued $160,000 aggregate principal amount of unsecured notes that mature on June 15, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2016. Total proceeds from the issuance of the Original 2024 Notes, net of underwriting discounts and offering costs, were $155,043. On June 16, 2016, we entered into an at-the-market (“ATM”) program with FBR Capital Markets & Co. through which we could sell, by means of ATM offerings, from time to time, up to $100,000 in aggregate principal amount of our existing 2024 Notes (“Initial 2024 Notes ATM”). Following the initial 2024 Notes ATM, the aggregate principal amount of the 2024 Notes issued was $199,281 for net proceeds of $193,253, after commissions and offering costs. On July 2, 2018, we entered into a second ATM program with B.Riley FBR, Inc. and BB&T Capital Markets, and on August 31, 2018 with Comerica Securities, Inc., through which we could sell, by means of ATM offerings, up to $100,000 in aggregate principal amount of the 2024 Notes (“Second 2024 Notes ATM”, and together with the Initial 2024 Notes ATM, the “2024 Notes Follow-on Program”). The 2024 Notes are listed on the New York Stock Exchange (“NYSE”) and trade thereon under the ticker “PBB.” During the three months ended September 30, 2018, we issued an additional $15,566 aggregate principal amount under the second 2024 Notes ATM, for net proceeds of $15,461, after commissions and offering costs. As of September 30, 2018 , the outstanding aggregate principal amount of the 2024 Notes is $214,847.
On June 7, 2018, we issued $55,000 aggregate principal amount of unsecured notes that mature on June 15, 2028 (the “2028 Notes”). The 2028 Notes bear interest at a rate of 6.25% per year, payable quarterly on March 15, June 15, September 15, and December 15 of each year, beginning September 15, 2018. Total proceeds from the issuance of the 2028 Notes, net of underwriting discounts and offering costs were $53,119. On July 2, 2018, we entered into an ATM program with B.Riley FBR, Inc. and BB&T Capital Markets, and on August 31, 2018 with Comerica Securities, Inc., through which we could sell, by means of ATM offerings, up to $100,000 in aggregate principal amount of our existing 2028 Notes (“2028 Notes ATM” or “2028 Notes Follow-on Program”). The 2028 Notes are listed on the NYSE and trade thereon under the ticker “PBY.” During the three months ended September 30, 2018, we issued an additional $10,078 aggregate principal amount under the 2028 Notes ATM, for net proceeds of $9,963, after commissions and offering costs. As of September 30, 2018, the outstanding aggregate principal amount of the 2028 Notes is $65,078.
On September 27, 2018, we issued $100,000 aggregate principal amount of unsecured notes that mature on January 15, 2024 (the “6.375% 2024 Notes”). The 6.375% 2024 Notes settled on October 1, 2018. The 6.375% 2024 Notes bear interest at a rate of 6.375% per year, payable semi-annually on January 15 and July 15 of each year, beginning January 15, 2019. Total proceeds from the issuance of the 6.375% 2024 Notes, net of underwriting discounts and offering costs, were $98,985. Net proceeds are reflected in Due from Broker on the Consolidated Statements of Assets and Liabilities.
The 2023 Notes, the 2024 Notes, the 2028 Notes, and the 6.375% 2024 Notes (collectively, the “Public Notes”) are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding.
In connection with the issuance of the Public Notes we recorded a discount of $3,337 and debt issuance costs of $13,689, which are being amortized over the terms of the notes. As of September 30, 2018, $2,093 of the original issue discount and $10,126 of the debt issuance costs remain to be amortized and are included as a reduction within Public Notes on the Consolidated Statement of Assets and Liabilities.
During the three months ended September 30, 2018 and September 30, 2017, we recorded $11,363 and $11,041, respectively, of interest costs and amortization of financing costs on the Public Notes as interest expense.
Prospect Capital InterNotes®
On February 16, 2012, we entered into a selling agent agreement (the “Selling Agent Agreement”) with Incapital LLC, as purchasing agent for our issuance and sale from time to time of up to $500,000 of Prospect Capital InterNotes® (the “InterNotes® Offering”), which was increased to $1,500,000 in May 2014. Additional agents may be appointed by us from time to time in connection with the InterNotes® Offering and become parties to the Selling Agent Agreement.
These notes are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding. Each series of notes will be issued by a separate trust. These notes bear interest at fixed interest rates and offer a variety of maturities no less than twelve months from the original date of issuance.
During the three months ended September 30, 2018, we issued $39,757 aggregate principal amount of Prospect Capital InterNotes® for net proceeds of $39,093. These notes were issued with stated interest rates ranging from 5.00% to 6.00% with a weighted average interest rate of 5.48%. These notes mature between July 15, 2023 and September 15, 2028.


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The following table summarizes the Prospect Capital InterNotes® issued during the three months ended September 30, 2018:
Tenor at
Origination
(in years)
 
Principal
Amount
 
Interest Rate
Range
 
Weighted
Average
Interest Rate
 
Maturity Date Range
5
 
$
18,668

 
5.00
%
 
5.00
%
 
July 15, 2023 - September 15, 2023
7
 
7,172

 
5.50%–5.75%

 
5.73
%
 
July 15, 2025 - September 15, 2025
8
 
385

 
5.75
%
 
5.75
%
 
July 15, 2026
10
 
13,532

 
6.00
%
 
6.00
%
 
July 15, 2028 - September 15, 2028
 
 
$
39,757

 
 
 
 
 
 
During the three months ended September 30, 2017, we issued $27,402 aggregate principal amount of our Prospect Capital InterNotes® for net proceeds of $26,996. These notes were issued with stated interest rates ranging from 4.00% to 5.00% with a weighted average interest rate of 4.57%.

The following table summarizes the Prospect Capital InterNotes® issued during the three months ended September 30, 2017:
Tenor at
Origination
(in years)
 
Principal
Amount
 
Interest Rate
Range
 
Weighted
Average
Interest Rate
 
Maturity Date Range
5
 
$
17,059

 
4.00%–4.75%
 
4.42
%
 
July 15, 2022 – September 15, 2022
7
 
2,825

 
4.75%–5.00%
 
4.93
%
 
July 15, 2024
8
 
7,518

 
4.50%–5.00%
 
4.76
%
 
August 15, 2025 – September 15, 2025
 
 
$
27,402

 
 
 
 
 
 
During the three months ended September 30, 2018, we redeemed, prior to maturity, $29,360 aggregate principal amount of Prospect Capital InterNotes® at par with a weighted average interest rate of 4.70% in order to replace shorter maturity debt with longer-term debt. During the three months ended September 30, 2018, we repaid $2,434 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 September 30, 2018 was $255.

The following table summarizes the Prospect Capital InterNotes® outstanding as of September 30, 2018:
Tenor at
Origination
(in years)
 
Principal
Amount
 
Interest Rate
Range
 
Weighted
Average
Interest Rate
 
Maturity Date Range
5
 
$
245,127

 
4.00% – 5.50%

 
4.93
%
 
July 15, 2020 - September 15, 2023
5.2
 
4,440

 
4.63
%
 
4.63
%
 
August 15, 2020 - September 15, 2020
5.3
 
2,636

 
4.63
%
 
4.63
%
 
September 15, 2020
5.5
 
69,570

 
4.25% – 4.75%

 
4.57
%
 
May 15, 2020 - November 15, 2020
6
 
2,182

 
4.88
%
 
4.88
%
 
April 15, 2021 - May 15, 2021
6.5
 
38,672

 
5.10% – 5.25%

 
5.23
%
 
December 15, 2021 - May 15, 2022
7
 
143,604

 
4.00% – 5.75%

 
5.12
%
 
January 15, 2020 - September 15, 2025
7.5
 
1,996

 
5.75
%
 
5.75
%
 
February 15, 2021
8
 
24,820

 
4.50% – 5.75%

 
4.67
%
 
August 15, 2025 - July 15, 2026
10
 
50,906

 
4.32% – 7.00%

 
6.11
%
 
March 15, 2022 - September 15, 2028
12
 
2,978

 
6.00
%
 
6.00
%
 
November 15, 2025 - December 15, 2025
15
 
17,163

 
5.25% – 6.00%

 
5.35
%
 
May 15, 2028 - November 15, 2028
18
 
20,199

 
4.13% – 6.25%

 
5.54
%
 
December 15, 2030 - August 15, 2031
20
 
4,060

 
5.75% – 6.00%

 
5.89
%
 
November 15, 2032 - October 15, 2033
25
 
32,834

 
6.25% – 6.50%

 
6.39
%
 
August 15, 2038 - May 15, 2039
30
 
107,700

 
5.50% – 6.75%

 
6.24
%
 
November 15, 2042 - October 15, 2043
 
 
$
768,887

 
 

 
 

 
 

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During the three months ended September 30, 2017, we redeemed, prior to maturity $89,980 aggregate principal amount of Prospect Capital InterNotes® at par with a weighted average interest rate of 4.91% in order to replace debt with shorter maturity dates. During the three months ended September 30, 2017, we repaid $1,884 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 September 30, 2017 was $445.

The following table summarizes the Prospect Capital InterNotes® outstanding as of June 30, 2018:
Tenor at
Origination
(in years)
 
Principal
Amount
 
Interest Rate
Range
 
Weighted
Average
Interest Rate
 
Maturity Date Range
5
 
$
228,835

 
4.00% – 5.50%

 
4.92
%
 
July 15, 2020 - June 15, 2023
5.2
 
4,440

 
4.63
%
 
4.63
%
 
August 15, 2020 - September 15, 2020
5.3
 
2,636

 
4.63
%
 
4.63
%
 
September 15, 2020
5.5
 
86,097

 
4.25% – 4.75%

 
4.61
%
 
May 15, 2020 - November 15, 2020
6
 
2,182

 
4.88
%
 
4.88
%
 
April 15, 2021 - May 15, 2021
6.5
 
38,832

 
5.10% – 5.25%

 
5.23
%
 
December 15, 2021 - May 15, 2022
7
 
147,349

 
4.00% – 5.75%

 
5.05
%
 
January 15, 2020 - June 15, 2025
7.5
 
1,996

 
5.75%

 
5.75
%
 
February 15, 2021
8
 
24,720

 
4.50% – 5.25%

 
4.65
%
 
August 15, 2025 - May 15, 2026
10
 
37,424

 
5.34% – 7.00%

 
6.19
%
 
March 15, 2022 - December 15, 2025
12
 
2,978

 
6.00
%
 
6.00
%
 
November 15, 2025 - December 15, 2025
15
 
17,163

 
5.25% – 6.00%

 
5.35
%
 
May 15, 2028 - November 15, 2028
18
 
20,677

 
4.13% – 6.25%

 
5.55
%
 
December 15, 2030 - August 15, 2031
20
 
4,120

 
5.75% – 6.00%

 
5.89
%
 
November 15, 2032 - October 15, 2033
25
 
33,139

 
6.25% – 6.50%

 
6.39
%
 
August 15, 2038 - May 15, 2039
30
 
108,336

 
5.50% – 6.75%

 
6.24
%
 
November 15, 2042 - October 15, 2043
 
 
$
760,924

 
 

 
 

 
 
In connection with the issuance of Prospect Capital InterNotes®, we incurred $24,904 of fees which are being amortized over the term of the notes, of which $11,875 remains to be amortized and is included as a reduction within Prospect Capital InterNotes® on the Consolidated Statement of Assets and Liabilities as of September 30, 2018.
During the three months ended September 30, 2018 and September 30, 2017 we recorded $10,745 and $13,384, respectively, of interest costs and amortization of financing costs on the Prospect Capital InterNotes® as interest expense.
Net Asset Value
During the three months ended September 30, 2018 our net asset value increased by $23,897, or $0.04 per share. The increase was primarily attributable to net investment income exceeding dividends by $0.05 per weighted average share for the three months ended September 30, 2018. The increase in net investment income per share resulted primarily from an increase in dividend income compared to the June 2018 quarter. The increase was partially offset by $0.01 per share decline from reinvestment of our dividends on behalf of our stockholders at current market prices. The following table shows the calculation of net asset value per share as of September 30, 2018 and June 30, 2018.
 
 
September 30, 2018
 
June 30, 2018
Net assets
 
$
3,430,944

 
$
3,407,047

Shares of common stock issued and outstanding
 
365,225,139

 
364,409,938

Net asset value per share
 
$
9.39

 
$
9.35

Results of Operations
Net increase in net assets resulting from operations for the three months ended September 30, 2018 and September 30, 2017 was $83,795, or $0.23 per share, and $11,973, or $0.03 per share, respectively. The increase of $71,822, or $0.20 per share, is primarily due to net unrealized gains on investments of $1,049 recognized for three months ended September 30, 2018 compared to a $52,751

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net unrealized loss recognized for the three months ended September 30, 2017. For the three months ended September 30, 2017, the $52,751 net change in unrealized losses was primarily the result of greater unrealized losses in our CLO portfolio and our investment in USC. Additionally, net investment income increased by $21,427, or $0.05 per share, for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 due to an increase in interest income and dividend income of $11,357, or $0.03 per share, and $14,383, or $0.04 per share, respectively. This favorable variance was partially offset by a $5,151, or $0.01 per share, increase in advisory fees for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.
While we seek to maximize gains and minimize losses, our investments in portfolio companies can expose our capital to risks greater than those we may anticipate. These companies typically do not issue securities rated investment grade, and have limited resources, limited operating history, and concentrated product lines or customers. These are generally private companies with limited operating information available and are likely to depend on a small core of management talents. Changes in any of these factors can have a significant impact on the value of the portfolio company.

Investment Income
We generate revenue in the form of interest income on the debt securities that we own, dividend income on any common or preferred stock that we own, and fees generated from the structuring of new deals. Our investments, if in the form of debt securities, will typically have a term of one to ten years and bear interest at a fixed or floating rate. To the extent achievable, we will seek to collateralize our investments by obtaining security interests in our portfolio companies’ assets. We also may acquire minority or majority equity interests in our portfolio companies, which may pay cash or in-kind dividends on a recurring or otherwise negotiated basis. In addition, we may generate revenue in other forms including prepayment penalties and possibly consulting fees. Any such fees generated in connection with our investments are recognized as earned.
Investment income, which consists of interest income, including accretion of loan origination fees, prepayment penalty fees, dividend income and other income, including settlement of net profits interests, overriding royalty interests and structuring fees, was $180,422 and $158,579 for the three months ended September 30, 2018 and September 30, 2017, respectively. Investment income increased $21,843, or $0.05 per share from three months ended September 30, 2017 compared to the three months ended September 30, 2018 primarily due to an increase in dividend income, an increase in cash-on-cash yields on our CLO investment portfolio due to a number of recent resets across the portfolio and the increase in LIBOR above our floors amongst our interest bearing investments.


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The following table describes the various components of investment income and the related levels of debt investments:
 
Three Months Ended September 30,
 
2018
 
2017
Interest income
$
159,442

 
$
148,085

Dividend income
14,927

 
544

Other income
6,053

 
9,950

Total investment income
$
180,422

 
$
158,579

 
 
 
 
Average debt principal of performing interest bearing investments(1)
$
5,516,765

 
$
5,421,375

Weighted average interest rate earned on performing interest bearing investments(1)
11.31
%
 
10.93
%
Average debt principal of all interest bearing investments(2)
$
6,930,310

 
$
5,770,167

Weighted average interest rate earned on all interest bearing investments(2)
10.52
%
 
10.27
%
(1) Excludes equity investments and non-accrual loans.
(2) Excludes equity investments.

Average interest income producing assets increased from $5,421,375 for the three months ended September 30, 2017 to $5,516,765 for the three months ended September 30, 2018. The average interest earned on interest bearing performing assets increased from 10.93% for the three months ended September 30, 2017 to 11.31% for the three months ended September 30, 2018. The increase is primarily attributable to an increase in cash-on-cash yields on our CLO investment portfolio due to a number of recent resets across the portfolio. In addition, the increase in LIBOR above our floors amongst our interest bearing investments. See Item 3. Quantitative and Qualitative Disclosures about Market Risk for detailed disclosures with respect to the approximate annual impact on net investment income resulting from base rate changes in interest rate.

Investment income is also generated from dividends and other income which is less predictable than interest income. Dividend income increased from $544 for the three months ended September 30, 2017 to $14,927 for the three months ended September 30, 2018. The $14,383 increase in dividend income is primarily attributable to a $11,000 dividend received from our investment in NPRC, which was generated from taxable earnings and profits in connection with the gain on the sales of NPRC’s St. Marin, Central Park, and Matthews Reserve properties. In addition, we received a $3,500 dividend from our investment in Valley Electric. No such dividends were received from NPRC or Valley Electric for the three months ended September 30, 2017.

Other income is comprised of structuring fees, advisory fees, royalty interests, and settlement of net profits interests. Income from other sources decreased to $6,053 for the three months ended September 30, 2018 from $9,950 for the three months ended September 30, 2017. The $3,897 decline is primarily attributable to a $3,233 structuring fee from our investment in Pacific World for services rendered in connection with amending its revolving credit facility received during three months ended September 30, 2017. No such structuring fee was received for the three months ended September 30, 2018.

Operating Expenses

Our primary operating expenses consist of investment advisory fees (base management and income incentive fees), borrowing costs, legal and professional fees, overhead-related expenses and other operating expenses. These expenses include our allocable portion of overhead under the Administration Agreement with Prospect Administration under which Prospect Administration provides administrative services and facilities for us. Our investment advisory fees compensate the Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions. Operating expenses were $95,263 and $94,847 for the three months ended September 30, 2018 and September 30, 2017, respectively.

Total gross base management fee was $30,095 and $30,379 for the three months ended September 30, 2018 and September 30, 2017, respectively. The decrease in total gross base management fee is directly related a decrease in average total assets. The Investment Adviser has entered into a servicing agreement with certain institutions who purchased loans with us, where we serve as the agent and collect a servicing fee on behalf of the Investment Adviser. We received payments of $138 and $216 from these institutions for the three months ended September 30, 2018 and September 30, 2017, respectively, on behalf of the Investment Adviser, for providing such services under the servicing agreement. We were given a credit for these payments as a reduction of

S-48

base management fee payable by us to the Investment Adviser resulting in net base management fees of $29,957 and $30,163 for the three months ended September 30, 2018 and September 30, 2017, respectively.
For the three months ended September 30, 2018 and September 30, 2017, we incurred $21,290 and $15,933 of income incentive fees, respectively ($0.06 and $0.04 per weighted average share, respectively). This increase was driven by a corresponding increase in pre-incentive fee net investment income from $79,665 for the three months ended September 30, 2017 to $106,449 for the three months ended September 30, 2018. No capital gains incentive fee has yet been incurred pursuant to the Investment Advisory Agreement.
During the three months ended September 30, 2018 and September 30, 2017, we incurred $37,908 and $41,035 respectively, of interest and credit facility expenses related to our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® (collectively, our “Notes”). These expenses are related directly to the leveraging capacity and the levels of indebtedness actually undertaken in those periods.
The table below describes the various expenses of our Notes and the related indicators of leveraging capacity and indebtedness during these years.
 
Three Months Ended September 30,
 
2018
 
2017
Interest on borrowings
$
32,985

 
$
35,538

Amortization of deferred financing costs
2,716

 
3,166

Accretion of discount on Public Notes
131

 
69

Facility commitment fees
2,076

 
2,262

Total interest and credit facility expenses
$
37,908

 
$
41,035

 
 
 
 
Average principal debt outstanding
$
2,496,642

 
$
2,666,070

Annualized weighted average stated interest rate on borrowings(1)
5.28
%
 
5.33
%
Annualized weighted average interest rate on borrowings(2)
6.07
%
 
6.16
%
(1)
Includes only the stated interest expense.
(2)
Includes the stated interest expense, amortization of deferred financing costs, accretion of discount on Public Notes and commitment fees on the undrawn portion of our Revolving Credit Facility.
Interest expense decreased by $3,127 for the three months ended September 30, 2018 as compared to three months ended September 30, 2017. The weighted average stated interest rate on borrowings (excluding amortization, accretion and undrawn facility fees) decreased from 5.33% for the three months ended September 30, 2017 to 5.28% for the three months ended September 30, 2018. This decrease is primarily due to increased utilization of our Revolving Credit Facility which bears a lower rate than our remaining debt.
The allocation of gross overhead expense from Prospect Administration was $3,365 and $4,710 for the three months ended September 30, 2018 and September 30, 2017, respectively. Prospect Administration received estimated payments of $1,182 directly from our portfolio companies, and certain funds managed by the Investment Adviser for legal, tax and portfolio level accounting services during the three months ended September 30, 2017. No such payments were received for the three months ended September 30, 2018. We were given a credit for these payments as a reduction of the administrative services cost payable by us to Prospect Administration. Had Prospect Administration not received these payments, Prospect Administration’s charges for its administrative services would have increased by these amounts. Net overhead during the three months ended September 30, 2018 and September 30, 2017 totaled $3,365 and $3,528, respectively.
Total operating expenses, excluding investment advisory fees, interest and credit facility expenses, and allocation of overhead from Prospect Administration (“Other Operating Expenses”), net of any expense reimbursements, were $2,743 and $4,188 for the three months ended September 30, 2018 and September 30, 2017, respectively. The $1,445 decline was primarily attributable to decreases in audit, compliance and tax related fees and other general and administrative expenses.

S-49

Net Investment Income
Net investment income represents the difference between investment income and operating expenses. Net investment income was $85,159 and $63,732 for the three months ended September 30, 2018 and September 30, 2017, respectively. Net investment income for the three months ended September 30, 2018 and September 30, 2017 was $0.23 and $0.18 per weighted average share, respectively. During the three months ended September 30, 2018, the increase of $21,427, or $0.05 per weighted average share, was due to an increase in interest income and dividend income of $11,357, or $0.03 per share, and $14,383, or $0.04 per share, respectively. This favorable variance was partially offset by a $5,151, or $0.01 per share, increase in advisory fees for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.
Net Realized (Losses) Gains
Net realized gain for the three months ended September 30, 2018 was $1,041, an unfavorable decrease in gains of $396 compared to the $1,437 net realized gain recognized during the three months ended September 30, 2017. The net realized gain during the three months ended September 30, 2018 was primarily due to the receipt of $1,000 of bankruptcy settlement proceeds from our investment in New Century Transportation, Inc, which was written-down during the three months ended December 31, 2014. The net realized gain during the three months ended September 30, 2017 was primarily due to the exchange of our loans with Targus International, LLC into common shares of Targus Cayman Holdco Limited, resulting in a realized gain of $846. Additionally, during the three months ended September 30, 2017, we recognized a realized gain on the call of our Madison IX CLO investment in the amount of $827.
Change in Unrealized Gains (Losses), Net
Net change in unrealized gains (losses) was $1,049 and ($52,751) for the three months ended September 30, 2018 and September 30, 2017, respectively. The $53,800 net favorable change in unrealized losses were primarily the result of $45,525 in unrealized gains related to our investments in CP Energy and Valley Electric driven by an improvement in operating performance driven by revenue growth and increased profitability. The fair value of our investment in NPRC increased resulting in an unrealized gain of $15,002 primarily driven by an increase in net operating income and a decline in capitalization rates. The favorable changes in unrealized losses were offset by a $10,907 decline in value of our investment in UTP due to a decline in operating performance. The value of our investment in USC also decreased by $8,136 due to both a decline in operating performance and the overall decline in demand for firearms and ammunition. Finally, our portfolio experienced $24,251 of unrealized losses in our CLO investments due to a decline in the weighted average spread in the underlying senior secured loan portfolios, increase in discount rates, and collateral losses.

During the three months ended September 30, 2017, the net change in unrealized losses of $52,751 was primarily the result of $44,754 unrealized losses in our CLO portfolio due to a decline in the weighted average spread in the underlying senior secured loan portfolios, increase in discount rates, and collateral losses. The value of our investment in USC decreased by $13,407 due to both a decline in operating performance and the overall decline in demand for firearms and ammunition.

Financial Condition, Liquidity and Capital Resources
For the three months ended September 30, 2018 and September 30, 2017, our operating activities used $238,434 and provided $99,946 of cash, respectively. There were no investing activities for the three months ended September 30, 2018 and September 30, 2017. Financing activities provided $274,728 and used $153,512 of cash during the three months ended September 30, 2018 and September 30, 2017, respectively, which included dividend payments of $59,849 and $88,321, respectively. Our primary uses of funds have been to continue to invest in portfolio companies, through both debt and equity investments, repay outstanding borrowings and to make cash distributions to holders of our common stock.

Our primary sources of funds have historically been issuances of debt and equity. More recently, we have and may continue to fund a portion of our cash needs through repayments and opportunistic sales of our existing investment portfolio. We may also securitize a portion of our investments in unsecured or senior secured loans or other assets. Our objective is to put in place such borrowings in order to enable us to expand our portfolio. During the three months ended September 30, 2018, we borrowed $436,000 and we made repayments totaling $69,000 under the Revolving Credit Facility. As of September 30, 2018, we had, net of unamortized discount and debt issuance costs, $810,138 outstanding on the Convertible Notes, $687,706 outstanding on the Public Notes and $757,012 outstanding on the Prospect Capital InterNotes®, and $404,000 outstanding balance on the Revolving Credit Facility. (See “Capitalization” above.)

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Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 5.00%. As of September 30, 2018 and June 30, 2018, we had $38,530 and $29,675, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies. The fair value of our undrawn committed revolvers and delayed draw term loans was zero as of September 30, 2018 and June 30, 2018.
Our shareholders’ equity accounts as of September 30, 2018 and June 30, 2018 reflect cumulative shares issued, net of shares repurchased, as of those respective dates. Our common stock has been issued through public offerings, a registered direct offering, the exercise of over-allotment options on the part of the underwriters, our dividend reinvestment plan and in connection with the acquisition of certain controlled portfolio companies. When our common stock is issued, the related offering expenses have been charged against paid-in capital in excess of par. All underwriting fees and offering expenses were borne by us.
As part of our Repurchase Program, we delivered a notice with our annual proxy mailing on September 25, 2018. We did not repurchase any shares of our common stock for the three months ended September 30, 2018 or September 30, 2017.
On August 31, 2016, we filed a registration statement on Form N-2 (File No. 333-213391) with the SEC. We subsequently filed a Pre-Effective Amendment No. 2 thereto on November 1, 2016, which the SEC declared effective on November 3, 2016. On October 26, 2017, we filed Post-Effective Amendment No. 50 to the registration statement, which the SEC declared effective on October 30, 2017. The registration statement permits us to issue, through one or more transactions, up to an aggregate of $5,000,000 in securities, consisting of common stock, preferred stock, debt securities, subscription rights to purchase our securities, warrants representing rights to purchase our securities or separately tradeable units combining two or more of our securities. As of September 30, 2018, we have the ability to issue up to $4,221,013 in securities under the registration statement.

Off-Balance Sheet Arrangements
As of September 30, 2018, we did not have any off-balance sheet liabilities or other contractual obligations that are reasonably likely to have a current or future material effect on our financial condition, other than those which originate from 1) the investment advisory and management agreement and the administration agreement and 2) the portfolio companies.
Recent Developments
During the period from October 1, 2018 through November 5, 2018 we issued $16,550 aggregate principal amount of Prospect Capital InterNotes® for net proceeds of $16,279.

During the period from October 1, 2018 through October 29, 2018, we issued $2,806 in aggregate principal amount of our 2024 Notes for net proceeds of $2,768 and issued $1,741 in aggregate principal amount of our 2028 Notes for net proceeds of $1,708.

On October 1, 2018, Fleetwash, Inc. fully repaid the $21,544 Senior Secured Term Loan B receivable to us.

We have provided notice to call on October 12, 2018 with settlement on November 15, 2018, $70,072 of our Prospect Capital InterNotes® at par maturing between May 15, 2020 and November 15, 2020, with a weighted average rate of 4.92%.

On October 10, 2018, we made a $25,000 Second Lien Term Loan investment in 8th Avenue Food & Provisions, Inc., a private food brands provider and manufacturer of peanut and other nut butters, pasta and healthy snacks.

On October 11, 2018, we increased total commitments to our revolving credit facility for Prospect Capital Funding LLC, one of our GAAP consolidated subsidiaries, by $35,000 to $830,000 in the aggregate.

On October 12, 2018, we made a $35,000 Second Lien Term Loan investment in CCS-CMGC Holdings, Inc., a leading provider of outsourced correctional healthcare and behavioral healthcare solutions for government customers.

On October 18, 2018, ATS Consolidated, Inc. fully repaid the $15,000 Second Lien Term Loan receivable to us.

On October 25, 2018, we made a $12,500 Second Lien Term Loan investment in GlobalTranz Enterprises, Inc., a technology-enabled third-party logistics provider of transportation services, including full truckload, less-than-truckload, expedited (air), and intermodal services, along with logistics services and supply chain management solutions.

On October 31, 2018, our Registration Statement on Form N-2 (File No. 333-227124) was declared effective by the SEC. Under this Shelf Registration Statement, we can issue up to an aggregate of $5,000,000 in debt and equity securities in the public market.

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On November 6, 2018, we announced the declaration of monthly dividends in the following amounts and with the following dates:
•
$0.06 per share for November 2018 to holders of record on November 30, 2018 with a payment date of December 20, 2018
•
$0.06 per share for December 2018 to holders of record on January 2, 2019 with a payment date of January 24, 2019.
•
$0.06 per share for January 2019 to holders of record on January 31, 2019 with a payment date of February 21, 2019.
Critical Accounting Policies and Estimates
Basis of Presentation and Consolidation
The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) pursuant to the requirements for reporting on Form 10-Q, ASC 946, Financial Services—Investment Companies (“ASC 946”), and Articles 6, 10 and 12 of Regulation S-X. Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Our consolidated financial statements include the accounts of Prospect, PCF, PSBL, PYC, and the Consolidated Holding Companies. All intercompany balances and transactions have been eliminated in consolidation. The financial results of our non-substantially wholly-owned holding companies and operating portfolio company investments are not consolidated in the financial statements. Any operating companies owned by the Consolidated Holding Companies are not consolidated.
Reclassifications

Certain reclassifications have been made in the presentation of prior consolidated financial statements and accompanying notes to conform to the presentation as of and for the three months ended September 30, 2018.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income, expenses, and gains and losses during the reported period. Changes in the economic environment, financial markets, creditworthiness of the issuers of our investment portfolio and any other parameters used in determining these estimates could cause actual results to differ, and these differences could be material.
Investment Classification
We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses or has the right to acquire within 60 days or less, a beneficial ownership of more than 25% of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through the possession outright or via the right to acquire within 60 days or less, beneficial ownership of 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.
As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of September 30, 2018 and June 30, 2018, our qualifying assets as a percentage of total assets, stood at 74.93% and 73.20%, respectively.
Investment Transactions
Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. In accordance with ASC 325-40, Beneficial Interest in Securitized Financial Assets, investments in CLOs are periodically assessed for other-than-temporary impairment (“OTTI”). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down to its fair value as of the date of the determination based on events and information evaluated and that

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write-down is recognized as a realized loss. Amounts for investments traded but not yet settled are reported in Due to Broker or Due from Broker, in the Consolidated Statements of Assets and Liabilities.
Foreign Currency
Foreign currency amounts are translated into US Dollars (USD) on the following basis:
i.
fair value of investment securities, other assets and liabilities—at the spot exchange rate on the last business day of the period; and
ii.
purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such investment transactions, income or expenses.
We do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held or disposed of during the period. Such fluctuations are included within the net realized and net change in unrealized gains or losses from investments in the Consolidated Statements of Operations.
Investment Risks
Our investments are subject to a variety of risks. Those risks include the following:
Market Risk
Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.
Credit Risk
Credit risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.
Liquidity Risk
Liquidity risk represents the possibility that we may not be able to rapidly adjust the size of our investment positions in times of high volatility and financial stress at a reasonable price.
Interest Rate Risk
Interest rate risk represents a change in interest rates, which could result in an adverse change in the fair value of an interest-bearing financial instrument.
Prepayment Risk
Many of our debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the security and making us less likely to fully earn all of the expected income of that security and reinvesting in a lower yielding instrument.
Structured Credit Related Risk

CLO investments may be riskier and less transparent to us than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans. 
Online Small-and-Medium-Sized Business Lending Risk
With respect to our online small-and-medium-sized business (“SME”) lending initiative, we invest primarily in marketplace loans through marketplace lending platforms (e.g. OnDeck). We do not conduct loan origination activities ourselves. Therefore, our ability to purchase SME loans, and our ability to grow our portfolio of SME loans, is directly influenced by the business performance and competitiveness of the marketplace loan origination business of the marketplace lending platforms from which we purchase SME loans. In addition, our ability to analyze the risk-return profile of SME loans is significantly dependent on the marketplace platforms’ ability to effectively evaluate a borrower's credit profile and likelihood of default. If we are

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unable to effectively evaluate borrowers' credit profiles or the credit decisioning and scoring models implemented by each platform, we may incur unanticipated losses which could adversely impact our operating results.
Foreign Currency
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.
Investment Valuation
To value our investments, we follow the guidance of ASC 820, Fair Value Measurement (“ASC 820”), that defines fair value, establishes a framework for measuring fair value in conformity with GAAP, and requires disclosures about fair value measurements. In accordance with ASC 820, the fair value of our investments is defined as the price that we would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market in which that investment is transacted.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.
Our Board of Directors has established procedures for the valuation of our investment portfolio. These procedures are detailed below.
Investments for which market quotations are readily available are valued at such market quotations.
For most of our investments, market quotations are not available. With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board of Directors has approved a multi-step valuation process each quarter, as described below.
1.
Each portfolio company or investment is reviewed by our investment professionals with independent valuation firms engaged by our Board of Directors.
2.
The independent valuation firms prepare independent valuations for each investment based on their own independent assessments and issue their report.
3.
The Audit Committee of our Board of Directors reviews and discusses with the independent valuation firms the valuation reports, and then makes a recommendation to the Board of Directors of the value for each investment.
4.
The Board of Directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent valuation firm and the Audit Committee.
Our non-CLO investments are valued utilizing a yield technique, enterprise value (“EV”) technique, net asset value technique, liquidation technique, discounted cash flow technique, or a combination of techniques, as appropriate. The yield technique uses loan spreads for loans and other relevant information implied by market data involving identical or comparable assets or liabilities. Under the EV technique, the EV of a portfolio company is first determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i.e., “waterfall” allocation). To determine the EV, we typically use a market (multiples) valuation approach that considers relevant and applicable market trading data of guideline public companies, transaction metrics from precedent merger and acquisitions transactions, and/or a discounted cash flow technique. The net asset value technique, an income approach, is used to derive a value of an underlying investment (such as real estate property) by dividing a relevant earnings stream by an appropriate capitalization rate. For this purpose, we consider capitalization rates for similar properties as

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may be obtained from guideline public companies and/or relevant transactions. The liquidation technique is intended to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio company’s assets. The discounted cash flow technique converts future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate discount rate. The fair value measurement is based on the net present value indicated by current market expectations about those future amounts.
In applying these methodologies, additional factors that we consider in valuing our investments may include, as we deem relevant: security covenants, call protection provisions, and information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments; the principal markets in which the portfolio company does business; publicly available financial ratios of peer companies; the principal market; and enterprise values, among other factors.
Our investments in CLOs are classified as Level 3 fair value measured securities under ASC 820 and are valued using a discounted multi-path cash flow model. The CLO structures are analyzed to identify the risk exposures and to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows from the underlying assets and liabilities.  These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market as well as certain benchmark credit indices are considered, to determine the value of each CLO investment.  In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the multi-path cash flows.  We are not responsible for and have no influence over the asset management of the portfolios underlying the CLO investments we hold, as those portfolios are managed by non-affiliated third party CLO collateral managers. The main risk factors are default risk, prepayment risk, interest rate risk, downgrade risk, and credit spread risk.
Valuation of Other Financial Assets and Financial Liabilities
ASC 825, Financial Instruments, specifically ASC 825-10-25, permits an entity to choose, at specified election dates, to measure eligible items at fair value (the “Fair Value Option”). We have not elected the Fair Value Option to report selected financial assets and financial liabilities. See Note 8 in the accompanying Consolidated Financial Statements for the disclosure of the fair value of our outstanding debt and the market observable inputs used in determining fair value.
Convertible Notes
We have recorded the Convertible Notes at their contractual amounts. We have determined that the embedded conversion options in the Convertible Unsecured Notes are not required to be separately accounted for as a derivative under ASC 815, Derivatives and Hedging. See Note 5 in the accompanying Consolidated Financial Statements for further discussion.
Revenue Recognition
Realized gains or losses on the sale of investments are calculated using the specific identification method.
Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Loan origination fees, original issue discount, and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable, and adjusted only for material amendments or prepayments. Upon a prepayment of a loan, prepayment premiums, original issue discount, or market discounts are recorded as interest income.
Loans are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Unpaid accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans are either applied to the cost basis or interest income, depending upon management’s judgment of the collectibility of the loan receivable. Non-accrual loans are restored to accrual status when past due principal and interest is paid and in management’s judgment, is likely to remain current and future principal and interest collections when due are probable. Interest received and applied against cost while a loan is on non-accrual, and PIK interest capitalized but not recognized while on non-accrual, is recognized prospectively on the effective yield basis through maturity of the loan when placed back on accrual status, to the extent deemed collectible by management. As of September 30, 2018, approximately 2.4% of our total assets at fair value are in non-accrual status.
Some of our loans and other investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, we capitalize the accrued interest (reflecting such amounts in the basis as additional securities received). PIK generally

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becomes due at maturity of the investment or upon the investment being called by the issuer. At the point that we believe PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. We do not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if we believe that PIK is expected to be realized.
Interest income from investments in the “equity” class of security of CLO funds (typically preferred shares, income notes or subordinated notes) and “equity” class of security of securitized trust is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40, Beneficial Interests in Securitized Financial Assets. We monitor the expected cash inflows from our CLO and securitized trust equity investments, including the expected residual payments, and the effective yield is determined and updated periodically.
Dividend income is recorded on the ex-dividend date.
Other income generally includes amendment fees, commitment fees, administrative agent fees and structuring fees which are recorded when earned. Excess deal deposits, net profits interests and overriding royalty interests are included in other income. See Note 10 in the accompanying Consolidated Financial Statements for further discussion.
Federal and State Income Taxes
We have elected to be treated as a RIC and intend to continue to comply with the requirements of the Code applicable to regulated investment companies. We are required to distribute at least 90% of our investment company taxable income and intend to distribute (or retain through a deemed distribution) all of our investment company taxable income and net capital gains to stockholders; therefore, we have made no provision for income taxes. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.
If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income and 98.2% of our capital gains in the calendar year earned, we will generally be required to pay an excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated excess taxable income. As of September 30, 2018, we do not expect to have any excise tax due for the 2018 calendar year. Thus, we have not accrued any excise tax for this period.
If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate income tax rates. We would not be able to deduct distributions to stockholders, nor would we be required to make distributions. Distributions would generally be taxable to our individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits, provided certain holding period and other requirements are met. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our shareholders our accumulated earnings and profits attributable to non-RIC years. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.
We follow ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of September 30, 2018 and for the three months then ended, we did not record any unrecognized tax benefits or liabilities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although we file both federal and state income tax returns, our major tax jurisdiction is federal. Our federal tax returns for the tax years ended August 31, 2015 and thereafter remain subject to examination by the Internal Revenue Service.

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Dividends and Distributions
Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount, if any, to be paid as a monthly dividend or distribution is approved by our Board of Directors quarterly and is generally based upon our management’s estimate of our future taxable earnings. Net realized capital gains, if any, are distributed at least annually.
Financing Costs
We record origination expenses related to our Revolving Credit Facility and the Unsecured Notes as deferred financing costs. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation for our Revolving Credit Facility. The same methodology is used to approximate the effective yield method for our Prospect Capital InterNotes®, our 2024 Notes Follow-on Program, and our 2028 Notes Follow-on Program. The effective interest method is used to amortize deferred financing costs for our remaining Unsecured Notes over the respective expected life or maturity. In the event that we modify or extinguish our debt before maturity, we follow the guidance in ASC 470-50, Modification and Extinguishments (“ASC 470-50”). For modifications to or exchanges of our Revolving Credit Facility, any unamortized deferred costs relating to lenders who are not part of the new lending group are expensed. For extinguishments of our Unsecured Notes, any unamortized deferred costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment.
Unamortized deferred financing costs are presented as a direct deduction to the respective Unsecured Notes (see Notes 5, 6, and 7 in the accompanying Consolidated Financial Statements for further discussion).
We may record registration expenses related to shelf filings as prepaid expenses. These expenses consist principally of SEC registration fees, legal fees and accounting fees incurred. These prepaid expenses are charged to capital upon the receipt of proceeds from an equity offering or charged to expense if no offering is completed. As of September 30, 2018 and June 30, 2018, there are no prepaid expenses related to registration expenses and all amounts incurred have been expensed.
Guarantees and Indemnification Agreements
We follow ASC 460, Guarantees (“ASC 460”). ASC 460 elaborates on the disclosure requirements of a guarantor in its interim and annual consolidated financial statements about its obligations under certain guarantees that it has issued. It also requires a guarantor to recognize, at the inception of a guarantee, for those guarantees that are covered by ASC 460, the fair value of the obligation undertaken in issuing certain guarantees.
Per Share Information
Net increase or decrease in net assets resulting from operations per share is calculated using the weighted average number of common shares outstanding for the period presented. In accordance with ASC 946, convertible securities are not considered in the calculation of net asset value per share.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic No. 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact, if any, of adopting this ASU on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments (“ASU 2016-15”), which addresses certain aspects of cash flow statement classification. One such amendment requires cash payments for debt prepayment or debt extinguishment costs to be classified as cash outflows for financing activities. ASU 2016-15 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that

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interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The adoption of the amended guidance in ASU 2016-15 did not have a significant effect on our consolidated financial statements and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends accounting guidance for revenue recognition arising from contracts with customers. Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB also issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of the standard for one year. As a result, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted as of fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The application of this guidance did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The standard will modify the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. ASU No. 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted upon issuance of this ASU. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

SEC Disclosure Update and Simplification
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance. As a result of the amendments, we are required to present a reconciliation of changes in stockholders’ equity in the notes or as a separate statement. This analysis should reconcile the beginning balance to the ending balance of each caption in stockholders’ equity for each period for which an income statement is required to be filed and comply with the remaining content requirements of Rule 3-04 of Regulation S-X. In October 2018, the SEC announced that this final rule will become effective on November 5, 2018. In light of the timing of effectiveness of the amendments and proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC Staff commented that it would not object if the first presentation of the changes in shareholders’ equity is included in a filer’s Form 10-Q for the quarter that begins after the effective date of the amendments. Due to the timing of our filing of this Form 10-Q, our first presentation of the changes in stockholders’ equity will be for our second quarter ended December 31, 2018. 
Tax Cuts and Jobs Act

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed the Code, including, a reduction in the corporate income tax rate, a new limitation on the deductibility of interest expense, and significant changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Act also authorizes the IRS to issue regulations with respect to the new provisions. We cannot predict how the changes in the Tax Act, or regulations or other guidance issued under it, might affect us, our business or the business of our portfolio companies. However, our portfolio companies may or may not make certain elections under the Tax Act that could materially increase their taxable earnings and profits. Any such increase in the earnings and profits of a portfolio company may result in the characterization of certain distributions sourced from sale proceeds as dividend income, which may increase our distributable taxable income. During the three months ended September 30, 2018, we received $11,000 of such dividends from NPRC related to the gain on the sale of NPRC’s St. Marin, Central Park, and Matthews Reserve properties.


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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to financial market risks, including changes in interest rates and equity price risk. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates impacting some of the loans in our portfolio which have floating interest rates. Additionally, because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. See “Risk Factors - Risks Relating to Our Business - Changes in interest rates may affect our cost of capital and net investment income” in the accompanying prospectus.
Our debt investments may be based on floating rates or fixed rates. For our floating rate loans the rates are determined from the LIBOR, EURO Interbank Offer Rate, the Federal Funds Rate or the Prime Rate. The floating interest rate loans may be subject to a LIBOR floor. Our loans typically have durations of one to three months after which they reset to current market interest rates. As of September 30, 2018, 87.82% of the interest earning investments in our portfolio, at fair value, bore interest at floating rates.
We also have a revolving credit facility and certain Prospect Capital InterNotes® issuances that are based on floating LIBOR rates. Interest on borrowings under the revolving credit facility is one-month LIBOR plus 220 basis points with no minimum LIBOR floor and there is $404.0 million outstanding as of September 30, 2018. Interest on five Prospect Capital InterNotes® is three-month LIBOR plus a range of 300 to 350 basis points with no minimum LIBOR floor. The Convertible Notes, Public Notes and remaining Prospect Capital InterNotes® bear interest at fixed rates.
The following table shows the approximate annual impact on net investment income of base rate changes in interest rates (considering interest rate flows for floating rate instruments, excluding our investments in CLO residual interests) to our loan portfolio and outstanding debt as of September 30, 2018, assuming no changes in our investment and borrowing structure:
(in thousands)
Basis Point Change
 
Interest Income
 
Interest Expense
 
Net Investment Income
 
Net Investment Income (1)
Up 300 basis points
 
$
96,983

 
$
55

 
$
96,928

 
$
77,542

Up 200 basis points
 
64,162

 
37

 
64,125

 
51,300

Up 100 basis points
 
31,340

 
18

 
31,322

 
25,058

Down 100 basis points
 
(34,859
)
 
(43
)
 
(34,816
)
 
(27,853
)
(1)
Includes the impact of income incentive fees. See Note 13 in the accompanying Consolidated Financial Statements for more information on income incentive fees.

As of September 30, 2018, one, two, three and six month LIBOR was 2.26%, 2.31%, 2.40%, and 2.60% respectively.
We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of higher interest rates with respect to our portfolio of investments. During the quarter ended September 30, 2018, we did not engage in hedging activities.

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SUPPLEMENT TO MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary of U.S. federal income tax considerations supplements the discussion set forth under the heading “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus and is subject to the qualifications and assumptions set forth therein.
The following is a general summary of U.S. federal income tax considerations generally applicable to the purchase, ownership and disposition of the Notes. This discussion is based upon the Code, Treasury Regulations and judicial decisions and administrative interpretations thereof, all as of the date hereof and all of which are subject to change or differing interpretations, possibly with retroactive effect. No ruling from the Internal Revenue Service (“IRS”) has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects set forth below.
This discussion applies only to a holder of the Notes that acquires the Notes for cash pursuant to this offering at the initial offering price and who holds the Notes as a capital asset (generally, property held for investment) under the Code. This discussion does not address any U.S. federal estate or gift tax consequences or any state, local or non-U.S. tax consequences. In addition, this discussion does not address all aspects of U.S. federal income taxation that may be applicable to investors in light of their particular circumstances, or to investors subject to special treatment under U.S. federal income tax law, including, but not limited to:
•
banks, insurance companies or other financial institutions;
•
pension plans or trusts;
•
U.S. Noteholders (as defined below) whose functional currency is not the U.S. dollar;
•
real estate investment trusts;
•
regulated investment companies;
•
persons subject to the alternative minimum tax;
•
cooperatives;
•
tax-exempt organizations;
•
dealers in securities;
•
expatriates;
•
foreign persons or entities (except to the extent set forth below);
•
persons deemed to sell the Notes under the constructive sale provisions of the Code; or
•
persons that hold the Notes as part of a straddle, hedge, conversion transaction or other integrated investment.
If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) is an owner of the Notes, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partners in a partnership that owns the Notes should consult their tax advisors as to the particular U.S. federal income tax consequences applicable to them.
We encourage investors to consult their tax advisors regarding the specific consequences of an investment in the Notes, including tax reporting requirements, the applicability of U.S. federal, state, local and non-U.S. tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.
Consequences to U.S. Noteholders
The following is a general summary of U.S. federal income tax consequences generally applicable to you if you are a U.S. Noteholder. U.S. federal income tax consequences generally applicable to non-U.S. Noteholders are described under “Consequences to non-U.S. Noteholders” below. For purposes of this summary, the term “U.S. Noteholder” means a beneficial owner of a Note that is, for U.S. federal income tax purposes (i) an individual who is a citizen or resident of the U.S., (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, that is created or organized under the laws of the U.S., any of the States or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust (A) if a court within the U.S. is able to exercise primary supervision over

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its administration and one or more U.S. persons have the authority to control all substantial decisions of such trust, or (B) that has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes.
Interest on the Notes
Interest on the Notes will be taxable to a U.S. Noteholder as ordinary interest income at the time such Noteholder receives or accrues such amounts, in accordance with its regular method of accounting.
As discussed in “Description of the Notes - Interest Rate Adjustment,” the interest rate on the Notes may be adjusted in the event certain contingencies occur. We intend to take the position that the Notes are not subject to the rules for "contingent payment debt instruments" and are not issued with "original issue discount" for U.S. federal income tax purposes. Our determination is generally binding on all holders, other than a holder that discloses its differing position in a statement attached to its timely filed U.S. federal income tax return for the taxable year during which a Note was acquired. Our determination is not, however, binding on the IRS, and if the IRS were to challenge our determination, a holder that is subject to U.S. federal income taxation might be required to accrue ordinary interest income on the Notes at a rate that is higher than the otherwise applicable rate of stated interest or may have other adverse consequences. Please consult your tax advisor as to the tax effects to you of our position and the possible IRS re-characterization of the Notes with respect to the foregoing. The remainder of this discussion assumes our determination is respected.
Sale, exchange, redemption or other taxable disposition of the Notes
Subject to the discussion below regarding amounts attributable to accrued but unpaid interest, upon the sale, exchange, redemption or other taxable disposition of a Note, a U.S. Noteholder generally will recognize taxable capital gain or loss equal to the difference, if any, between the amount realized and the U.S. Noteholder’s adjusted tax basis in the Note at the time of such disposition. Such gain or loss will be long-term capital gain or loss if the U.S. Noteholder’s holding period with respect to the Note disposed of is more than one year. To the extent that amounts received are attributable to accrued but unpaid interest that the U.S. Noteholder has not yet included in income, such interest will not be taken into account in determining gain or loss, but will instead be taxable as ordinary interest income. The deductibility of capital losses is subject to limitations.
Information reporting and backup withholding
Interest on, or the proceeds of the sale or other disposition of, a Note are generally subject to information reporting unless the U.S. Noteholder is an exempt recipient (such as a corporation). Such payments, along with principal payments on the Note, may also be subject to U.S. federal backup withholding at the applicable rate if the recipient of such payment fails to supply a taxpayer identification number, certified under penalties of perjury, as well as certain other information or otherwise fails to establish an exemption from backup withholding. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit against that U.S. Noteholder’s U.S. federal income tax liability provided the required information is furnished to the IRS.
Medicare tax
Certain U.S. Noteholders who are individuals, estates or trusts and whose income exceeds certain thresholds will be required to pay a 3.8% Medicare tax on all or a portion of their “net investment income,” which includes interest on the Notes and capital gains from the sale or other disposition of the Notes.
Consequences to non-U.S. Noteholders
The following is a general summary of U.S. federal income tax consequences generally applicable to you if you are a non-U.S. Noteholder. A beneficial owner of a Note that is not a partnership for U.S. federal income tax purposes or a U.S. Noteholder is referred to herein as a “non-U.S. Noteholder.”
Interest on the Notes
Subject to the discussion below under the heading “Other withholding rules,” interest paid or accrued to a non-U.S. Noteholder generally will not be subject to U.S. federal income or withholding tax if the interest is not effectively connected with its conduct of a trade or business within the United States, and the non-U.S. Noteholder:
•
does not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock entitled to vote;
•
is not a “controlled foreign corporation” with respect to which we are, directly or indirectly, a “related person”;
•
is not a bank whose receipt of interest on the Notes is described in section 881(c)(3)(A) of the Code; and

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•
provides its name and address, and certifies, under penalties of perjury, that it is not a U.S. person (on a properly executed IRS Form W-8BEN or W-8BEN-E or other applicable form), or holds the Notes through certain foreign intermediaries and satisfies the certification requirements of applicable Treasury Regulations.
If a non-U.S. Noteholder does not qualify for an exemption under these rules, interest income from the Notes may be subject to withholding tax at the rate of 30% (or lower applicable treaty rate). Interest effectively connected with a non-U.S. Noteholder’s conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, which is attributable to a United States permanent establishment), however, would not be subject to a 30% withholding tax so long as the non-U.S. Noteholder provides us or our paying agent with an adequate certification (currently on IRS Form W-8ECI); such payments of interest generally would be subject to U.S. federal income tax on a net basis at the rates applicable to U.S. persons generally. In addition, if a non-U.S. Noteholder is a foreign corporation and the interest is effectively connected with its conduct of a U.S. trade or business, it may also be subject to a 30% (or lower applicable treaty rate) branch profits tax on its effectively connected earnings and profits for the taxable year, subject to adjustments. To claim the benefit of a tax treaty, a non-U.S. Noteholder must provide a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable form) to us or our paying agent before the payment of interest and may be required to obtain a U.S. taxpayer identification number and provide documentary evidence issued by foreign governmental authorities to prove residence in the foreign country.
Sale, exchange, redemption or other taxable disposition of the Notes
Subject to the discussion below under the heading “Other withholding rules,” any gain recognized by a non-U.S. Noteholder on the sale, exchange, redemption or other taxable disposition of the Notes (except with respect to accrued and unpaid interest, which would be taxed as described under “Consequences to Non-U.S. Noteholders—Interest on the Notes” above) generally will not be subject to U.S. federal income tax unless:
•
the non-U.S. Noteholder’s gain is effectively connected with its conduct of a U.S. trade or business (and, if required under an applicable income tax treaty, is attributable to a United States permanent establishment); or
•
the non-U.S. Noteholder is a nonresident alien individual present in the U.S. for 183 or more days in the taxable year within which the sale, exchange, redemption or other disposition takes place and certain other requirements are met.
If a non-U.S. Noteholder is a holder described in the first bullet point above, the net gain derived from the sale, exchange, redemption or other taxable disposition of its Notes generally will be subject to U.S. federal income tax on a net basis at the rates applicable to U.S. persons generally. In addition, if such non-U.S. Noteholder is a foreign corporation, it may also be subject to a 30% (or lower applicable treaty rate) branch profits tax on its effectively connected earnings and profits for the taxable year, subject to adjustments. If a non-U.S. Noteholder is a holder described in the second bullet point above, it will be subject to a flat 30% U.S. federal income tax on the gain derived from the sale, exchange, redemption or other taxable disposition of its Notes, which may be offset by U.S. source capital losses, even though it is not considered a resident of the United States.
Non-U.S. Noteholders should consult any applicable income tax treaties that may provide for different rules. In addition, non-U.S. Noteholders are urged to consult their tax advisors regarding the tax consequences of the purchase, ownership and disposition of the Notes.
Information reporting and backup withholding
A non-U.S. Noteholder may be required to comply with certain certification procedures to establish that the holder is not a U.S. person in order to avoid backup withholding with respect to our payment of principal and interest on, or the proceeds of the sale or other disposition of, a Note. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against that non-U.S. Noteholder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS. In certain circumstances, the name and address of the beneficial owner and the amount of interest paid on a Note, as well as the amount, if any, of tax withheld, may be reported to the IRS. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. Noteholder resides.

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Other withholding rules
Withholding at a rate of 30% will be required on interest in respect of, and after December 31, 2018, on gross proceeds from the sale of, the Notes held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Secretary of the Treasury to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution to the extent such interests or accounts are held by certain U.S. persons or by certain non-U.S. entities that are wholly or partially owned by United States persons and to withhold on certain payments. Accordingly, the entity through which the Notes are held will affect the determination of whether such withholding is required. Similarly, interest in respect of, and, after December 31, 2018, gross proceeds from the sale of, the Notes held by an investor that is a non-financial non-U.S. entity will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to the applicable withholding agent that such entity does not have any “substantial U.S. owners” or (ii) provides certain information regarding the entity’s “substantial U.S. owners,” which we will in turn provide to the Secretary of the Treasury. An intergovernmental agreement between the United States and an applicable foreign country, or future guidance, may modify these requirements. Non-U.S. Noteholders are encouraged to consult with their tax advisors regarding the possible implications of these requirements on their investment in the Notes.

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CERTAIN CONSIDERATIONS APPLICABLE TO
ERISA, GOVERNMENTAL AND OTHER PLAN INVESTORS
A fiduciary of a pension plan or other employee benefit plan (including a governmental plan, an individual retirement account or a Keogh plan) proposing to invest in the Notes should consider this section carefully.
A fiduciary of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (commonly referred to as “ERISA”), should consider fiduciary standards including the prudence and diversification requirements under ERISA in the context of the particular circumstances of such plan before authorizing an investment in the Notes. Such fiduciary should also consider, among other things, whether the investment is in accordance with the documents and instruments governing the plan.
In addition, ERISA and the Code prohibit certain transactions (referred to as “prohibited transactions”) involving the assets of a plan subject to ERISA or the assets of an individual retirement account or plan subject to Section 4975 of the Code (each referred to as an “ERISA plan”), on the one hand, and persons who have certain specified relationships to the plan (“parties in interest” within the meaning of ERISA or “disqualified persons” within the meaning of the Code), on the other. If we (or an affiliate) are considered a party in interest or disqualified person with respect to an ERISA plan, then the investment in Notes by the ERISA plan may give rise to a prohibited transaction, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions (“PTCEs”) that may apply to the acquisition and holding of the notes by an ERISA plan.  These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting transactions involving insurance company pooled separate accounts, PTCE 91-38 respecting transactions involving bank collective investment funds, PTCE 95-60 respecting transactions involving life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers.  In addition, the statutory exemption under Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provides relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions between an ERISA plan and a person who is a party in interest or disqualified person solely as a result of providing services to such ERISA plan (or as a result of being related to person who provides services to such ERISA plan).  This relief applies only if neither the party in interest or disqualified person nor any of its affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice with respect to the assets of the ERISA plan involved in the transaction and the ERISA plan receives no less, and pays no more, than adequate consideration in connection with the transaction.  Each of the above-noted exemptions contains conditions and limitations on its application.  Fiduciaries of ERISA plans considering acquiring and/or holding the notes in reliance on these or any other exemption should carefully review the exemption to assure it is applicable.  There can be no assurance that all of the conditions of any such exemptions will be satisfied, or that any exemption will cover all possible transactions involving Notes.
By purchasing and holding the Notes (including any interest in a Note), the fiduciary making the decision to invest on behalf of an ERISA plan is representing that the purchase and holding of the Notes will not result in a non-exempt prohibited transaction under ERISA or the Code. Therefore, an ERISA plan should not invest in the Notes unless the plan fiduciary acquiring Notes on behalf of the ERISA plan determines that neither we nor an affiliate is or (at any time during the term of the investment) will become a party in interest or a disqualified person and that no other prohibited transaction under ERISA or Section 4975 of the Code would occur in connection with the ERISA plan’s investment in Notes or, alternatively, that an exemption from the prohibited transaction rules is available. If an ERISA plan engages in a prohibited transaction, the transaction may require “correction” and may cause the ERISA plan fiduciary to incur certain liabilities and the parties in interest or disqualified persons to be subject to excise taxes. There can be no assurance that any exemption would be available with respect to any particular ERISA plan’s investment in the Notes.
Employee benefit plans that are governmental plans and non-U.S. plans, and certain church plans, are not subject to ERISA requirements. However, non-U.S., federal, state or local laws or regulations governing the investment and management of the assets of such plans may contain fiduciary and prohibited transaction requirements similar to those under ERISA and Section 4975 of the Code discussed above. By purchasing and holding the Notes (including any interest in a Note), the person making the decision to invest on behalf of any such plan is representing that the purchase and holding of the Notes will not violate any law or regulation applicable to such plan that is similar to the prohibited transaction provisions of ERISA or the Code. Neither we nor the underwriters nor any of our or their respective affiliates, has provided, and none of them will provide, impartial investment advice and or any advice in a fiduciary capacity, in connection with the ERISA plan’s investment in the Notes.
A fiduciary of an employee benefit plan, whether or not subject to ERISA, that proposes to invest in the Notes with the assets of such employee benefit plan, should consult its own legal counsel for further guidance. The sale of Notes (or any interest in a Note) to an employee benefit plan is in no respect a representation by us, the underwriters or any other person that

S-64

such an investment meets all relevant legal requirements with respect to investments by employee benefit plans generally or any particular plan or that such an investment is appropriate or recommended for employee benefit plans generally or any particular plan.
Additionally, each purchaser that is acquiring the Notes (or any interest in a Note with the assets of any ERISA plan, at any time when regulation 29 C.F.R. Section 2510.3-21 is applicable, represents, warrants and acknowledges that a fiduciary is making the decision to invest in the Notes on its behalf and that such fiduciary (a) is (1) a bank, insurance company, registered investment adviser, broker-dealer or other person with financial expertise, in each case as described in 29 C.F.R. Section 2510.3-21(c)(1)(i); (2) an independent plan fiduciary within the meaning of 29 C.F.R. Section 2510.3-21; (3) capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies; and (4) responsible for exercising independent judgment in evaluating the transaction and (b) acknowledges and agrees that (1) no fee or other compensation will be paid directly to us, an underwriter or any of our or their respective affiliates, for the provision of investment advice (as opposed to other services) in connection with the ERISA plan’s acquisition of, or holding of an interest in  the Notes; (2) neither we nor the underwriters or other persons that provide marketing services, nor any of our or their respective affiliates, has provided, and none of them will provide, impartial investment advice and neither we nor they are providing or will provide advice in a fiduciary capacity, in connection with the ERISA plan’s investment in the Notes and (3) it has received and understands the disclosure of the existence and nature of the financial interests contained in this offering and related materials. The above representations in this paragraph are intended to comply with the Department of Labor’s regulation Sections 29 C.F.R. 2510.3-21(a) and (c)(1) as promulgated on April 8, 2016 (81 Fed. Reg. 20,997), and if these regulations are revoked, repealed or no longer effective, these representations shall be deemed to be no longer required or in effect.

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USE OF PROCEEDS
We estimate that the net proceeds from this offering will be approximately $47,925,000 (or approximately $55,188,750 if the option to purchase up to an additional $7,500,000 aggregate principal amount of Notes solely to cover over-allotments, if any, is exercised in full) after deducting fees and estimated offering expenses of approximately $500,000 payable by us.
We expect to use a portion of the net proceeds from the sale of the Notes offered hereby to repay debt under our credit facility. We intend to use the remainder of the net proceeds of the offering to invest in high quality short term debt investments, and/or to make long term investments in accordance with our investment objective.
As of November 27, 2018, we had $331.0 million in outstanding borrowings under our credit facility and, based on the assets currently pledged as collateral on the facility, a total of approximately $574.2 million was available to us for borrowing under our credit facility net of outstanding borrowings. Interest on borrowings under the credit facility is one-month LIBOR plus 2.20%, with no minimum LIBOR floor. Additionally, the lenders charge a fee on the unused portion of the credit facility equal to either 50 basis points if more than 60% of the credit facility is drawn, or 100 basis points if more than 35% and an amount less than or equal to 60% of the credit facility is drawn, or 150 basis points if an amount less than or equal to 35% of the credit facility is drawn.

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CAPITALIZATION
The following table sets forth our consolidated capitalization (i) as of September 30, 2018 and (ii) as of September 30, 2018, as adjusted to give effect to the sale of $50.0 million aggregate principal amount of Notes but without giving effect to the use of the cash proceeds from such sale as described in “Use of Proceeds”.
This table should be read in conjunction with “Use of Proceeds” and our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and notes thereto included in this prospectus supplement and the accompanying prospectus. The adjusted information is illustrative only.
 
As of September 30, 2018
 
 
(In thousands, except
shares and per share data)
(Unaudited)
 
 
Actual
 
As Adjusted for this Offering(1)
 
Long‑term debt, including current maturities:
 
 
 
 
Credit facility payable
$
404,000

 
$
404,000

(2) 
Convertible notes
822,147

 
822,147

 
Public notes
699,925

 
699,925

(3) 
Prospect Capital InterNotes®
768,887

 
768,887

(4) 
Notes offered hereby
—

 
50,000

 
Amount owed to affiliates
53,723

 
53,723

 
Total long‑term debt
$
2,748,682

 
$
2,798.682

 
Stockholders’ equity:
 
 
 
 
Common stock, par value $0.001 per share (1,000,000,000 common shares authorized; 365,225,139 shares outstanding actual and 365,225,139 shares outstanding as adjusted)
$
365

 
$
365

 
Paid‑in capital in excess of par value
4,027,305

 
4,027,305

 
Accumulated overdistributed net investment income
(25,689
)
 
(25,689
)
 
Accumulated realized losses on investments
(467,906
)
 
(467,906
)
 
Net unrealized loss on investments
(103,131
)
 
(103,131
)
 
Total stockholders’ equity
3,430,944

 
3,430,944

 
Total capitalization
$
6,179,626

 
$
6,229.626

 

(1) The As Adjusted for this Offering calculations exclude any exercise of the underwriters’ option to purchase additional Notes.

(2) As of November 27, 2018, we had $331.0 million in outstanding borrowings under our credit facility.

(3) The As Adjusted for this Offering calculation excludes our issuance of $3.7 million in aggregate principal amount of our 2024 Notes for net proceeds of $3.6 million and $2.2 million in aggregate principal amount of our 2028 Notes for net proceeds of $2.2 million.

(4) The As Adjusted for this Offering calculation excludes our issuance of $23.9 million aggregate principal amount of Prospect Capital Internotes® for net proceeds of $23.5 million during the period October 1, 2018 through November 27, 2018.


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SENIOR SECURITIES
Information about our senior securities is shown in the following table as of each fiscal year ended June 30 for the fiscal years ended June 30, 2009 through June 30, 2018 and as of September 30, 2018. (All figures in this item are in thousands except per unit data.)
 
 
Total Amount
Outstanding(1)
 
Asset
Coverage per
Unit(2)
 
Involuntary
Liquidating
Preference per
Unit(3)
 
Average
Market
Value per
Unit(4)
Credit Facility(15)
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
404,000

 
$
15,159

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
37,000

 
155,503

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
—

 
—

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
—

 
—

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
368,700

 
18,136

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
92,000

 
69,470

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
124,000

 
34,996

 
—

 
—

Fiscal 2012 (as of June 30, 2012)
 
96,000

 
22,668

 
—

 
—

Fiscal 2011 (as of June 30, 2011)
 
84,200

 
18,065

 
—

 
—

Fiscal 2010 (as of June 30, 2010)
 
100,300

 
8,093

 
—

 
—

Fiscal 2009 (as of June 30, 2009)
 
124,800

 
5,268

 
—

 
—

 
 
 
 
 
 
 
 
 
2015 Notes(5)
 
 
 
 
 
 
 
 
Fiscal 2015 (as of June 30, 2015)
 
$
150,000

 
$
44,579

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
150,000

 
42,608

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
150,000

 
28,930

 
—

 
—

Fiscal 2012 (as of June 30, 2012)
 
150,000

 
14,507

 
—

 
—

Fiscal 2011 (as of June 30, 2011)
 
150,000

 
10,140

 
—

 
—

 
 
 
 
 
 
 
 
 
2016 Notes(6)
 
 
 
 
 
 
 
 
Fiscal 2016 (as of June 30, 2016)
 
$
167,500

 
$
36,677

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
167,500

 
39,921

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
167,500

 
38,157

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
167,500

 
25,907

 
—

 
—

Fiscal 2012 (as of June 30, 2012)
 
167,500

 
12,992

 
—

 
—

Fiscal 2011 (as of June 30, 2011)
 
172,500

 
8,818

 
—

 
—

 
 
 
 
 
 
 
 
 
2017 Notes(7)
 
 
 
 
 
 
 
 
Fiscal 2017 (as of June 30, 2017)
 
$
50,734

 
$
118,981

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
129,500

 
47,439

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
130,000

 
51,437

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
130,000

 
49,163

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
130,000

 
33,381

 
—

 
—

Fiscal 2012 (as of June 30, 2012)
 
130,000

 
16,739

 
—

 
—

 
 
 
 
 
 
 
 
 
2018 Notes(8)
 
 
 
 
 
 
 
 
Fiscal 2017 (as of June 30, 2017)
 
$
85,419

 
$
70,668

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
200,000

 
30,717

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
200,000

 
33,434

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
200,000

 
31,956

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
200,000

 
21,697

 
—

 
—


S-68

 
 
Total Amount
Outstanding(1)
 
Asset
Coverage per
Unit(2)
 
Involuntary
Liquidating
Preference per
Unit(3)
 
Average
Market
Value per
Unit(4)
2019 Notes
 
 

 
 

 
 

 
 

Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
101,647

 
$
60,251

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
101,647

 
56,604

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
200,000

 
30,182

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
200,000

 
30,717

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
200,000

 
33,434

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
200,000

 
31,956

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
200,000

 
21,697

 
—

 
—

 
 
 
 
 
 
 
 
 
5.00% 2019 Notes(10)
 
 
 
 
 
 
 
 
Fiscal 2018 (as of June 30, 2018)
 
$
153,536

 
$
37,474

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
300,000

 
20,121

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
300,000

 
20,478

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
300,000

 
22,289

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
300,000

 
21,304

 
—

 
—

 
 
 
 
 
 
 
 
 
2020 Notes
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
392,000

 
$
15,623

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
392,000

 
14,678

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
392,000

 
15,399

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
392,000

 
15,672

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
392,000

 
17,058

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
400,000

 
15,978

 
—

 
—

 
 
 
 
 
 
 
 
 
6.95% 2022 Notes(9)
 
 
 
 
 
 
 
 
Fiscal 2014 (as of June 30, 2014)
 
$
100,000

 
$
63,912

 
—

 
$
1,038

Fiscal 2013 (as of June 30, 2013)
 
100,000

 
43,395

 
—

 
1,036

Fiscal 2012 (as of June 30, 2012)
 
100,000

 
21,761

 
—

 
996

 
 
 
 
 
 
 
 
 
2022 Notes
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
328,500

 
$
18,643

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
328,500

 
17,515

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
225,000

 
26,828

 
—

 
—

 
 
 
 
 
 
 
 
 
2023 Notes(11)
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
318,792

 
$
19,211

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
318,675

 
18,055

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
248,507

 
24,291

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
248,293

 
24,742

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
248,094

 
26,953

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
247,881

 
25,783

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
247,725

 
17,517

 
—

 
—

 
 
 
 
 
 
 
 
 
2024 Notes
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
214,847

 
$
28,506

 
—

 
$
1,001

Fiscal 2018 (as of June 30, 2018)
 
199,281

 
28,872

 
—

 
1,029

Fiscal 2017 (as of June 30, 2017)
 
199,281

 
30,291

 
—

 
1,027

Fiscal 2016 (as of June 30, 2016)
 
161,364

 
38,072

 
—

 
951


S-69

 
 
Total Amount
Outstanding(1)
 
Asset
Coverage per
Unit(2)
 
Involuntary
Liquidating
Preference per
Unit(3)
 
Average
Market
Value per
Unit(4)
6.375% 2024 Notes(11)
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
99,685

 
$
61,437

 
—

 
—

 
 
 
 
 
 
 
 
 
2028 Notes
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
65,078

 
$
94,108

 
—

 
$
998

Fiscal 2018 (as of June 30, 2018)
 
55,000

 
104,611

 
—

 
1,004

 
 
 
 
 
 
 
 
 
Prospect Capital InterNotes®(13)
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
768,887

 
$
7,965

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
760,924

 
7,561

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
980,494

 
6,156

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
908,808

 
6,760

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
827,442

 
8,081

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
785,670

 
8,135

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
363,777

 
11,929

 
—

 
—

 
 
 
 
 
 
 
 
 
All Senior Securities(11)(12)(13)(14)
 
 
 
 
 
 
 
 
Fiscal 2019 (as of September 30, 2018, unaudited)
 
$
2,693,436

 
$
2,274

 
—

 
—

Fiscal 2018 (as of June 30, 2018)
 
2,346,563

 
2,452

 
—

 
—

Fiscal 2017 (as of June 30, 2017)
 
2,681,435

 
2,251

 
—

 
—

Fiscal 2016 (as of June 30, 2016)
 
2,707,465

 
2,269

 
—

 
—

Fiscal 2015 (as of June 30, 2015)
 
2,983,736

 
2,241

 
—

 
—

Fiscal 2014 (as of June 30, 2014)
 
2,773,051

 
2,305

 
—

 
—

Fiscal 2013 (as of June 30, 2013)
 
1,683,002

 
2,578

 
—

 
—

Fiscal 2012 (as of June 30, 2012)
 
664,138

 
3,277

 
—

 
—

____________________________________________
(1)
Except as noted, the total amount of each class of senior securities outstanding at the end of the year/period presented (in 000’s).
(2)
The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit.
(3)
This column is inapplicable.
(4)
This column is inapplicable, except for the 6.95% 2022 Notes, the 2024 Notes and the 2028 Notes. The average market value per unit is calculated as an average of quarter-end prices and shown as the market value per $1,000 of indebtedness.
(5)
We repaid the outstanding principal amount of the 2015 Notes on December 15, 2015.
(6)
We repaid the outstanding principal amount of the 2016 Notes on August 15, 2016.
(7)
We repaid the outstanding principal amount of the 2017 Notes on October 15, 2017.
(8)
We repaid the outstanding principal amount of the 2018 Notes on March 15, 2018.
(9)
We redeemed the 6.95% 2022 Notes on May 15, 2015.
(10)
We redeemed the 5.00% 2019 Notes on September 26, 2018.
(11)
For the quarter ended September 30, 2018 and all fiscal years ended June 30th, the notes are presented net of unamortized discount.
(12)
While we do not consider commitments to fund under revolving arrangements to be Senior Securities, if we were to elect to treat such unfunded commitments, which were $38,530 as of September 30, 2018 as Senior Securities for purposes of Section 18 of the 1940 Act, our asset coverage per unit would be $2,256.
(13)
Pursuant to notice to call provided on October 12, 2018, we redeemed $70,072 of our Prospect Capital InterNotes® at par maturing between May 15, 2020 and November 15, 2020, with a weighted average rate of 4.92%. Settlement of the call occurred on November 15, 2018.
(14)
If we were to consider the additional issuance and repurchases subsequent to September 30, 2018, our asset coverage per unit would be $2,331, or $2,317 including the effects of unfunded commitments, as of November 27, 2018.
(15)
As of November 27, 2018, we had $331.0 million outstanding borrowings under our credit facility.

S-70

UNDERWRITING
RBC Capital Markets, LLC and UBS Securities LLC are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the aggregate principal amount of Notes set forth opposite its name below.
Underwriter
 
Principal Amount of Notes
RBC Capital Markets, LLC
 
$
15,500,000

UBS Securities LLC
 
15,500,000

Ladenburg Thalmann & Co. Inc.
 
5,000,000

Oppenheimer & Co. Inc.
 
5,000,000

BB&T Capital Markets, a division of BB&T Securities, LLC
 
2,500,000

Citigroup Global Markets Inc.
 
2,500,000

William Blair & Company, L.L.C.
 
2,500,000

B. Riley FBR, Inc.
 
750,000

Incapital LLC
 
750,000

   Total
 
$
50,000,000

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the Notes sold under the underwriting agreement if any of these Notes are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.
The underwriters are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by counsel and other conditions contained in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
We expect that delivery of the Notes will be made against payment therefor on or about December 5, 2018, which will be the fifth business day following the date of the pricing of the Notes (such settlement being herein referred to as “T+5”). Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes prior to the date of delivery hereunder will be required, by virtue of the fact that the Notes initially will settle in T+5 business days, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement.
Commissions and Discounts
An underwriting discount of 3.15% per Note will be paid by us. This underwriting discount will also apply to any Notes purchased pursuant to the option to purchase up to an additional $7,500,000 in aggregate principal amount of Notes.
The following table shows the total underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. The information assumes either no exercise or full exercise by the underwriters of their option.
 
 
Per Note
 
Total
Without Option
 
Total
With Option
Public offering price
 
$
25.00

 
$
50,000,000

 
$
57,500,000

Underwriting discount
 
$
0.7875

 
$
1,575,000

 
$
1,811,250

Proceeds, before expense, to us
 
$
24.2125

 
$
48,425,000

 
$
55,688,750


S-71

The underwriters propose to offer some of the Notes to the public at the public offering price set forth on the cover page of this prospectus supplement and some of the Notes to certain dealers at the public offering price less a concession not in excess of $0.50 per Note. The underwriters may allow, and dealers may reallow, a concession not in excess of $0.45 per Note to certain other dealers. After the initial offering of the Notes to the public, the public offering price and such concessions may be changed. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus supplement.
We estimate that our share of the total expenses of the offering, excluding the underwriting discount, will be approximately $500,000.
Option
We have granted an option to the underwriters to purchase up to an additional $7,500,000 total aggregate principal amount of Notes solely to cover over-allotments, if any, at the public offering price within 30 days from the date of this prospectus supplement. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional Notes proportionate to that underwriter’s initial principal amount reflected in the above table.
Lock-Up Arrangement
We have agreed that during a period of 30 days from the date of this prospectus supplement, we will not, without the prior written consent of RBC Capital Markets, LLC and UBS Securities LLC, directly or indirectly, offer, pledge, sell, contract to sell, grant any option for the sale of, or otherwise transfer or dispose of, any senior unsecured debt securities issued or guaranteed by us or any securities convertible into or exercisable or exchangeable for senior unsecured debt securities issued or guaranteed by us or file any registration statement under the Securities Act with respect to any of the foregoing. The foregoing restriction shall not apply to (i) the registration and sale of the Notes to be sold hereunder, (ii) the issuance of, commencing the week of December 10, 2018, Prospect Capital InterNotes® pursuant to that certain Seventh Amended and Restated Selling Agent Agreement, dated as of November 9, 2018, between the Company, Prospect Capital Management, Prospect Administration and the agents named therein, (iii) the issuance of, commencing the week of December 10, 2018, 2024 Notes and 2028 Notes pursuant to certain Debt Distribution Agreements, dated as of August 31, 2018, between the Company, Prospect Capital Management, Prospect Administration and the agents party thereto, or (iv) the issuance of any institutional notes not listed on an exchange.
Listing
The Notes are a new issue of securities with no established trading market. We intend to list the Notes on The New York Stock Exchange. If the application for the listing is approved, we expect trading in the Notes on The New York Stock Exchange to begin within 30 days after the original issue date. Currently there is no public market for the Notes.
We have been advised by the underwriters that they presently intend to make a market in the Notes after completion of the offering as permitted by applicable laws and regulations. The underwriters are not obligated, however, to make a market in the Notes and any such market-making may be discontinued at any time in the sole discretion of the underwriters without any notice. Accordingly, no assurance can be given as to the liquidity of, or development of a public trading market for, the Notes. If an active public trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected.
Price Stabilization, Short Positions
In connection with the offering, the underwriters may purchase and sell Notes in the open market. These transactions may include overallotment, covering transactions and stabilizing transactions. Overallotment involves sales of securities in excess of the aggregate principal amount of securities to be purchased by the underwriters in the offering, which creates a short position for the underwriters. Covering transactions involve purchases of the securities in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions consist of certain bids or purchases of securities made for the purpose of preventing or retarding a decline in the market price of the securities while the offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased Notes sold by or for the account of such underwriter in stabilizing or short covering transactions.

S-72

Any of these activities may cause the price of the Notes to be higher than the price that otherwise would exist in the open market in the absence of such transactions. These transactions may be affected in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time without any notice relating thereto.
Electronic Offer, Sale and Distribution of Notes
The underwriters may make prospectuses available in electronic (PDF) format. A prospectus in electronic (PDF) format may be made available on a web site maintained by the underwriters, and the underwriters may distribute such prospectuses electronically. The underwriters may allocate a limited principal amount of the Notes for sale to their online brokerage customers.
Other Relationships
The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the issuer and its affiliates, for which they received or may in the future receive customary fees and expenses. In particular, affiliates of certain of the underwriters are lenders under our credit facility and may receive a portion of the net proceeds from the offering made pursuant to this prospectus supplement and the accompanying prospectus through the repayment of any borrowings.
In the ordinary course of its various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. If the underwriters or their affiliates have a lending relationship with us, they routinely hedge their credit exposure to us consistent with their customary risk management policies. The underwriters and their affiliates may hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the Notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the Notes offered hereby. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
The principal business address of RBC Capital Markets, LLC is Brookfield Place, 200 Vesey Street, 8th Floor, New York, New York. The principal business address of UBS Securities LLC is 1285 Avenue of the Americas, New York, New York 10019.
Other Jurisdictions
Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the Notes offered by this prospectus supplement and accompanying prospectus in any jurisdiction where action for that purpose is required. The Notes offered by this prospectus supplement and accompanying prospectus may not be offered or sold, directly or indirectly, nor may this prospectus supplement and accompanying prospectus or any other offering material or advertisements in connection with the offer and sale of any such Notes be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus supplement and accompanying prospectus comes are advised to inform themselves about and to observe any restriction relating to the offering and the distribution of this prospectus supplement and accompanying prospectus. This prospectus supplement and the accompanying prospectus do not constitute an offer to sell or a solicitation of an offer to buy the Notes offered by this prospectus supplement and the accompanying prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Selling Restrictions
This prospectus supplement and accompanying prospectus do not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (i) in which such an offer or solicitation is not authorized, (ii) in which any person making such offer or solicitation is not qualified to do so or (iii) in which any such offer or solicitation would otherwise

S-73

be unlawful. No action has been taken that would, or is intended to, permit a public offer of the Notes or possession or distribution of this prospectus supplement and accompanying prospectus or any other offering or publicity material relating to the Notes in any country or jurisdiction (other than the United States) where any such action for that purpose is required. Accordingly, the underwriters have undertaken that they will not, directly or indirectly, offer or sell any Notes or have in its possession, distribute or publish any prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of their knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of Notes by the underwriters will be made on the same terms.
European Economic Area
The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or (ii) a customer within the meaning of Directive 2002/92/EC (as amended, the “Insurance Mediation Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended, the “Prospectus Directive”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. This prospectus supplement and accompanying prospectus has been prepared on the basis that any offer of the Notes in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of the Notes. This prospectus supplement and accompanying prospectus is not a prospectus for the purposes of the Prospectus Directive.

S-74

LEGAL MATTERS
The legality of the Notes offered hereby will be passed upon for the Company by Sean Dailey, our Vice President, Legal, Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden, Arps”), New York, New York, and Venable LLP, as special Maryland counsel, Baltimore, Maryland, will pass on certain matters for the Company. Troutman Sanders LLP will pass on certain matters for the underwriters. Skadden, Arps and Venable LLP each have from time to time acted as counsel for us and our subsidiaries and may do so in the future.
INDEPENDENT ACCOUNTING FIRMS
BDO USA, LLP is the independent Registered Public accounting firm of the Company and National Property REIT Corp. RSM US LLP is the independent registered public accounting firm of First Tower Finance Company LLC.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the Notes offered by this prospectus supplement and accompanying prospectus. The registration statement contains additional information about us and the Notes being registered by this prospectus supplement and accompanying prospectus. We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. This information and the information specifically regarding how we voted proxies relating to portfolio securities for the period ended June 30, 2018, are available free of charge by contacting us at 10 East 40th Street, 42nd floor, New York, NY 10016 or by telephone at toll-free (888) 748-0702. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s Internet site at http://www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-0102.
No dealer, salesperson or other individual has been authorized to give any information or to make any representation other than those contained in this prospectus supplement and accompanying prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the underwriters. This prospectus supplement does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus supplement and accompanying prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs or that information contained herein is correct as of any time subsequent to the date hereof.

S-75

INDEX TO FINANCIAL STATEMENTS


F-1

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share and per share data)
 
September 30, 2018
 
June 30, 2018
 
 
 
(Unaudited)
 
(Audited)
Assets
 
 
 

Investments at fair value:
 

 
 

Control investments (amortized cost of $2,331,620 and $2,300,526, respectively)
$
2,487,337

 
$
2,404,326

Affiliate investments (amortized cost of $175,235 and $55,637, respectively)
95,993

 
58,436

Non-control/non-affiliate investments (amortized cost of $3,532,959 and $3,475,295, respectively)
3,353,353

 
3,264,517

Total investments at fair value (amortized cost of $6,039,814 and $5,831,458, respectively)
5,936,683

 
5,727,279

Cash
120,052

 
83,758

Receivables for:
 
 
 
Interest, net
23,516

 
19,783

Other
1,359

 
1,867

Due from broker (Note 6)
102,834

 
3,029

Deferred financing costs on Revolving Credit Facility (Note 4)
8,202

 
2,032

Due from Affiliate (Note 13)
5,888

 
88

Prepaid expenses
948

 
984

Total Assets 
6,199,482

 
5,838,820

Liabilities 
 

 
 

Revolving Credit Facility (Notes 4 and 8)
404,000

 
37,000

Convertible Notes (less unamortized debt issuance costs of $12,009 and $13,074, respectively)
(Notes 5 and 8)
810,138

 
809,073

Prospect Capital InterNotes® (less unamortized debt issuance costs of $11,875 and $11,998,
respectively) (Notes 7 and 8)
757,012

 
748,926

Public Notes (less unamortized discount and debt issuance costs of $12,219 and $11,007,
respectively) (Notes 6 and 8)
687,706

 
716,810

Due to Prospect Capital Management (Note 13)
51,327

 
49,045

Interest payable
27,365

 
33,741

Dividends payable
21,914

 
21,865

Due to broker
—

 
6,159

Accrued expenses
4,535

 
5,426

Due to Prospect Administration (Note 13)
2,396

 
2,212

Other liabilities
2,145

 
1,516

Total Liabilities 
2,768,538

 
2,431,773

Commitments and Contingencies (Note 3)
—

 
—

Net Assets 
$
3,430,944

 
$
3,407,047

 
 
 
 
Components of Net Assets 
 

 
 

Common stock, par value $0.001 per share (1,000,000,000 common shares authorized; 365,225,139 and 364,409,938 issued and outstanding, respectively) (Note 9)
$
365

 
$
364

Paid-in capital in excess of par (Note 9)
4,027,305

 
4,021,541

Accumulated overdistributed net investment income
(25,689
)
 
(45,186
)
Accumulated net realized loss
(467,906
)
 
(465,493
)
Net unrealized loss
(103,131
)
 
(104,179
)
Net Assets 
$
3,430,944

 
$
3,407,047

 
 
 
 
Net Asset Value Per Share (Note 16) 
$
9.39

 
$
9.35



See notes to consolidated financial statements.
F-2
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)

 
Three Months Ended September 30,
 
2018
 
2017
Investment Income
 
 
 
Interest income:
 
 
 
Control investments
$
56,454

 
$
46,030

Affiliate investments
227

 
205

Non-control/non-affiliate investments
68,609

 
72,430

Structured credit securities
34,152

 
29,420

Total interest income
159,442

 
148,085

Dividend income:
 
 
 
Control investments
14,665

 
—

Non-control/non-affiliate investments
262

 
544

Total dividend income
14,927

 
544

Other income:
 
 
 
Control investments
2,791

 
2,091

Non-control/non-affiliate investments
3,262

 
7,859

Total other income (Note 10)
6,053

 
9,950

Total Investment Income
180,422

 
158,579

Operating Expenses
 
 
 
Base management fee (Note 13)
29,957

 
30,163

Income incentive fee (Note 13)
21,290

 
15,933

Interest and credit facility expenses
37,908

 
41,035

Allocation of overhead from Prospect Administration (Note 13)
3,365

 
3,528

Audit, compliance and tax related fees
393

 
1,088

Directors’ fees
79

 
113

Other general and administrative expenses
2,271

 
2,987

Total Operating Expenses
95,263

 
94,847

Net Investment Income
85,159

 
63,732

Net Realized and Net Change in Unrealized Gains (Losses) from Investments
 
 
 
Net realized gains
 
 
 
Control investments
1

 
9

Affiliate investments
—

 
846

Non-control/non-affiliate investments
1,040

 
582

Net realized gains
1,041

 
1,437

Net change in unrealized gains (losses)
 
 
 
Control investments
51,918

 
1,093

Affiliate investments
(13,755
)
 
5,193

Non-control/non-affiliate investments
(37,114
)
 
(59,037
)
Net change in unrealized gains (losses)
1,049

 
(52,751
)
Net Realized and Net Change in Unrealized Gains (Losses) from Investments
2,090

 
(51,314
)
Net realized losses on extinguishment of debt
(3,454
)
 
(445
)
Net Increase in Net Assets Resulting from Operations
$
83,795

 
$
11,973

Net increase in net assets resulting from operations per share
$
0.23

 
$
0.03

Dividends declared per share
$
(0.18
)
 
$
(0.23
)


See notes to consolidated financial statements.
F-3
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(in thousands, except share data)
(Unaudited)


 
Three Months Ended September 30,
 

2018
 
2017
Operations
 

 
 

Net investment income
$
85,159

 
$
63,732

Net realized (losses) gains
(2,413
)
 
992

Net change in net unrealized gains (losses)
1,049

 
(52,751
)
Net Increase in Net Assets Resulting from Operations 
83,795

 
11,973

 
 
 
 
Distributions to Shareholders
 
 
 
Distribution from net investment income
(65,693
)
 
(81,647
)
Net Decrease in Net Assets Resulting from Distributions to Shareholders
(65,693
)
 
(81,647
)
 
 
 
 
Common Stock Transactions 
 
 
 
Value of shares issued through reinvestment of dividends
5,795

 
1,713

Net Increase in Net Assets Resulting from Common Stock Transactions
5,795

 
1,713

 
 
 
 
Total Increase (Decrease) in Net Assets
23,897

 
(67,961
)
Net assets at beginning of period
3,407,047

 
3,354,952

Net Assets at End of Period (Accumulated Overdistributed Net Investment Income of $25,689 and $72,726, respectively)
$
3,430,944

 
$
3,286,991

 
 
 
 
Common Stock Activity
 
 
 
Shares issued through reinvestment of dividends
815,201

 
233,489

  Shares issued and outstanding at beginning of period
364,409,938

 
360,076,933

Shares Issued and Outstanding at End of Period
365,225,139

 
360,310,422



See notes to consolidated financial statements.
F-4
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
(Unaudited)

 
Three Months Ended September 30,
 
2018
 
2017
Operating Activities
 
 
 
Net increase in net assets resulting from operations
$
83,795

 
$
11,973

Net realized losses on extinguishment of debt
3,454

 
445

Net realized gains on investments
(1,041
)
 
(1,437
)
Net change in net unrealized (gains) losses on investments
(1,049
)
 
52,751

Amortization of discounts and (accretion of premiums), net
(7,839
)
 
11,133

Accretion of discount on Public Notes (Note 6)
131

 
69

Amortization of deferred financing costs
2,716

 
3,166

Payment-in-kind interest
(9,325
)
 
(1,980
)
Structuring fees
(2,854
)
 
(2,285
)
Change in operating assets and liabilities:
 
 
 
Payments for purchases of investments
(242,463
)
 
(217,886
)
Proceeds from sale of investments and collection of investment principal
55,166

 
310,894

Decrease in due to broker
(6,159
)
 
(47,416
)
Increase (Decrease) in due to Prospect Capital Management
2,282

 
(1,936
)
Increase in interest receivable, net
(3,733
)
 
(11,714
)
Decrease in interest payable
(6,376
)
 
(5,306
)
Decrease in accrued expenses
(891
)
 
(1,093
)
Increase in due from broker
(99,805
)
 
—

Increase in other liabilities
629

 
614

Decrease (Increase) in other receivables
508

 
(174
)
Increase in due from Prospect Administration
—

 
(12
)
Increase in due from affiliate
(5,800
)
 
(4
)
Decrease in prepaid expenses
36

 
144

Increase in due to Prospect Administration
184

 
—

Net Cash (Used in) Provided by Operating Activities
(238,434
)
 
99,946

Financing Activities
 
 
 
Borrowings under Revolving Credit Facility (Note 4)
436,000

 
—

Principal payments under Revolving Credit Facility (Note 4)
(69,000
)
 
—

Issuances of Public Notes, net of original issue discount (Note 6)
125,644

 
—

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

Issuances of Prospect Capital InterNotes® (Note 7)
39,757

 
27,402

Redemptions of Prospect Capital InterNotes®, net (Note 7)
(31,794
)
 
(91,864
)
Financing costs paid and deferred
(12,494
)
 
(729
)
Dividends paid
(59,849
)
 
(88,321
)
Net Cash Provided by (Used in) Financing Activities
274,728

 
(153,512
)
 
 
 
 
Net Increase (Decrease) in Cash
36,294

 
(53,566
)
Cash at beginning of period
83,758

 
318,083

Cash at End of Period
$
120,052

 
$
264,517

Supplemental Disclosures
 
 
 
Cash paid for interest
$
41,437

 
$
43,106

Non-Cash Financing Activities
 
 
 
Value of shares issued through reinvestment of dividends
$
5,795

 
$
1,713

Cost basis of investments written off as worthless
$
—

 
$
310


See notes to consolidated financial statements.
F-5
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS
(in thousands, except share data)


 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPI Inc.(19)
Electronic Equipment, Instruments & Components
Senior Secured Term Loan A (10.00%, due 12/31/2020)(3)
12/13/2012
$
2,825

$
2,825

$
2,825

0.1%
Senior Secured Term Loan B (12.00% plus 7.00% PIK, due 12/31/2020)(3)(46)
12/13/2012
17,651

17,651

17,651

0.5%
Common Stock (14,857 shares)(16)
12/13/2012
 
6,759

14,213

0.4%
 
 
 
 
 
27,235

34,689

1.0%
CP Energy Services Inc.(20)
Energy Equipment & Services
Senior Secured Term Loan (13.34% (LIBOR + 11.00% with 1.00% LIBOR floor), due 12/29/2022)(11)
12/29/2017
35,048

35,048

35,048

1.0%
Series B Convertible Preferred Stock (16.00%, 790 shares)(16)
10/30/2015
 
63,225

63,225

1.9%
Common Stock (102,924 shares)(16)
8/2/2013
 
81,203

44,367

1.3%
 
 
 
 
 
179,476

142,640

4.2%
Credit Central Loan Company, LLC(21)
Consumer Finance
Subordinated Term Loan (10.00% plus 10.00% PIK, due 6/26/2024)(14)(46)
6/24/2014
51,855

48,345

51,855

1.5%
Class A Units (10,640,642 units)(14)(16)
6/24/2014
 
13,731

17,477

0.5%
Net Revenues Interest (25% of Net Revenues)(14)(16)
1/28/2015
 
—

1,256

0.1%
 
 
 
 
 
62,076

70,588

2.1%
Echelon Transportation, LLC (f/k/a Echelon Aviation, LLC)
Aerospace & Defense
Senior Secured Term Loan (11.83% (LIBOR + 9.75% with 2.00% LIBOR floor) plus 2.25% PIK, due 3/31/2022)(13)(46)
3/31/2014
32,211

32,211

32,211

0.9%
Senior Secured Term Loan (11.08% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 1.00% PIK, due 12/7/2024)(13)(46)
12/9/2016
17,012

17,012

17,012

0.5%
Membership Interest (100%)(16)
3/31/2014
 
22,738

38,152

1.1%
 
 
 
 
 
71,961

87,375

2.5%
First Tower Finance Company LLC(23)
Consumer Finance
Subordinated Term Loan to First Tower, LLC (10.00% plus 10.00% PIK, due 6/24/2019)(14)(46)
6/24/2014
272,170

272,170

272,170

7.9%
Class A Units (95,709,910 units)(14)(16)
6/24/2014
 
81,146

173,571

5.1%
 
 
 
 
 
353,316

445,741

13.0%
Freedom Marine Solutions, LLC(24)
Energy Equipment & Services
Membership Interest (100%)(16)
10/1/2009
 
43,592

14,600

0.4%
 
 
 
 
 
43,592

14,600

0.4%
InterDent, Inc. (52)
Health Care Providers & Services
Senior Secured Term Loan A (7.74% (LIBOR + 5.50% with 0.75% LIBOR floor), due 9/5/2020)(13)
8/3/2012
77,994

77,994

77,994

2.3%
Senior Secured Term Loan B (16.00% PIK, due 9/5/2020)(13)(46)
8/3/2012
103,090

103,090

103,090

3.0%
Senior Secured Term Loan A/B (2.49% (LIBOR + 0.25% with 0.75% LIBOR floor), due 9/5/2020)(13)
8/1/2018
14,000

14,000

14,000

0.4%
Senior Secured Term Loan C (18.00% PIK, due 9/5/2020)(46)
3/22/2018
35,766

35,766

25,215

0.7%
Senior Secured Term Loan D (1.00% PIK, due 9/5/2020)(46)
9/19/2018
5,001

5,001

—

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

—

—%
 
 
 
 
 
235,851

220,299

6.4%

See notes to consolidated financial statements.
F-6
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 
 
 
 
 
 
 
 
 
MITY, Inc.(25)
Commercial Services & Supplies
Senior Secured Note A (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor), due 1/30/2020)(3)(11)
9/19/2013
$
26,250

$
26,250

$
26,250

0.8%
Senior Secured Note B (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor) plus 10.00% PIK, due 1/30/2020)(3)(11)(46)
6/23/2014
24,652

24,652

24,652

0.7%
Subordinated Unsecured Note to Broda Enterprises ULC (10.00%, due on demand)(14)
9/19/2013
5,702

7,200

5,702

0.2%
Common Stock (42,053 shares)(16)
9/19/2013
 
6,849

1,121

—%
 
 
 
 
 
64,951

57,725

1.7%
National Property REIT Corp.(26)
Equity Real Estate Investment Trusts (REITs) / Online Lending
Senior Secured Term Loan A (6.39% (LIBOR + 4.00% with 2.00% LIBOR floor) plus 10.50% PIK, due 4/1/2019)(11)(46)
4/1/2014
293,203

293,203

293,203

8.5%
Senior Secured Term Loan E (11.39% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 1.50% PIK, due 4/1/2019)(11)(46)
4/1/2014
217,960

217,960

217,960

6.4%
Common Stock (3,102,279 shares)
12/31/2013
 
317,809

453,313

13.2%
Net Operating Income Interest (5% of Net Operating Income)
12/31/2013
 
—

107,487

3.1%
 
 
 
 
 
828,972

1,071,963

31.2%
Nationwide Loan Company LLC(27)
Consumer Finance
Senior Subordinated Term Loan to Nationwide Acceptance LLC (10.00% plus 10.00% PIK, due 6/18/2019)(14)(46)
6/18/2014
17,410

17,410

17,410

0.5%
Class A Units (32,456,159 units)(14)
1/31/2013
 
21,962

15,307

0.4%
 
 
 
 
 
39,372

32,717

0.9%
NMMB, Inc.(28)
Media
Senior Secured Note (14.00%, due 5/6/2021)(3)
5/6/2011
3,714

3,714

3,714

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

3,900

3,900

0.1%
Series A Preferred Stock (7,200 shares)(16)
12/12/2013
 
7,200

6,971

0.2%
Series B Preferred Stock (5,669 shares)(16)
12/12/2013
 
5,669

5,489

0.2%
 
 
 
 
 
20,483

20,074

0.6%
Pacific World Corporation(40)
Personal Products
Revolving Line of Credit – $26,000 Commitment (9.46% (LIBOR + 7.25% with 1.00% LIBOR floor), due 9/26/2020)(13)(15)
9/26/2014
20,825

20,825

20,825

0.6%
Senior Secured Term Loan A (7.46% (LIBOR + 5.25% with 1.00% LIBOR floor), due 9/26/2020)(13)
12/31/2014
96,000

96,000

96,000

2.8%
Senior Secured Term Loan B (11.46% PIK (LIBOR + 9.25% with 1.00% LIBOR floor), in non-accrual status effective 5/21/2018, due 9/26/2020)(13)
12/31/2014
99,166

96,500

47,333

1.4%
Convertible Preferred Equity (100,000 shares)(16)
6/15/2018
 
15,000

—

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

—

—%
 
 
 
 
 
228,325

164,158

4.8%
R-V Industries, Inc.
Machinery
Senior Subordinated Note (11.39% (LIBOR + 9.00% with 1.00% LIBOR floor), due 3/31/2022)(3)(11)
6/12/2013
28,622

28,622

24,782

0.7%
Common Stock (745,107 shares)(16)
6/26/2007
 
6,866

—

—%
 
 
 
 
 
35,488

24,782

0.7%
SB Forging Company II, Inc. (f/k/a Gulf Coast Machine & Supply Company)(29)
Energy Equipment & Services
Series A Convertible Preferred Stock (99,900 shares)(16)
11/8/2013
 
—

2,201

0.1%
Common Stock (100 shares)(16)
11/8/2013
 
—

—

—%
 
 
 
 
 
—

2,201

0.1%

See notes to consolidated financial statements.
F-7
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(47)
 
 
 
 
 
 
 
 
 
 
 
 
 
USES Corp.(30)
Commercial Services & Supplies
Senior Secured Term Loan A (9.00% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
$
37,821

$
31,601

$
15,807

0.5%
Senior Secured Term Loan B (15.50% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
49,787

35,568

—

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

—

—%
 
 
 
 
 
67,169

15,807

0.5%
Valley Electric Company, Inc.(31)
Construction & Engineering
Senior Secured Note to Valley Electric Co. of Mt. Vernon, Inc. (8.00% (LIBOR + 5.00% with 3.00% LIBOR floor) plus 2.50% PIK, due 12/31/2024)(3)(11)(46)
12/31/2012
10,430

10,430

10,430

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

32,881

32,881

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

3,328

0.1%
Common Stock (50,000 shares)
12/31/2012
 
26,204

35,304

1.0%
 
 
 
 
 
69,515

81,943

2.4%
Wolf Energy, LLC(32)
Energy Equipment & Services
Membership Interest (100%)(16)
7/1/2014
 
—

—

—%
Membership Interest in Wolf Energy Services Company, LLC (100%)(16)
3/14/2017
 
3,838

22

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

13

—%
 
 
 
 
 
3,838

35

—%
Total Control Investments (Level 3)
 
$
2,331,620

$
2,487,337

72.5%

See notes to consolidated financial statements.
F-8
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments (5.00% to 24.99% voting control)(48)
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC(22)
Diversified Consumer Services
Second Lien Revolving Credit Facility to Edmentum, Inc. – $8,032 Commitment (5.00% PIK, due 12/9/2021)(15)(46)
6/9/2015
$
177

$
177

$
177

—%
Unsecured Senior PIK Note (8.50% PIK, due 12/9/2021)(46)
6/9/2015
7,683

7,683

7,683

0.2%
Unsecured Junior PIK Note (10.00% PIK, in non-accrual status effective 1/1/2017, due 12/9/2021)
6/9/2015
36,127

23,829

17,793

0.5%
Class A Units (370,964 units)(16)
6/9/2015
 
6,577

—

—%
 
 
 
 
 
38,266

25,653

0.7%
Nixon, Inc.(39)
Textiles, Apparel & Luxury Goods
Common Stock (857 units)(16)
5/12/2017
 
—

—

—%
 
 
 
 
 
—

—

—%
Targus Cayman HoldCo Limited(33)
Textiles, Apparel & Luxury Goods
Common Stock (7,383,395 shares)(16)
5/24/2011
 
9,878

19,670

0.6%
 
 
 
 
 
9,878

19,670

0.6%
United Sporting Companies, Inc.(18)
Distributors
Second Lien Term Loan (13.24% (LIBOR + 11.00% with 1.75% LIBOR floor) plus 2.00% PIK, in non-accrual status effective 4/1/2017, due 11/16/2019)(13)
9/28/2012
154,814

127,091

50,670

1.5%
Common Stock (218,941 shares)(16)
5/2/2017
 
—

—

—%
 
 
 
 
 
127,091

50,670

1.5%
Total Affiliate Investments (Level 3)
 
$
175,235

$
95,993

2.8%


See notes to consolidated financial statements.
F-9
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
ACE Cash Express, Inc.
Consumer Finance
Senior Secured Note (12.00%, due 12/15/2022)(8)(14)
12/15/2017
$
20,000

$
19,748

$
21,371

0.6%
 
 
 
 
 
19,748

21,371

0.6%
AgaMatrix, Inc.
Health Care Equipment & Supplies
Senior Secured Term Loan (11.39% (LIBOR + 9.00% with 1.25% LIBOR floor), due 9/29/2022)(3)(11)
9/29/2017
35,380

35,380

35,380

1.0%
 
 
 
 
 
35,380

35,380

1.0%
American Gilsonite Company(34)
Chemicals
Membership Interest (0.05%, 131 shares)(16)
3/14/2008
 
—

—

—%
 
 
 
 
 
—

—

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

21

76

—%
 
 
 
 
 
21

76

—%
Apidos CLO XI
Structured Finance
Subordinated Notes (Residual Interest, current yield 7.90%, due 10/17/2028)(5)(14)
1/17/2013
40,500

32,510

25,231

0.7%
 
 
 
 
 
32,510

25,231

0.7%
Apidos CLO XII
Structured Finance
Subordinated Notes (Residual Interest, current yield 13.71%, due 4/15/2031)(5)(14)
4/18/2013
52,203

34,302

26,718

0.8%
 
 
 
 
 
34,302

26,718

0.8%
Apidos CLO XV
Structured Finance
Subordinated Notes (Residual Interest, current yield 12.85%, due 4/20/2031)(5)(14)
10/16/2013
48,515

35,499

27,161

0.8%
 
 
 
 
 
35,499

27,161

0.8%
Apidos CLO XXII
Structured Finance
Subordinated Notes (Residual Interest, current yield 11.34%, due 10/20/2027)(5)(6)(14)
10/14/2015
31,350

27,848

25,122

0.7%
 
 
 
 
 
27,848

25,122

0.7%
Ark-La-Tex Wireline Services, LLC
Energy Equipment & Services
Senior Secured Term Loan B (13.76% (LIBOR + 11.50% with 1.00% LIBOR floor), in non-accrual status effective 4/1/2016, due 4/8/2019)(13)
4/8/2014
25,595

1,145

787

—%
 
 
 
 
 
1,145

787

—%
Atlantis Health Care Group (Puerto Rico), Inc.
Health Care Providers & Services
Revolving Line of Credit – $7,000 Commitment (10.84% (LIBOR + 8.50% with 1.50% LIBOR floor), due 8/21/2019)(11)
2/21/2013
7,000

7,000

6,869

0.2%
Senior Term Loan (10.84% (LIBOR + 8.50% with 1.50% LIBOR floor), due 2/21/2020)(3)(11)
2/21/2013
77,509

77,509

76,063

2.2%
 
 
 
 
 
84,509

82,932

2.4%
ATS Consolidated, Inc.
Electronic Equipment, Instruments & Components
Second Lien Term Loan (9.99% (LIBOR + 7.75%), due 2/27/2026)(8)(13)
3/19/2018
15,000

14,860

15,300

0.5%
 
 
 
 
 
14,860

15,300

0.5%
Autodata, Inc./ Autodata Solutions, Inc.(9)
Software
Second Lien Term Loan (9.49% (LIBOR + 7.25%), due 12/12/2025)(3)(8)(13)
12/14/2017
6,000

5,973

5,973

0.2%
 
 
 
 
 
5,973

5,973

0.2%
Barings CLO 2018-III (f/k/a Babson CLO Ltd. 2014-III)
Structured Finance
Subordinated Notes (Residual Interest, current yield 11.98%, due 7/20/2029)(5)(6)(14)
6/14/2018
83,098

51,204

44,371

1.3%
 
 
 
 
 
51,204

44,371

1.3%
Broder Bros., Co.
Textiles, Apparel & Luxury Goods
Senior Secured Note (10.39% (LIBOR + 8.00% with 1.25% LIBOR floor), due 12/02/2022)(3)(11)
12/4/2017
272,618

272,618

272,618

7.9%
 
 
 
 
 
272,618

272,618

7.9%

See notes to consolidated financial statements.
F-10
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Brookside Mill CLO Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 8.07%, due 1/18/2028)(5)(14)
5/23/2013
$
36,300

$
18,865

$
13,535

0.4%
 
 
 
 
 
18,865

13,535

0.4%
California Street CLO IX Ltd. (f/k/a Symphony CLO IX Ltd.)
Structured Finance
Preference Shares (Residual Interest, current yield 10.74%, due 10/16/2028)(5)(14)
5/8/2012
58,915

41,855

35,997

1.1%
 
 
 
 
 
41,855

35,997

1.1%
Candle-Lite Company, LLC
Household Products
Senior Secured Term Loan A (7.81% (LIBOR + 5.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,375

12,375

12,375

0.3%
Senior Secured Term Loan B (11.81% (LIBOR + 9.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,500

12,500

12,500

0.4%
 
 
 
 
 
24,875

24,875

0.7%
Capstone Logistics Acquisition, Inc.
Commercial Services & Supplies
Second Lien Term Loan (10.49% (LIBOR + 8.25% with 1.00% LIBOR floor), due 10/7/2022)(3)(8)(13)
10/7/2014
101,030

100,690

101,030

2.9%
 
 
 
 
 
100,690

101,030

2.9%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 21.10%, due 7/15/2030)(5)(6)(14)
6/29/2018
25,534

18,797

19,440

0.6%
 
 
 
 
 
18,797

19,440

0.6%
Carlyle Global Market Strategies CLO 2016-3, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 17.37%, due 10/20/2029)(5)(6)(14)
9/13/2016
32,200

32,705

28,604

0.8%
 
 
 
 
 
32,705

28,604

0.8%
Carlyle C17 CLO Limited (f/k/a Cent CLO 17 Limited)
Structured Finance
Subordinated Notes (Residual Interest, current yield 18.32%, due 4/30/2031)(5)(14)
5/10/2018
24,870

15,850

15,386

0.5%
 
 
 
 
 
15,850

15,386

0.5%
Cent CLO 20 Limited
Structured Finance
Subordinated Notes (Residual Interest, current yield 14.96%, due 1/25/2026)(5)(14)
1/15/2014
40,275

30,792

28,127

0.8%
 
 
 
 
 
30,792

28,127

0.8%
Cent CLO 21 Limited
Structured Finance
Subordinated Notes (Residual Interest, current yield 14.61%, due 7/27/2030)(5)(6)(14)
6/18/2014
49,552

38,539

31,536

0.9%
 
 
 
 
 
38,539

31,536

0.9%
Cent CLO 21 Limited
Structured Finance
Class E Notes (10.99% (LIBOR + 8.65%), due 7/27/2030)(6)(11)(14)(37)
7/27/2018
10,591

9,971

10,866

0.3%
 
 
 
 
 
9,971

10,866

0.3%
Centerfield Media Holding Company(35)
IT Services
Senior Secured Term Loan A (9.34% (LIBOR + 7.00% with 2.00% LIBOR floor), due 1/17/2022)(3)(11)
1/17/2017
75,732

75,732

75,732

2.2%
Senior Secured Term Loan B (14.84% (LIBOR + 12.50% with 2.00% LIBOR floor), due 1/17/2022)(11)
1/17/2017
78,100

78,100

78,100

2.3%
 
 
 
 
 
153,832

153,832

4.5%
CIFC Funding 2013-III-R, Ltd. (f/k/a CIFC Funding 2013-III, Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 14.53%, due 4/24/2031)(5)(14)
4/5/2018
44,100

28,368

25,184

0.7%
 
 
 
 
 
28,368

25,184

0.7%
CIFC Funding 2013-IV, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 16.81%, due 4/28/2031)(5)(14)
11/14/2013
45,500

32,857

27,855

0.8%
 
 
 
 
 
32,857

27,855

0.8%

See notes to consolidated financial statements.
F-11
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
CIFC Funding 2014-IV Investor, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 8.31%, due 10/19/2026)(5)(6)(14)
9/3/2014
$
41,500

$
28,175

$
22,084

0.6%
 
 
 
 
 
28,175

22,084

0.6%
CIFC Funding 2014-V, Ltd.
Structured Finance
Class F Notes (10.88% (LIBOR + 8.50%), due 10/17/2031)(6)(11)(14)(37)
9/27/2018
10,250

9,943

9,942

0.3%
 
 
 
 
 
9,943

9,942

0.3%
CIFC Funding 2016-I, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 13.13%, due 10/21/2028)(5)(6)(14)
12/21/2016
34,000

31,247

28,351

0.8%
 
 
 
 
 
31,247

28,351

0.8%
Cinedigm DC Holdings, LLC
Entertainment
Senior Secured Term Loan (11.31% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 2.50% PIK, due 3/31/2021)(11)(46)
2/28/2013
29,965

29,915

29,965

0.9%
 
 
 
 
 
29,915

29,965

0.9%
Class Appraisal, LLC
Real Estate Management & Development
Revolving Line of Credit – $1,500 Commitment (10.64% (LIBOR + 8.25% with 1.50% LIBOR floor), due 3/12/2020)(11)(15)
3/12/2018
—

—

—

—%
Senior Secured Term Loan (10.64% (LIBOR + 8.25% with 1.50% LIBOR floor), due 3/10/2023)(3)(11)
3/12/2018
41,580

41,580

41,580

1.2%
 
 
 
 
 
41,580

41,580

1.2%
Coverall North America, Inc.
Commercial Services & Supplies
Senior Secured Term Loan A (8.34% (LIBOR + 6.00% with 1.00% LIBOR floor), due 11/02/2020)(3)(11)
11/2/2015
16,225

16,225

16,225

0.5%
Senior Secured Term Loan B (13.34% (LIBOR + 11.00% with 1.00% LIBOR floor), due 11/02/2020)(3)(11)
11/2/2015
24,375

24,375

24,375

0.7%
 
 
 
 
 
40,600

40,600

1.2%
CP VI Bella Midco
IT Services
Second Lien Term Loan (8.99% (LIBOR + 6.75%, due 12/29/2025)(8)(13)
12/28/2017
5,500

5,486

5,486

0.2%
 
 
 
 
 
5,486

5,486

0.2%
Digital Room, LLC
Commercial Services & Supplies
First Lien Term Loan (7.25% (LIBOR + 5.00% with 1.00% LIBOR floor), due 12/29/2023)(3)(8)(13)
2/9/2018
9,925

9,836

9,925

0.3%
Second Lien Term Loan (11.00% (LIBOR + 8.75% with 1.00% LIBOR floor), due 12/29/2024)(3)(8)(13)
2/8/2018
57,100

56,326

57,100

1.7%
 
 
 
 
 
66,162

67,025

2.0%
Dunn Paper, Inc.
Paper & Forest Products
Second Lien Term Loan (10.99% (LIBOR + 8.75% with 1.00% LIBOR floor), due 8/26/2023)(3)(8)(13)
10/7/2016
11,500

11,337

11,337

0.3%
 
 
 
 
 
11,337

11,337

0.3%
Dynatrace, LLC
Software
Second Lien Term Loan (9.22% (LIBOR + 7.00%), due 8/23/2026)(8)(13)
8/23/2018
3,000

2,993

2,993

0.1%
 
 
 
 
 
2,993

2,993

0.1%
Easy Gardener Products, Inc.
Household Durables
Senior Secured Term Loan (12.34% (LIBOR + 10.00% with 0.25% LIBOR floor), due 09/30/2020)(3)(11)
10/2/2015
16,894

16,894

15,399

0.5%
 
 
 
 
 
16,894

15,399

0.5%
Engine Group, Inc.(7)
Media
Senior Secured Term Loan (7.39% (LIBOR + 5.00% with 1.00% LIBOR floor), due 9/15/2022)(8)(11)
9/25/2017
4,710

4,710

4,690

0.1%
Second Lien Term Loan (11.39% (LIBOR + 9.00% with 1.00% LIBOR floor), due 9/15/2023)(3)(8)(11)
9/25/2017
35,000

35,000

34,320

1.0%
 
 
 
 
 
39,710

39,010

1.1%

See notes to consolidated financial statements.
F-12
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
EXC Holdings III Corp
Technology Hardware, Storage & Peripherals
Second Lien Term Loan (10.04% (LIBOR + 7.50% with 1.00% LIBOR floor), due 12/01/2025)(8)(10)
12/5/2017
$
12,500

$
12,388

$
12,500

0.4%
 
 
 
 
 
12,388

12,500

0.4%
Fleetwash, Inc.
Commercial Services & Supplies
Senior Secured Term Loan B (11.34% (LIBOR + 9.00% with 1.00% LIBOR floor), due 4/30/2022)(3)(11)
4/30/2014
21,544

21,544

21,544

0.6%
Delayed Draw Term Loan – $15,000 Commitment (10.34% (LIBOR + 8.00% with 1.00% LIBOR floor), expires 4/30/2022)(11)(15)
4/30/2014
—

—

—

—%
 
 
 
 
 
21,544

21,544

0.6%
Galaxy XV CLO, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 10.89%, due 10/15/2030)(5)(14)
3/14/2013
50,525

35,233

30,617

0.9%
 
 
 
 
 
35,233

30,617

0.9%
Galaxy XXVII CLO, Ltd. (f/k/a Galaxy XVI CLO, Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 10.28%, due 5/16/2031)(5)(14)
4/17/2018
24,575

16,495

13,668

0.4%
 
 
 
 
 
16,495

13,668

0.4%
Galaxy XXVIII CLO, Ltd. (f/k/a Galaxy XVII CLO, Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 10.85%, due 7/15/2031)(5)(6)(14)
6/27/2014
39,905

28,281

18,664

0.5%
 
 
 
 
 
28,281

18,664

0.5%
Galaxy XXVIII CLO, Ltd.
Structured Finance
Class F Junior Notes (10.82% (LIBOR + 8.48%), due 7/15/2031)(6)(11)(14)(37)
7/16/2018
6,658

6,171

6,616

0.2%
 
 
 
 
 
6,171

6,616

0.2%
H.I.G. ECI Merger Sub, Inc.
IT Services
Senior Secured Term Loan A (7.84% (LIBOR + 5.50% with 1.50% LIBOR floor), due 5/31/2023)(3)(11)
5/31/2018
44,576

44,576

44,576

1.3%
Senior Secured Term Loan B (12.84% (LIBOR + 10.50% with 1.50% LIBOR floor), due 5/31/2023)(3)(11)
5/31/2018
29,900

29,900

29,900

0.9%
 
 
 
 
 
74,476

74,476

2.2%
Halcyon Loan Advisors Funding 2012-1 Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 8/15/2023)(5)(14)(17)
8/21/2012
23,188

3,844

4,665

0.1%
 
 
 
 
 
3,844

4,665

0.1%
Halcyon Loan Advisors Funding 2013-1 Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 4/15/2025)(5)(14)(17)
3/28/2013
40,400

21,359

13,109

0.4%
 
 
 
 
 
21,359

13,109

0.4%
Halcyon Loan Advisors Funding 2014-1 Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 1.35%, due 4/18/2026)(5)(14)
3/6/2014
24,500

13,315

11,201

0.3%
 
 
 
 
 
13,315

11,201

0.3%
Halcyon Loan Advisors Funding 2014-2 Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 4/28/2025)(5)(6)(14)(17)
4/28/2014
41,164

23,151

16,598

0.5%
 
 
 
 
 
23,151

16,598

0.5%
Halcyon Loan Advisors Funding 2015-3 Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 20.18%, due 10/18/2027)(5)(6)(14)
9/3/2015
39,598

34,437

32,319

0.9%
 
 
 
 
 
34,437

32,319

0.9%

See notes to consolidated financial statements.
F-13
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Halyard MD OPCO, LLC
Media
Revolving Line of Credit – $2,000 Commitment (10.39% (LIBOR + 8.00%), due 2/6/2020)(11)(15)
8/6/2018
$
—

$
—

$
—

—%
First Lien Term Loan (10.39% (LIBOR + 8.00% with 2.00% LIBOR floor), due 8/6/2023)(11)
8/6/2018
11,925

11,925

11,925

0.4%
Delayed Draw Term Loan – $3,500 Commitment (10.39% (LIBOR + 8.00% with 2.00% LIBOR floor), due 8/6/2019)(11)(15)
8/6/2018
—

—

—

—%
 
 
 
 
 
11,925

11,925

0.4%
Harbortouch Payments, LLC
Commercial Services & Supplies
Escrow Receivable
3/31/2014
 
—

932

—%
 
 
 
 
 
—

932

—%
HarbourView CLO VII-R, Ltd. (f/k/a HarbourView CLO VII, Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 18.02%, due 7/18/2031)(5)(6)(14)
6/10/2015
19,025

14,029

13,632

0.4%
 
 
 
 
 
14,029

13,632

0.4%
Help/Systems Holdings, Inc.
Software
Second Lien Term Loan (9.99% (LIBOR + 7.75%), due 3/27/2026)(3)(8)(13)
4/17/2018
11,293

11,246

11,293

0.3%
 
 
 
 
 
11,246

11,293

0.3%
Ingenio, LLC
Interactive Media & Services
Senior Secured Term Loan (9.91% (LIBOR + 7.50% with 1.25% LIBOR floor), due 9/26/2022)(3)(8)(11)
9/25/2017
9,647

9,647

9,647

0.3%
 
 
 
 
 
9,647

9,647

0.3%
Inpatient Care Management Company, LLC
Health Care Providers & Services
Senior Secured Term Loan (10.34% (LIBOR + 8.00% with 1.00% LIBOR floor), due 6/8/2021)(3)(11)
6/8/2016
21,713

21,713

21,713

0.6%
 
 
 
 
 
21,713

21,713

0.6%
Janus International Group, LLC
Building Products
Second Lien Term Loan (9.99% (LIBOR + 7.75% with 1.00% LIBOR floor), due 2/12/2026)(3)(8)(13)
2/22/2018
20,000

19,824

20,000

0.6%
 
 
 
 
 
19,824

20,000

0.6%
JD Power and Associates
Capital Markets
Second Lien Term Loan (10.74% (LIBOR + 8.50% with 1.00% LIBOR floor), due 9/7/2024)(3)(8)(13)
9/16/2016
26,675

26,531

26,675

0.8%
 
 
 
 
 
26,531

26,675

0.8%
Jefferson Mill CLO Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 11.66%, due 10/20/2031)(5)(6)(14)
7/28/2015
23,594

18,297

12,917

0.4%
 
 
 
 
 
18,297

12,917

0.4%
K&N Parent, Inc.
Auto Components
Second Lien Term Loan (11.14% (LIBOR + 8.75% with 1.00% LIBOR floor), due 10/21/2024)(3)(8)(11)
10/20/2016
25,887

25,388

24,851

0.7%
 
 
 
 
 
25,388

24,851

0.7%
Keystone Acquisition Corp.(36)
Health Care Providers & Services
Second Lien Term Loan (11.64% (LIBOR + 9.25% with 1.00% LIBOR floor), due 5/1/2025)(3)(8)(11)
5/18/2017
50,000

50,000

50,000

1.5%
 
 
 
 
 
50,000

50,000

1.5%
LCM XIV Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 16.64%, due 7/21/2031)(5)(14)
7/11/2013
49,934

27,644

24,770

0.7%
 
 
 
 
 
27,644

24,770

0.7%
Madison Park Funding IX, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 8/15/2022)(5)(14)(17)
7/18/2012
43,110

1,994

1,624

0.1%
 
 
 
 
 
1,994

1,624

0.1%

See notes to consolidated financial statements.
F-14
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Maverick Healthcare Equity, LLC
Health Care Providers & Services
Preferred Units (10.00%, 1,250,000 units)(16)
10/31/2007
 
$
1,252

$
262

—%
Class A Common Units (1,250,000 units)(16)
10/31/2007
 
—

—

—%
 
 
 
 
 
1,252

262

—%
MedMark Services, Inc.(51)
Health Care Providers & Services
Second Lien Term Loan (10.35% (LIBOR + 8.25% with 1.00% LIBOR floor), due 3/1/2025)(3)(8)(13)
3/16/2018
$
7,000

6,935

6,935

0.2%
 
 
 
 
 
6,935

6,935

0.2%
Memorial MRI & Diagnostic, LLC
Health Care Providers & Services
Senior Secured Term Loan (10.89% (LIBOR + 8.50% with 1.00% LIBOR floor), due 3/16/2022)(11)
3/16/2017
36,735

36,735

36,735

1.1%
 
 
 
 
 
36,735

36,735

1.1%
Mobile Posse, Inc.
Media
First Lien Term Loan (10.89% (LIBOR + 8.50% with 2.00% LIBOR floor), due 4/3/2023)(3)(11)
4/3/2018
27,400

27,400

27,400

0.8%
 
 
 
 
 
27,400

27,400

0.8%
Mountain View CLO 2013-I Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 13.74%, due 10/15/2030)(5)(14)
5/1/2013
43,650

28,823

23,281

0.7%
 
 
 
 
 
28,823

23,281

0.7%
Mountain View CLO IX Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 18.61%, due 7/15/2031)(5)(6)(14)
6/25/2015
47,830

31,489

34,290

1.0%
 
 
 
 
 
31,489

34,290

1.0%
MRP Holdco, Inc.
Professional Services
Senior Secured Term Loan A (6.74% (LIBOR + 4.50% with 1.50% LIBOR floor), due 4/17/2024)(3)(13)
4/17/2018
42,785

42,785

42,785

1.2%
Senior Secured Term Loan B (10.74% (LIBOR + 8.50% with 1.50% LIBOR floor), due 4/17/2024)(13)
4/17/2018
43,000

43,000

43,000

1.3%
 
 
 
 
 
85,785

85,785

2.5%
Octagon Investment Partners XV, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 14.33%, due 7/19/2030)(5)(14)
2/20/2013
42,064

32,187

26,641

0.8%
 
 
 
 
 
32,187

26,641

0.8%
Octagon Investment Partners 18-R Ltd. (f/k/a Octagon Investment Partners XVIII, Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 19.07%, due 4/16/2031)(5)(6)(14)
8/17/2015
46,016

27,409

25,634

0.8%
 
 
 
 
 
27,409

25,634

0.8%
Pearl Intermediate Parent LLC
Health Care Providers & Services
Second Lien Term Loan (8.42% (LIBOR + 6.25%), due 2/15/2026)(8)(13)
2/28/2018
5,000

4,977

4,977

0.1%
 
 
 
 
 
4,977

4,977

0.1%
PeopleConnect Intermediate, LLC (f/k/a Intelius, Inc.)
Interactive Media & Services
Revolving Line of Credit – $1,000 Commitment (11.84% (LIBOR + 9.50% with 1.00% LIBOR floor), due 7/1/2020)(11)(15)
7/1/2015
500

500

500

—%
Senior Secured Term Loan A (8.84% (LIBOR + 6.50% with 1.00% LIBOR floor), due 7/1/2020)(3)(11)
7/1/2015
18,548

18,548

18,548

0.5%
Senior Secured Term Loan B (14.84% (LIBOR + 12.50% with 1.00% LIBOR floor), due 7/1/2020)(3)(11)
7/1/2015
20,023

20,023

20,023

0.6%
 
 
 
 
 
39,071

39,071

1.1%
PGX Holdings, Inc.
Diversified Consumer Services
Second Lien Term Loan (11.24% (LIBOR + 9.00% with 1.00% LIBOR floor), due 9/29/2021)(3)(13)
9/29/2014
118,289

118,289

118,289

3.5%
 
 
 
 
 
118,289

118,289

3.5%

See notes to consolidated financial statements.
F-15
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
PharMerica Corporation
Pharmaceuticals
Second Lien Term Loan (9.90% (LIBOR + 7.75% with 1.00% LIBOR floor), due 12/7/2025)(3)(8)(13)
12/7/2017
$
12,000

$
11,882

$
12,000

0.4%
 
 
 
 
 
11,882

12,000

0.4%
Photonis Technologies SAS
Electronic Equipment, Instruments & Components
First Lien Term Loan (9.89% (LIBOR + 7.50% with 1.00% LIBOR floor), due 9/18/2019)(8)(11)(14)
9/10/2013
12,872

12,572

12,566

0.4%
 
 
 
 
 
12,572

12,566

0.4%
PlayPower, Inc.
Leisure Products
Second Lien Term Loan (11.14% (LIBOR + 8.75% with 1.00% LIBOR floor), due 6/23/2022)(3)(8)(11)
6/23/2015
11,000

10,910

11,000

0.3%
 
 
 
 
 
10,910

11,000

0.3%
Research Now Group, Inc. & Survey Sampling International LLC
Professional Services
First Lien Term Loan (7.74% (LIBOR + 5.50% with 1.00% LIBOR floor), due 12/20/2024)(8)(13)
1/5/2018
9,925

9,461

9,815

0.3%
Second Lien Term Loan (11.74% (LIBOR + 9.50% with 1.00% LIBOR floor), due 12/20/2025)(8)(13)
1/5/2018
50,000

46,848

48,282

1.4%
 
 
 
 
 
56,309

58,097

1.7%
RGIS Services, LLC
Commercial Services & Supplies
Senior Secured Term Loan (9.74% (LIBOR + 7.50% with 1.00% LIBOR floor), due 3/31/2023)(3)(8)(13)
4/20/2017
15,173

15,113

14,320

0.4%
 
 
 
 
 
15,113

14,320

0.4%
RME Group Holding Company
Media
Senior Secured Term Loan A (8.39% (LIBOR + 6.00% with 1.00% LIBOR floor), due 5/4/2022)(3)(11)
5/4/2017
34,958

34,958

34,958

1.0%
Senior Secured Term Loan B (13.39% (LIBOR + 11.00% with 1.00% LIBOR floor), due 5/4/2022)(3)(11)
5/4/2017
24,286

24,286

24,286

0.7%
 
 
 
 
 
59,244

59,244

1.7%
Rocket Software, Inc.
Software
Second Lien Term Loan (11.89% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/14/2024)(3)(8)(11)
10/20/2016
50,000

49,250

50,000

1.5%
 
 
 
 
 
49,250

50,000

1.5%
Romark WM-R Ltd. (f/k/a Washington Mill CLO Ltd.)
Structured Finance
Subordinated Notes (Residual Interest, current yield 14.02%, due 4/20/2031)(5)(6)(14)
5/15/2014
27,725

21,966

16,599

0.5%
 
 
 
 
 
21,966

16,599

0.5%
Rosa Mexicano
Hotels, Restaurants & Leisure
Revolving Line of Credit – $2,500 Commitment (9.89% (LIBOR + 7.50% with 1.50% LIBOR floor), due 3/29/2023(11)(15)
3/29/2018
—

—

—

—%
Senior Secured Term Loan (9.89% (LIBOR + 7.50% with 1.50% LIBOR floor), due 3/29/2023(3)(11)
3/29/2018
29,625

29,625

29,625

0.9%
 
 
 
 
 
29,625

29,625

0.9%
SCS Merger Sub, Inc.
IT Services
Second Lien Term Loan (11.74% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/30/2023)(3)(8)(13)
11/6/2015
20,000

19,624

20,000

0.6%
 
 
 
 
 
19,624

20,000

0.6%
Securus Technologies Holdings, Inc.
Communications Equipment
Second Lien Term Loan (10.49% (LIBOR + 8.25% with 1.00% LIBOR floor), due 11/01/2025)(3)(8)(13)
11/3/2017
48,000

47,872

48,000

1.4%
 
 
 
 
 
47,872

48,000

1.4%

See notes to consolidated financial statements.
F-16
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
SEOTownCenter, Inc.
IT Services
Senior Secured Term Loan A (9.84% (LIBOR + 7.50% with 2.00% LIBOR floor), due 4/07/2023)(3)(11)
4/10/2018
$
24,500

$
24,500

$
24,500

0.7%
Senior Secured Term Loan B (14.84% (LIBOR + 12.50% with 2.00% LIBOR floor), due 4/07/2023)(3)(11)
4/10/2018
17,000

17,000

17,000

0.5%
 
 
 
 
 
41,500

41,500

1.2%
SESAC Holdco II LLC
Entertainment
Second Lien Term Loan (9.49% (LIBOR + 7.25% with 1.00% LIBOR floor), due 2/23/2025)(8)(13)
3/2/2017
3,000

2,976

2,976

0.1%
 
 
 
 
 
2,976

2,976

0.1%
SMG US Midco
Hotels, Restaurants & Leisure
Second Lien Term Loan (9.24% (LIBOR + 7.00%), due 1/23/2026)(3)(8)(13)
1/23/2018
7,500

7,483

7,483

0.2%
 
 
 
 
 
7,483

7,483

0.2%
Spartan Energy Services, Inc.
Energy Equipment & Services
Senior Secured Term Loan A (8.08% (LIBOR + 6.00% with 1.00% LIBOR floor), due 12/28/2018)(13)
10/20/2014
13,156

12,840

13,156

0.4%
Senior Secured Term Loan B (14.08% PIK (LIBOR + 12.00% with 1.00% LIBOR floor), due 12/28/2018)(13)(46)
10/20/2014
18,899

18,174

18,899

0.5%
 
 
 
 
 
31,014

32,055

0.9%
Spectrum Holdings III Corp
Health Care Equipment & Supplies
Second Lien Term Loan (9.24% (LIBOR + 7.00% with 1.00% LIBOR floor), due 1/31/2026)(8)(13)
1/31/2018
7,500

7,465

7,465

0.2%
 
 
 
 
 
7,465

7,465

0.2%
Strategic Materials
Household Durables
Second Lien Term Loan (10.09% (LIBOR + 7.75% with 1.00% LIBOR floor), due 11/1/2025)(3)(8)(11)
11/1/2017
7,000

6,938

6,360

0.2%
 
 
 
 
 
6,938

6,360

0.2%
Stryker Energy, LLC
Energy Equipment & Services
Overriding Royalty Interests(43)
12/4/2006
 
—

—

—%
 
 
 
 
 
—

—

—%
Sudbury Mill CLO Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 8.52%, due 1/17/2026)(5)(14)
12/5/2013
28,200

18,119

15,178

0.4%
 
 
 
 
 
18,119

15,178

0.4%
Symphony CLO XIV Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 0.92%, due 7/14/2026)(5)(6)(14)
5/29/2014
49,250

33,606

25,550

0.7%
 
 
 
 
 
33,606

25,550

0.7%
Symphony CLO XV, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 8.39%, due 10/17/2026)(5)(14)
11/17/2014
50,250

39,265

31,922

0.9%
 
 
 
 
 
39,265

31,922

0.9%
TGP HOLDINGS III LLC
Household Durables
Second Lien Term Loan (10.86% (LIBOR + 8.50% with 1.00% LIBOR floor), due 9/25/2025)(8)(11)
10/3/2017
3,000

2,961

2,961

0.1%
 
 
 
 
 
2,961

2,961

0.1%
TouchTunes Interactive Networks, Inc.
Entertainment
Second Lien Term Loan (10.36% (LIBOR + 8.25% with 1.00% LIBOR floor), due 5/29/2022)(3)(8)(13)
5/29/2015
14,000

13,931

14,000

0.4%
 
 
 
 
 
13,931

14,000

0.4%
Town & Country Holdings, Inc.
Distributors
First Lien Term Loan (11.89% (LIBOR + 8.50% with 1.50% LIBOR floor), due 1/26/2023)(3)(11)
1/26/2018
174,191

174,191

174,191

5.1%
 
 
 
 
 
174,191

174,191

5.1%

See notes to consolidated financial statements.
F-17
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Transplace Holdings, Inc.
Transportation Infrastructure
Second Lien Term Loan (10.90% (LIBOR + 8.75% with 1.00% LIBOR floor), due 10/6/2025)(3)(8)(13)
10/5/2017
$
28,104

$
27,515

$
28,104

0.8%
 
 
 
 
 
27,515

28,104

0.8%
Turning Point Brands, Inc.(42)
Tobacco
Second Lien Term Loan (9.15% (LIBOR + 7.00%), due 3/7/2024)(3)(8)(13)
2/17/2017
14,500

14,399

14,399

0.4%
 
 
 
 
 
14,399

14,399

0.4%
Universal Fiber Systems, LLC
Textiles, Apparel & Luxury Goods
Second Lien Term Loan (11.70% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/02/2022)(3)(8)(12)
10/2/2015
37,000

36,578

37,000

1.1%
 
 
 
 
 
36,578

37,000

1.1%
Universal Turbine Parts, LLC
Trading Companies & Distributors
Senior Secured Term Loan A (8.09% (LIBOR + 5.75% with 1.00% LIBOR floor), due 7/22/2021)(11)
7/22/2016
31,200

31,200

27,181

0.8%
Senior Secured Term Loan B (14.09% (LIBOR + 11.75% with 1.00% LIBOR floor), in non-accrual status effective 7/1/2018, due 7/22/2021)(11)
7/22/2016
32,500

32,500

17,948

0.5%
 
 
 
 
 
63,700

45,129

1.3%
USG Intermediate, LLC
Leisure Products
Revolving Line of Credit – $2,000 Commitment (11.49% (LIBOR + 9.25% with 1.00% LIBOR floor), due 8/24/2019)(13)(15)
4/15/2015
1,500

1,500

1,500

0.1%
Senior Secured Term Loan A (8.99% (LIBOR + 6.75% with 1.00% LIBOR floor), due 8/24/2022)(3)(13)
4/15/2015
10,560

10,560

10,560

0.3%
Senior Secured Term Loan B (13.99% (LIBOR + 11.75% with 1.00% LIBOR floor), due 8/24/2022)(3)(13)
4/15/2015
20,492

20,492

20,492

0.6%
Equity(16)
4/15/2015
 
1

—

—%
 
 
 
 
 
32,553

32,552

1.0%
UTZ Quality Foods, LLC
Food Products
Second Lien Term Loan (9.49% (LIBOR + 7.25%), due 11/21/2025)(3)(8)(13)
11/21/2017
10,000

9,888

9,888

0.3%
 
 
 
 
 
9,888

9,888

0.3%
VC GB Holdings, Inc.
Household Durables
Subordinated Secured Term Loan (10.24% (LIBOR + 8.00% with 1.00% LIBOR floor), due 2/28/2025)(3)(8)(13)
2/28/2017
12,933

12,693

12,933

0.4%
 
 
 
 
 
12,693

12,933

0.4%
Venio LLC
Professional Services
Second Lien Term Loan (4.00% plus PIK 10.00% (LIBOR + 7.50% with 2.50% LIBOR floor), due 2/19/2020)(11)(46)
2/19/2014
22,605

19,080

21,726

0.6%
 
 
 
 
 
19,080

21,726

0.6%
Voya CLO 2012-2, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 0.00%, due 10/15/2022)(5)(14)(17)
8/28/2012
38,070

450

683

—%
 
 
 
 
 
450

683

—%
Voya CLO 2012-3, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 0.00%, due 10/15/2022)(5)(14)(17)
10/18/2012
46,632

—

683

—%
 
 
 
 
 
—

683

—%
Voya CLO 2012-4, Ltd.
Structured Finance
Income Notes (Residual Interest, current yield 11.92%, due 10/16/2028)(5)(14)
11/29/2012
40,613

30,974

28,353

0.8%
 
 
 
 
 
30,974

28,353

0.8%
Voya CLO 2014-1, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 16.20%, due 4/18/2031)(5)(6)(14)
3/13/2014
40,773

28,696

25,197

0.7%
 
 
 
 
 
28,696

25,197

0.7%
Voya CLO 2016-3, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 12.53%, due 10/18/2027)(5)(6)(14)
10/27/2016
28,100

27,472

22,702

0.7%
 
 
 
 
 
27,472

22,702

0.7%

See notes to consolidated financial statements.
F-18
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
September 30, 2018 (Unaudited)
Portfolio Company
Industry
Investments(1)(44)
Acquisition Date
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Voya CLO 2017-3, Ltd.
Structured Finance
Subordinated Notes (Residual Interest, current yield 12.27%, due 7/20/2030)(5)(6)(14)
7/12/2017
$
44,885

$
48,253

$
42,624

1.2%
 
 
 
 
 
48,253

42,624

1.2%
VT Topco, Inc.
Commercial Services & Supplies
Second Lien Term Loan (9.34% (LIBOR + 7.00%), due 8/17/2026)(8)(11)
8/23/2018
7,000

6,966

6,966

0.2%
 
 
 
 
 
6,966

6,966

0.2%
Wink Holdco, Inc.
Insurance
Second Lien Term Loan (9.00% (LIBOR + 6.75% with 1.00% LIBOR floor), due 12/1/2025)(3)(8)(13)
12/1/2017
3,000

2,987

2,987

0.1%
 
 
 
 
 
2,987

2,987

0.1%
 
Total Non-Control/Non-Affiliate Investments (Level 3)
 
$
3,532,959

$
3,353,353

97.7%
 
 
 
 
 
 
 
 
 
 
Total Portfolio Investments (Level 3)
 
$
6,039,814

$
5,936,683

173.0%


See notes to consolidated financial statements.
F-19
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(49)
 
 
 
 
 
 
 
 
 
 
 
 
 
CCPI Inc.(19)
Ohio / Electronic Equipment, Instruments & Components
Senior Secured Term Loan A (10.00%, due 12/31/2020)(3)
12/13/2012
$
2,881

$
2,881

$
2,881

0.1%
Senior Secured Term Loan B (12.00% plus 7.00% PIK, due 12/31/2020)(3)(46)
12/13/2012
17,819

17,819

17,819

0.5%
Common Stock (14,857 shares)(16)
12/13/2012
 
6,759

15,056

0.4%
 
 
 
 
 
27,459

35,756

1.0%
CP Energy Services Inc.(20)
Oklahoma / Energy Equipment & Services
Senior Secured Term Loan (13.31% (LIBOR + 11.00% with 1.00% LIBOR floor), due 12/29/2022)(11)
12/29/2017
35,048

35,048

35,048

1.0%
Series B Convertible Preferred Stock (16.00%, 790 shares)(16)
10/30/2015
 
63,225

63,225

1.9%
Common Stock (102,924 shares)(16)
8/2/2013
 
81,203

24,988

0.7%
 
 
 
 
 
179,476

123,261

3.6%
Credit Central Loan Company, LLC(21)
South Carolina / Consumer Finance
Subordinated Term Loan (10.00% plus 10.00% PIK, due 6/26/2024)(14)(46)
6/24/2014
51,855

47,496

51,855

1.5%
Class A Units (10,640,642 units)(14)(16)
6/24/2014
 
13,731

23,196

0.7%
Net Revenues Interest (25% of Net Revenues)(14)(16)
1/28/2015
 
—

1,626

0.1%
 
 
 
 
 
61,227

76,677

2.3%
Echelon Transportation, LLC (f/k/a Echelon Aviation, LLC)
New York / Aerospace & Defense
Senior Secured Term Loan (11.75% (LIBOR + 9.75% with 2.00% LIBOR floor) plus 2.25% PIK, due 3/31/2022)(13)(46)
3/31/2014
31,055

31,055

31,055

0.9%
Senior Secured Term Loan (11.00% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 1.00% PIK, due 12/7/2024)(13)(46)
12/9/2016
16,044

16,044

16,044

0.5%
Membership Interest (100%)(16)
3/31/2014
 
22,738

35,179

1.0%
 
 
 
 
 
69,837

82,278

2.4%
First Tower Finance Company LLC(23)
Mississippi / Consumer Finance
Subordinated Term Loan to First Tower, LLC (10.00% plus 10.00% PIK, due 6/24/2019)(14)(46)
6/24/2014
273,066

273,066

273,066

8.0%
Class A Units (95,709,910 units)(14)(16)
6/24/2014
 
81,146

169,944

5.0%
 
 
 
 
 
354,212

443,010

13.0%
Freedom Marine Solutions, LLC(24)
Louisiana / Energy Equipment & Services
Membership Interest (100%)(16)
10/1/2009
 
43,592

13,037

0.4%
 
 
 
 
 
43,592

13,037

0.4%
InterDent, Inc. (52)
California / Health Care Providers & Services
Senior Secured Term Loan A (7.59% (LIBOR + 5.50% with 0.75% LIBOR floor), due 12/31/2017, past due)(13)
8/3/2012
77,994

77,994

77,994

2.3%
Senior Secured Term Loan B (8.34% (LIBOR + 6.25% with 0.75% LIBOR floor) plus 4.25% PIK, due 12/31/2017, past due)(13)
8/3/2012
131,558

131,558

119,627

3.5%
Senior Secured Term Loan C (18.00% PIK, due on demand)(46)
3/22/2018
3,149

3,149

—

—%
Warrants (to purchase 4,900 shares of Common Stock, expires 3/22/2030)(16)
2/23/2018
 
—

—

—%
 
 
 
 
 
212,701

197,621

5.8%

See notes to consolidated financial statements.
F-20
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(49)
 
 
 
 
 
 
 
 
 
 
 
 
 
MITY, Inc.(25)
Utah / Commercial Services & Supplies
Senior Secured Note A (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor), due 1/30/2020)(3)(11)
9/19/2013
$
26,250

$
26,250

$
26,250

0.8%
Senior Secured Note B (10.00% (LIBOR + 7.00% with 3.00% LIBOR floor) plus 10.00% PIK, due 1/30/2020)(3)(11)(46)
6/23/2014
24,442

24,442

24,442

0.7%
Subordinated Unsecured Note to Broda Enterprises ULC (10.00%, due on demand)(14)
9/19/2013
5,563

7,200

5,563

0.1%
Common Stock (42,053 shares)(16)
9/19/2013
 
6,849

2,639

0.1%
 
 
 
 
 
64,741

58,894

1.7%
National Property REIT Corp.(26)
Various / Equity Real Estate Investment Trusts (REITs) / Online Lending
Senior Secured Term Loan A (6.00% (LIBOR + 4.00% with 2.00% LIBOR floor) plus 10.50% PIK, due 4/1/2019)(13)(46)
4/1/2014
293,203

293,203

293,203

8.6%
Senior Secured Term Loan E (11.00% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 1.50% PIK, due 4/1/2019)(13)(46)
4/1/2014
226,180

226,180

226,180

6.7%
Common Stock (3,042,393 shares)
12/31/2013
 
307,604

436,105

12.8%
Net Operating Income Interest (5% of Net Operating Income)
12/31/2013
 
—

99,488

2.9%
 
 
 
 
 
826,987

1,054,976

31.0%
Nationwide Loan Company LLC(27)
Illinois / Consumer Finance
Senior Subordinated Term Loan to Nationwide Acceptance LLC (10.00% plus 10.00% PIK, due 6/18/2019)(14)(46)
6/18/2014
17,410

17,410

17,410

0.5%
Class A Units (32,456,159 units)(14)(16)
1/31/2013
 
21,962

16,443

0.5%
 
 
 
 
 
39,372

33,853

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

3,714

3,714

0.1%
Senior Secured Note to Armed Forces Communications, Inc. (14.00%, due 5/6/2021)(3)
6/12/2014
4,900

4,900

4,900

0.2%
Series A Preferred Stock (7,200 shares)(16)
12/12/2013
 
7,200

5,663

0.2%
Series B Preferred Stock (5,669 shares)(16)
12/12/2013
 
5,669

4,458

0.1%
 
 
 
 
 
21,483

18,735

0.6%
Pacific World Corporation(40)
California / Personal Products
Revolving Line of Credit – $26,000 Commitment (9.34% (LIBOR + 7.25% with 1.00% LIBOR floor), due 9/26/2020)(13)(15)
9/26/2014
20,825

20,825

20,825

0.6%
Senior Secured Term Loan A (7.34% (LIBOR + 5.25% with 1.00% LIBOR floor), due 9/26/2020)(13)
12/31/2014
96,250

96,250

96,250

2.8%
Senior Secured Term Loan B (11.34% PIK (LIBOR + 9.25% with 1.00% LIBOR floor), in non-accrual status effective 5/21/2018, due 9/26/2020)(13)
12/31/2014
96,500

96,500

47,945

1.4%
Convertible Preferred Equity (100,000 shares)(16)
6/15/2018
 
15,000

—

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

—

—%
 
 
 
 
 
228,575

165,020

4.8%
R-V Industries, Inc.
Pennsylvania / Machinery
Senior Subordinated Note (11.34% (LIBOR + 9.00% with 1.00% LIBOR floor), due 3/31/2022)(11)
6/12/2013
28,622

28,622

28,622

0.8%
Common Stock (745,107 shares)(16)
6/26/2007
 
6,866

3,264

0.1%
 
 
 
 
 
35,488

31,886

0.9%

See notes to consolidated financial statements.
F-21
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments (greater than 25.00% voting control)(49)
 
 
 
 
 
 
 
 
 
 
 
 
 
SB Forging Company II, Inc. (f/k/a Gulf Coast Machine & Supply Company)(29)
Texas / Energy Equipment & Services
Series A Convertible Preferred Stock (6.50%, 99,000 shares)(16)
11/8/2013
 
$
—

$
2,194

0.1%
Common Stock (100 shares)(16)
11/8/2013
 
—

—

—%
 
 
 
 
 
—

2,194

0.1%
USES Corp.(30)
Texas / Commercial Services & Supplies
Senior Secured Term Loan A (9.00% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
$
36,964

31,601

16,319

0.5%
Senior Secured Term Loan B (15.50% PIK, in non-accrual status effective 4/1/2016, due 7/22/2020)
3/31/2014
47,866

35,568

—

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

—

—%
 
 
 
 
 
67,169

16,319

0.5%
Valley Electric Company, Inc.(31)
Washington / Construction & Engineering
Senior Secured Note to Valley Electric Co. of Mt. Vernon, Inc. (8.00% (LIBOR + 5.00% with 3.00% LIBOR floor) plus 2.50% PIK, due 12/31/2024)(3)(11)(46)
12/31/2012
10,430

10,430

10,430

0.3%
Senior Secured Note (8.00% plus 10.00% PIK, due 6/23/2024)(46)
6/24/2014
27,781

27,781

27,781

0.8%
Consolidated Revenue Interest (2.0%)
6/22/2018
 
—

—

—%
Common Stock (50,000 shares)(16)
12/31/2012
 
26,204

12,586

0.4%
 
 
 
 
 
64,415

50,797

1.5%
Wolf Energy, LLC(32)
Kansas / Energy Equipment & Services
Membership Interest (100%)(16)
7/1/2014
 
—

—

—%
Membership Interest in Wolf Energy Services Company, LLC (100%)(16)
3/14/2017
 
3,792

—

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

12

—%
 
 
 
 
 
3,792

12

—%
Total Control Investments (Level 3)
 
$
2,300,526

$
2,404,326

70.6%

Affiliate Investments (5.00% to 24.99% voting control)(50)
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC(22)
Minnesota / Diversified Consumer Services
Second Lien Revolving Credit Facility to Edmentum, Inc. – $7,834 Commitment (5.00%, due 12/9/2021)(15)
6/9/2015
$
7,834

$
7,834

$
7,834

0.2%
Unsecured Senior PIK Note (8.50% PIK, due 12/9/2021)(46)
6/9/2015
7,520

7,520

7,520

0.2%
Unsecured Junior PIK Note (10.00% PIK, in non-accrual status effective 1/1/2017, due 12/9/2021)
6/9/2015
35,226

23,828

19,862

0.6%
Class A Units (370,964 units)(16)
6/9/2015
 
6,577

—

—%
 
 
 
 
 
45,759

35,216

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

—

—%
 
 
 
 
 
—

—

—%
Targus International, LLC(33)
California / Textiles, Apparel & Luxury Goods
Common Stock (7,383,395 shares)(16)
5/24/2011
 
9,878

23,220

0.7%
 
 
 
 
 
9,878

23,220

0.7%
Total Affiliate Investments (Level 3)
 
$
55,637

$
58,436

1.7%

See notes to consolidated financial statements.
F-22
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
ACE Cash Express, Inc.
Texas / Consumer Finance
Senior Secured Note (12.00%, due 12/15/2022)(8)(14)
12/15/2017
$
20,000

$
19,733

$
21,594

0.6%
 
 
 
 
 
19,733

21,594

0.6%
AgaMatrix, Inc.
New Hampshire / Healthcare Equipment and Supplies
Senior Secured Term Loan (11.33% (LIBOR + 9.00% with 1.25% LIBOR floor), due 9/29/2022)(3)(11)
9/29/2017
35,815

35,815

35,815

1.1%
 
 
 
 
 
35,815

35,815

1.1%
American Gilsonite Company(34)
Utah / Chemicals
Membership Interest (0.05%, 131 shares)(16)
3/14/2008
 
—

—

—%
 
 
 
 
 
—

—

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

21

76

—%
 
 
 
 
 
21

76

—%
Apidos CLO XI
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 7.80%, due 1/17/2028)(5)(14)
1/17/2013
40,500

32,397

25,000

0.7%
 
 
 
 
 
32,397

25,000

0.7%
Apidos CLO XII
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 15.35%, due 4/15/2031)(5)(14)
4/18/2013
52,203

35,014

26,518

0.8%
 
 
 
 
 
35,014

26,518

0.8%
Apidos CLO XV
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 14.14%, due 4/20/2031)(5)(14)
10/16/2013
48,515

35,776

26,960

0.8%
 
 
 
 
 
35,776

26,960

0.8%
Apidos CLO XXII
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 12.65%, due 10/20/2027)(5)(6)(14)
10/14/2015
31,350

27,496

25,047

0.7%
 
 
 
 
 
27,496

25,047

0.7%
Ark-La-Tex Wireline Services, LLC
Louisiana / Energy Equipment & Services
Senior Secured Term Loan B (13.59% (LIBOR + 11.50% with 1.00% LIBOR floor), in non-accrual status effective 4/1/2016, due 4/8/2019)(13)
4/8/2014
25,595

1,145

787

—%
 
 
 
 
 
1,145

787

—%
Armor Holding II LLC
New York / Commercial Services & Supplies
Second Lien Term Loan (11.10% (LIBOR + 9.00% with 1.25% LIBOR floor), due 12/26/2020)(3)(8)(13)
6/26/2018
7,000

6,949

7,000

0.2%
 
 
 
 
 
6,949

7,000

0.2%
Atlantis Health Care Group (Puerto Rico), Inc.
Puerto Rico / Health Care Providers & Services
Revolving Line of Credit – $7,000 Commitment (10.81% (LIBOR + 8.50% with 1.50% LIBOR floor), due 8/21/2019)(11)(15)
2/21/2013
7,000

7,000

6,900

0.2%
Senior Term Loan (10.81% (LIBOR + 8.50% with 1.50% LIBOR floor), due 2/21/2020)(3)(11)
2/21/2013
77,713

77,713

76,607

2.2%
 
 
 
 
 
84,713

83,507

2.4%
ATS Consolidated, Inc.
Arizona / Electronic Equipment, Instruments & Components
Second Lien Term Loan (9.84% (LIBOR + 7.75%, due 2/27/2026)(8)(13)
3/19/2018
15,000

14,856

14,873

0.4%
 
 
 
 
 
14,856

14,873

0.4%

See notes to consolidated financial statements.
F-23
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Autodata, Inc. / Autodata Solutions, Inc.(9)
Canada / Software
Second Lien Term Loan (9.34% (LIBOR + 7.25% with 1.00% LIBOR floor), due 12/12/2025)(8)(13)
12/14/2017
$
6,000

$
5,972

$
5,972

0.2%
 
 
 
 
 
5,972

5,972

0.2%
Barings CLO 2018-III (f/k/a Babson CLO Ltd. 2014-III)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 11.35%, due 7/20/2029)(5)(6)(14)
6/14/2018
83,098

49,688

46,933

1.4%
 
 
 
 
 
49,688

46,933

1.4%
Broder Bros., Co.
Pennsylvania / Textiles, Apparel & Luxury Goods
Senior Secured Note (10.33% (LIBOR + 8.00% with 1.25% LIBOR floor), due 12/02/2022)(3)(11)
12/4/2017
274,009

274,009

274,009

8.0%
 
 
 
 
 
274,009

274,009

8.0%
Brookside Mill CLO Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 8.73%, due 1/18/2028)(5)(14)
5/23/2013
36,300

19,287

13,466

0.4%
 
 
 
 
 
19,287

13,466

0.4%
California Street CLO IX Ltd. (f/k/a Symphony CLO IX Ltd.)
Cayman Islands / Structured Finance
Preference Shares (Residual Interest, current yield 12.20%, due 10/16/2028)(5)(14)
5/8/2012
58,915

41,645

35,852

1.1%
 
 
 
 
 
41,645

35,852

1.1%
Candle-Lite Company, LLC
Ohio / Household & Personal Products
Senior Secured Term Loan A (7.81% (LIBOR + 5.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,438

12,438

12,438

0.3%
Senior Secured Term Loan B (11.81% (LIBOR + 9.50% with 1.25% LIBOR floor), due 1/23/2023)(3)(11)
1/23/2018
12,500

12,500

12,500

0.4%
 
 
 
 
 
24,938

24,938

0.7%
Capstone Logistics Acquisition, Inc.
Georgia / Commercial Services & Supplies
Second Lien Term Loan (10.34% (LIBOR + 8.25% with 1.00% LIBOR floor), due 10/7/2022)(3)(8)(13)
10/7/2014
101,030

100,669

100,136

2.9%
 
 
 
 
 
100,669

100,136

2.9%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 20.73%, due 7/15/2030)(5)(6)(14)
6/29/2018
25,534

17,832

18,807

0.6%
 
 
 
 
 
17,832

18,807

0.6%
Carlyle Global Market Strategies CLO 2016-3, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 18.00%, due 10/20/2029)(5)(6)(14)
9/13/2016
32,200

32,364

29,080

0.9%
 
 
 
 
 
32,364

29,080

0.9%
Carlyle C17 CLO Limited (f/k/a Cent CLO 17 Limited)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 18.34%, due 4/30/2031)(5)(14)
5/10/2018
24,870

15,140

15,196

0.4%
 
 
 
 
 
15,140

15,196

0.4%
Cent CLO 20 Limited
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 15.40%, due 1/25/2026)(5)(14)
1/15/2014
40,275

31,692

28,269

0.8%
 
 
 
 
 
31,692

28,269

0.8%
Cent CLO 21 Limited
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 17.56%, due 7/27/2026)(5)(6)(14)
6/18/2014
48,528

36,311

33,703

1.0%
 
 
 
 
 
36,311

33,703

1.0%

See notes to consolidated financial statements.
F-24
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Centerfield Media Holding Company(35)
California / Internet Software & Services
Senior Secured Term Loan A (9.31% (LIBOR + 7.00% with 2.00% LIBOR floor), due 1/17/2022)(3)(11)
1/17/2017
$
66,300

$
66,300

$
66,300

1.9%
Senior Secured Term Loan B (14.81% (LIBOR + 12.50% with 2.00% LIBOR floor), due 1/17/2022)(11)
1/17/2017
68,000

68,000

68,000

2.0%
 
 
 
 
 
134,300

134,300

3.9%
CIFC Funding 2013-III-R, Ltd. (f/k/a CIFC Funding 2013-III, Ltd.)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 14.43%, due 4/24/2031)(5)(14)
4/5/2018
44,100

27,624

25,250

0.7%
 
 
 
 
 
27,624

25,250

0.7%
CIFC Funding 2013-IV, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 14.31%, due 4/28/2031)(5)(14)
11/14/2013
45,500

31,503

27,697

0.8%
 
 
 
 
 
31,503

27,697

0.8%
CIFC Funding 2014-IV Investor, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 8.46%, due 10/19/2026)(5)(6)(14)
9/3/2014
41,500

28,512

23,715

0.7%
 
 
 
 
 
28,512

23,715

0.7%
CIFC Funding 2016-I, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 13.11%, due 10/21/2028)(5)(6)(14)
12/21/2016
34,000

31,179

27,998

0.8%
 
 
 
 
 
31,179

27,998

0.8%
Cinedigm DC Holdings, LLC
New York / Media
Senior Secured Term Loan (11.31% (LIBOR + 9.00% with 2.00% LIBOR floor) plus 2.50% PIK, due 3/31/2021)(11)(46)
2/28/2013
31,460

31,410

31,460

0.9%
 
 
 
 
 
31,410

31,460

0.9%
Class Appraisal, LLC
Michigan / Real Estate Management & Development
Revolving Line of Credit – $1,500 Commitment (10.58% (LIBOR + 8.25% with 1.50% LIBOR floor), due 3/12/2020)(11)(15)
3/12/2018
—

—

—

—
Senior Secured Term Loan (10.58% (LIBOR + 8.25% with 1.50% LIBOR floor), due 3/10/2023)(3)(11)
3/12/2018
41,860

41,860

41,860

—
 
 
 
 
 
41,860

41,860

1.2%
Coverall North America, Inc.
Florida / Commercial Services & Supplies
Senior Secured Term Loan A (8.31% (LIBOR + 6.00% with 1.00% LIBOR floor), due 11/02/2020)(3)(11)
11/2/2015
19,100

19,100

19,100

—
Senior Secured Term Loan B (13.31% (LIBOR + 11.00% with 1.00% LIBOR floor), due 11/02/2020)(3)(11)
11/2/2015
24,750

24,750

24,750

—
 
 
 
 
 
43,850

43,850

1.3%
CP VI Bella Midco
Pennsylvania / IT Services
Second Lien Term Loan (8.84% (LIBOR + 6.75%, due 12/29/2025)(8)(13)
12/28/2017
2,000

1,990

1,990

—
 
 
 
 
 
1,990

1,990

0.1%
CURO Financial Technologies Corp.
Canada / Consumer Finance
Senior Secured Notes (12.00%, due 3/1/2022)(8)(14)
2/1/2017
10,896

10,837

11,844

0.3%
 
 
 
 
 
10,837

11,844

0.3%
Digital Room, LLC
California / Commercial Services & Supplies
First Lien Term Loan (7.10% (LIBOR + 5.00% with 1.00% LIBOR floor), due 12/29/2023)(3)(8)(13)
2/9/2018
9,950

9,857

9,925

0.3%
Second Lien Term Loan (10.85% (LIBOR + 8.75% with 1.00% LIBOR floor), due 12/29/2024)(3)(8)(13)
2/8/2018
57,100

56,295

57,100

1.7%
 
 
 
 
 
66,152

67,025

2.0%

See notes to consolidated financial statements.
F-25
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Dunn Paper, Inc.
Georgia / Paper & Forest Products
Second Lien Term Loan (10.84% (LIBOR + 8.75% with 1.00% LIBOR floor), due 8/26/2023)(3)(8)(13)
10/7/2016
$
11,500

$
11,328

$
11,226

0.3%
 
 
 
 
 
11,328

11,226

0.3%
Easy Gardener Products, Inc.
Texas / Household Durables
Senior Secured Term Loan (12.31% (LIBOR + 10.00% with 0.25% LIBOR floor), due 09/30/2020)(11)
10/2/2015
16,894

16,894

15,728

0.5%
 
 
 
 
 
16,894

15,728

0.5%
Engine Group, Inc.(7)
California / Media
Senior Secured Term Loan (7.08% (LIBOR + 4.75% with 1.00% LIBOR floor), due 9/15/2022)(8)(11)
9/25/2017
4,813

4,813

4,813

0.1%
Second Lien Term Loan (11.08% (LIBOR + 8.75% with 1.00% LIBOR floor), due 9/15/2023)(3)(8)(11)
9/25/2017
35,000

35,000

35,000

1.0%
 
 
 
 
 
39,813

39,813

1.1%
EXC Holdings III Corp
Massachusetts / Technology Hardware, Storage & Peripherals
Second Lien Term Loan (9.97% (LIBOR + 7.50% with 1.00% LIBOR floor), due 12/01/2025)(8)(10)
12/5/2017
12,500

12,384

12,500

0.4%
 
 
 
 
 
12,384

12,500

0.4%
Fleetwash, Inc.
New Jersey / Commercial Services & Supplies
Senior Secured Term Loan B (11.31% (LIBOR + 9.00% with 1.00% LIBOR floor), due 4/30/2022)(3)(11)
4/30/2014
21,544

21,544

21,544

0.6%
Delayed Draw Term Loan – $15,000 Commitment (10.31% (LIBOR + 8.00% with 1.00% LIBOR floor), expires 4/30/2022)(11)(15)
4/30/2014
—

—

—

—%
 
 
 
 
 
21,544

21,544

0.6%
Galaxy XV CLO, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 12.42%, due 10/15/2030)(5)(14)
3/14/2013
50,525

34,853

30,457

0.9%
 
 
 
 
 
34,853

30,457

0.9%
Galaxy XXVII CLO, Ltd. (f/k/a Galaxy XVI CLO, Ltd.)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 13.57%, due 5/16/2031)(5)(14)
4/17/2018
24,575

16,936

13,688

0.4%
 
 
 
 
 
16,936

13,688

0.4%
Galaxy XXVIII CLO, Ltd. (f/k/a Galaxy XVII CLO, Ltd.)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 10.89%, due 7/15/2031)(5)(6)(14)
6/27/2014
39,905

28,009

22,335

0.7%
 
 
 
 
 
28,009

22,335

0.7%
Galaxy XXVIII CLO, Ltd.
Cayman Islands / Structured Finance
Class F Junior Notes (LIBOR + 8.48%, due 7/15/2031)(6)(11)(14)(37)
 
6,658

6,159

6,159

0.2%
 
 
 
 
 
6,159

6,159

0.2%
H.I.G. ECI Merger Sub, Inc.
Massachusetts / IT Services
Revolving Line of Credit – $5,000 Commitment (9.81% (LIBOR + 7.50% with 1.50% LIBOR floor), due 9/30/2018)(11)
5/31/2018
—

—

—

—%
Senior Secured Term Loan A (7.81% (LIBOR + 5.50% with 1.50% LIBOR floor), due 5/31/2023)(11)
5/31/2018
44,688

44,688

44,688

1.3%
Senior Secured Term Loan B (12.81% (LIBOR + 10.50% with 1.50% LIBOR floor), due 5/31/2023)(11)
5/31/2018
29,900

29,900

29,900

0.9%
 
 
 
 
 
74,588

74,588

2.2%

See notes to consolidated financial statements.
F-26
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Halcyon Loan Advisors Funding 2012-1 Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 8/15/2023)(5)(14)(17)
8/21/2012
$
23,188

$
3,869

$
3,125

0.1%
 
 
 
 
 
3,869

3,125

0.1%
Halcyon Loan Advisors Funding 2013-1 Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 0.00%, due 4/15/2025)(5)(14)(17)
3/28/2013
40,400

22,057

11,017

0.3%
 
 
 
 
 
22,057

11,017

0.3%
Halcyon Loan Advisors Funding 2014-1 Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 10.30%, due 4/18/2026)(5)(14)
3/6/2014
24,500

14,007

11,647

0.3%
 
 
 
 
 
14,007

11,647

0.3%
Halcyon Loan Advisors Funding 2014-2 Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 8.64%, due 4/28/2025)(5)(6)(14)
4/28/2014
41,164

24,290

19,050

0.6%
 
 
 
 
 
24,290

19,050

0.6%
Halcyon Loan Advisors Funding 2015-3 Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 19.80%, due 10/18/2027)(5)(6)(14)
9/3/2015
39,598

34,675

32,513

1.0%
 
 
 
 
 
34,675

32,513

1.0%
Harbortouch Payments, LLC
Pennsylvania / Commercial Services & Supplies
Escrow Receivable
3/31/2014
 
—

917

—%
 
 
 
 
 
—

917

—%
HarbourView CLO VII-R, Ltd. (f/k/a HarbourView CLO VII, Ltd.)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 18.94%, due 7/18/2031)(5)(6)(14)
6/10/2015
19,025

13,411

13,689

0.4%
 
 
 
 
 
13,411

13,689

0.4%
Help/Systems Holdings, Inc.
Minnesota / Software
Second Lien Term Loan (9.84% (LIBOR + 7.75%, due 3/27/2026)(8)(13)
4/17/2018
11,293

11,244

11,293

0.3%
 
 
 
 
 
11,244

11,293

0.3%
Ingenio, LLC
California / Internet Software & Services
Senior Secured Term Loan (9.82% (LIBOR + 7.50% with 1.25% LIBOR floor), due 9/26/2022)(3)(8)(11)
9/25/2017
9,647

9,647

9,647

0.3%
 
 
 
 
 
9,647

9,647

0.3%
Inpatient Care Management Company, LLC
Florida / Health Care Providers & Services
Senior Secured Term Loan (10.31% (LIBOR + 8.00% with 1.00% LIBOR floor), due 6/8/2021)(3)(11)
6/8/2016
23,698

23,698

23,698

0.7%
 
 
 
 
 
23,698

23,698

0.7%
Janus International Group, LLC
Georgia / Building Products
Second Lien Term Loan (9.84% (LIBOR + 7.75% with 1.00% LIBOR floor), due 2/12/2026)(8)(13)
2/22/2018
10,000

9,905

10,000

0.3%
 
 
 
 
 
9,905

10,000

0.3%
JD Power and Associates
California / Capital Markets
Second Lien Term Loan (10.59% (LIBOR + 8.50% with 1.00% LIBOR floor), due 9/7/2024)(3)(8)(13)
9/16/2016
20,000

19,799

20,000

0.6%
 
 
 
 
 
19,799

20,000

0.6%
Jefferson Mill CLO Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 7.20%, due 7/20/2027)(5)(6)(14)
7/28/2015
19,500

16,078

12,392

0.4%
 
 
 
 
 
16,078

12,392

0.4%

See notes to consolidated financial statements.
F-27
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
K&N Parent, Inc.
California / Auto Components
Second Lien Term Loan (11.08% (LIBOR + 8.75% with 1.00% LIBOR floor), due 10/21/2024)(3)(8)(11)
10/20/2016
$
12,887

$
12,681

$
12,887

0.4%
 
 
 
 
 
12,681

12,887

0.4%
Keystone Acquisition Corp.(36)
Pennsylvania / Health Care Providers & Services
Second Lien Term Loan (11.58% (LIBOR + 9.25% with 1.00% LIBOR floor), due 5/1/2025)(3)(8)(11)
5/18/2017
50,000

50,000

50,000

1.5%
 
 
 
 
 
50,000

50,000

1.5%
LCM XIV Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 16.28%, due 7/21/2031)(5)(14)
7/11/2013
49,934

26,516

24,257

0.7%
 
 
 
 
 
26,516

24,257

0.7%
Madison Park Funding IX, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 57.45%, due 8/15/2022)(5)(14)
7/18/2012
43,110

2,058

2,200

0.1%
 
 
 
 
 
2,058

2,200

0.1%
Maverick Healthcare Equity, LLC
Arizona / Health Care Providers & Services
Preferred Units (10.00%, 1,250,000 units)(16)
10/31/2007
 
1,252

446

—%
Class A Common Units (1,250,000 units)(16)
10/31/2007
 
—

—

—%
 
 
 
 
 
1,252

446

—%
MedMark Services, Inc.(51)
Texas / Health Care Providers & Services
Second Lien Term Loan (10.55% (LIBOR + 8.25% with 1.00% LIBOR floor), due 3/1/2025)(3)(8)(11)
3/16/2018
7,000

6,933

6,933

0.2%
 
 
 
 
 
6,933

6,933

0.2%
Memorial MRI & Diagnostic, LLC
Texas / Health Care Providers & Services
Senior Secured Term Loan (10.83% (LIBOR + 8.50% with 1.00% LIBOR floor), due 3/16/2022)(11)
3/16/2017
36,925

36,925

36,925

1.1%
 
 
 
 
 
36,925

36,925

1.1%
Mobile Posse, Inc.
Virginia / Media
First Lien Term Loan (10.83% (LIBOR + 8.50% with 2.00% LIBOR floor), due 4/3/2023)(3)(11)
4/3/2018
27,700

27,700

27,700

0.8%
 
 
 
 
 
27,700

27,700

0.8%
Mountain View CLO 2013-I Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 13.66%, due 10/15/2030)(5)(14)
5/1/2013
43,650

28,357

23,267

0.7%
 
 
 
 
 
28,357

23,267

0.7%
Mountain View CLO IX Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 17.63%, due 7/15/2031)(5)(6)(14)
6/25/2015
47,830

31,528

37,333

1.1%
 
 
 
 
 
31,528

37,333

1.1%
MRP Holdco, Inc.
Massachusetts / IT Services
Senior Secured Term Loan A (6.59% (LIBOR + 4.50% with 1.50% LIBOR floor), due 4/17/2024)(3)(13)
4/17/2018
43,000

43,000

43,000

1.3%
Senior Secured Term Loan B (10.59% (LIBOR + 8.50% with 1.50% LIBOR floor), due 4/17/2024)(13)
4/17/2018
43,000

43,000

43,000

1.3%
 
 
 
 
 
86,000

86,000

2.6%
Octagon Investment Partners XV, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 14.58%, due 7/19/2030)(5)(14)
2/20/2013
42,063

31,734

26,350

0.8%
 
 
 
 
 
31,734

26,350

0.8%

See notes to consolidated financial statements.
F-28
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Octagon Investment Partners 18-R Ltd. (f/k/a Octagon Investment Partners XVIII, Ltd.)
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 17.26%, due 4/16/2031)(5)(6)(14)
8/17/2015
$
46,016

$
27,295

$
26,420

0.8%
 
 
 
 
 
27,295

26,420

0.8%
Pearl Intermediate Parent LLC
Connecticut / Health Care Providers & Services
Second Lien Term Loan (8.33% (LIBOR + 6.25%, due 2/15/2026)(8)(13)
2/28/2018
5,000

4,976

5,000

0.1%
 
 
 
 
 
4,976

5,000

0.1%
PeopleConnect Intermediate, LLC (f/k/a Intelius, Inc.)
Washington / Internet Software & Services
Revolving Line of Credit – $1,000 Commitment (11.81% (LIBOR + 9.50% with 1.00% LIBOR floor), due 8/11/2020)(11)(15)
7/1/2015
500

500

500

—%
Senior Secured Term Loan A (8.81% (LIBOR + 6.50% with 1.00% LIBOR floor), due 7/1/2020)(3)(11)
7/1/2015
18,828

18,828

18,828

0.6%
Senior Secured Term Loan B (14.81% (LIBOR + 12.50% with 1.00% LIBOR floor), due 7/1/2020)(3)(11)
7/1/2015
20,163

20,163

20,163

0.6%
 
 
 
 
 
39,491

39,491

1.2%
PGX Holdings, Inc.
Utah / Diversified Consumer Services
Second Lien Term Loan (11.09% (LIBOR + 9.00% with 1.00% LIBOR floor), due 9/29/2021)(3)(13)
9/29/2014
118,289

118,289

118,289

3.5%
 
 
 
 
 
118,289

118,289

3.5%
PharMerica Corporation
Kentucky / Pharmaceuticals
Second Lien Term Loan (9.80% (LIBOR + 7.75% with 1.00% LIBOR floor), due 12/7/2025)(8)(13)
12/7/2017
12,000

11,882

12,000

0.4%
 
 
 
 
 
11,882

12,000

0.4%
Photonis Technologies SAS
France / Electronic Equipment, Instruments & Components
First Lien Term Loan (9.83% (LIBOR + 7.50% with 1.00% LIBOR floor), due 9/18/2019)(8)(11)(14)
9/10/2013
12,872

12,490

12,335

0.4%
 
 
 
 
 
12,490

12,335

0.4%
PlayPower, Inc.
North Carolina / Leisure Products
Second Lien Term Loan (11.08% (LIBOR + 8.75% with 1.00% LIBOR floor), due 6/23/2022)(3)(8)(11)
6/23/2015
11,000

10,904

11,000

0.3%
 
 
 
 
 
10,904

11,000

0.3%
Research Now Group, Inc.
Connecticut / Professional Services
First Lien Term Loan (7.86% (LIBOR + 5.50% with 1.00% LIBOR floor), due 12/20/2024)(8)(10)
1/5/2018
9,950

9,468

9,608

0.3%
Second Lien Term Loan (11.82% (LIBOR + 9.50% with 1.00% LIBOR floor), due 12/20/2025)(8)(11)
1/5/2018
50,000

46,738

47,382

1.4%
 
 
 
 
 
56,206

56,990

1.7%
RGIS Services, LLC
Michigan / Commercial Services & Supplies
Senior Secured Term Loan (9.59% (LIBOR + 7.50% with 1.00% LIBOR floor), due 3/31/2023)(3)(8)(13)
4/20/2017
15,173

15,113

14,339

0.4%
 
 
 
 
 
15,113

14,339

0.4%
RME Group Holding Company
Florida / Media
Senior Secured Term Loan A (8.33% (LIBOR + 6.00% with 1.00% LIBOR floor), due 5/4/2022)(3)(11)
5/4/2017
35,146

35,146

35,146

1.0%
Senior Secured Term Loan B (13.33% (LIBOR + 11.00% with 1.00% LIBOR floor), due 5/4/2022)(3)(11)
5/4/2017
24,349

24,349

24,349

0.7%
 
 
 
 
 
59,495

59,495

1.7%

See notes to consolidated financial statements.
F-29
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Rocket Software, Inc.
Massachusetts / Software
Second Lien Term Loan (11.83% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/14/2024)(3)(8)(11)
10/20/2016
$
50,000

$
49,219

$
50,000

1.5%
 
 
 
 
 
49,219

50,000

1.5%
Romark WM-R Ltd. (f/k/a Washington Mill CLO Ltd.)
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 12.41%, due 4/20/2031)(5)(6)(14)
5/15/2014
27,724

21,494

17,961

0.5%
 
 
 
 
 
21,494

17,961

0.5%
Rosa Mexicano
New York / Hotels, Restaurants & Leisure
Revolving Line of Credit – $2,500 Commitment (9.83% (LIBOR + 7.50% with 1.50% LIBOR floor), due 3/29/2023(11)(15)
3/29/2018
—

—

—

—%
Senior Secured Term Loan (9.83% (LIBOR + 7.50% with 1.50% LIBOR floor), due 3/29/2023(3)(11)
3/29/2018
29,813

29,813

29,813

0.9%
 
 
 
 
 
29,813

29,813

0.9%
SCS Merger Sub, Inc.
Texas / IT Services
Second Lien Term Loan (11.59% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/30/2023)(3)(8)(13)
11/6/2015
20,000

19,605

20,000

0.6%
 
 
 
 
 
19,605

20,000

0.6%
Securus Technologies Holdings, Inc.
Texas / Communications Equipment
Second Lien Term Loan (10.34% (LIBOR + 8.25% with 1.00% LIBOR floor), due 11/01/2025)(8)(13)
11/3/2017
40,000

39,860

40,000

1.2%
 
 
 
 
 
39,860

40,000

1.2%
SEOTownCenter, Inc
Utah / Internet Software & Services
Senior Secured Term Loan A (9.84% (LIBOR + 7.50% with 2.00% LIBOR floor), due 4/07/2023)(3)(11)
4/10/2018
25,000

25,000

25,000

0.7%
Senior Secured Term Loan B (14.84% (LIBOR + 12.50% with 2.00% LIBOR floor), due 4/07/2023)(3)(11)
4/10/2018
17,000

17,000

17,000

0.5%
 
 
 
 
 
42,000

42,000

1.2%
SESAC Holdco II LLC
Tennessee / Media
Second Lien Term Loan (9.34% (LIBOR + 7.25% with 1.00% LIBOR floor), due 2/23/2025)(8)(13)
3/2/2017
3,000

2,975

2,975

0.1%
 
 
 
 
 
2,975

2,975

0.1%
Small Business Whole Loan Portfolio(41)
New York / Online Lending
124 Small Business Loans purchased from On Deck Capital, Inc.
2/21/2014
30

30

17

—%
 
 
 
 
 
30

17

—%
SMG US Midco
Pennsylvania / Hotels, Restaurants & Leisure
Second Lien Term Loan (9.09% (LIBOR + 7.00%, due 1/23/2026)(8)(13)
1/23/2018
7,500

7,482

7,482

0.2%
 
 
 
 
 
7,482

7,482

0.2%
Spartan Energy Services, Inc.
Louisiana / Energy Equipment & Services
Senior Secured Term Loan A (7.98% (LIBOR + 6.00% with 1.00% LIBOR floor), due 12/28/2018)(13)
10/20/2014
13,156

12,528

13,046

0.4%
Senior Secured Term Loan B (13.98% PIK (LIBOR + 12.00% with 1.00% LIBOR floor), due 12/28/2018)(13)(46)
10/20/2014
18,237

16,838

18,237

0.5%
 
 
 
 
 
29,366

31,283

0.9%
Spectrum Holdings III Corp
Georgia / Health Care Equipment & Supplies
Second Lien Term Loan (9.09% (LIBOR + 7.00% with 1.00% LIBOR floor), due 1/31/2026)(8)(13)
1/31/2018
7,500

7,464

7,464

0.2%
 
 
 
 
 
7,464

7,464

0.2%

See notes to consolidated financial statements.
F-30
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic Materials
Texas / Household Durables
Second Lien Term Loan (10.10% (LIBOR + 7.75% with 1.00% LIBOR floor), due 11/1/2025)(8)(11)
11/1/2017
$
7,000

$
6,936

$
6,936

0.2%
 
 
 
 
 
6,936

6,936

0.2%
Stryker Energy, LLC
Louisiana / Energy Equipment & Services
Overriding Royalty Interests (43)
12/4/2006
 
—

—

—%
 
 
 
 
 
—

—

—%
Sudbury Mill CLO Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 5.47%, due 1/17/2026)(5)(14)
12/5/2013
28,200

18,183

14,218

0.4%
 
 
 
 
 
18,183

14,218

0.4%
Symphony CLO XIV Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 3.78%, due 7/14/2026)(5)(6)(14)
5/29/2014
49,250

34,297

27,478

0.8%
 
 
 
 
 
34,297

27,478

0.8%
Symphony CLO XV, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 7.30%, due 10/17/2026)(5)(14)
11/17/2014
50,250

39,512

32,433

1.0%
 
 
 
 
 
39,512

32,433

1.0%
TGP HOLDINGS III LLC
Oregon / Household Durables
Second Lien Term Loan (10.83% (LIBOR + 8.50% with 1.00% LIBOR floor), due 9/25/2025)(8)(11)
10/3/2017
3,000

2,959

2,959

0.1%
 
 
 
 
 
2,959

2,959

0.1%
TouchTunes Interactive Networks, Inc.
New York / Internet Software & Services
Second Lien Term Loan (10.25% (LIBOR + 8.25% with 1.00% LIBOR floor), due 5/29/2022)(3)(8)(13)
5/29/2015
14,000

13,926

14,000

0.4%
 
 
 
 
 
13,926

14,000

0.4%
Town & Country Holdings, Inc.
New York / Distributors
First Lien Term Loan (11.33% (LIBOR + 9.00% with 1.25% LIBOR floor), due 1/26/2023)(3)(11)
1/26/2018
69,650

69,650

69,650

2.0%
 
 
 
 
 
69,650

69,650

2.0%
Transplace Holdings, Inc.
Texas / Transportation Infrastructure
Second Lien Term Loan (10.79% (LIBOR + 8.75% with 1.00% LIBOR floor), due 10/6/2025)(8)(13)
10/5/2017
28,104

27,494

28,104

0.8%
 
 
 
 
 
27,494

28,104

0.8%
Turning Point Brands, Inc.(42)
Kentucky / Tobacco
Second Lien Term Loan (9.04% (LIBOR + 7.00%), due 3/7/2024)(3)(8)(13)
2/17/2017
14,500

14,392

14,392

0.4%
 
 
 
 
 
14,392

14,392

0.4%
United Sporting Companies, Inc.(18)
South Carolina / Distributors
Second Lien Term Loan (13.09% (LIBOR + 11.00% with 1.75% LIBOR floor) plus 2.00% PIK, in non-accrual status effective 4/1/2017, due 11/16/2019)(13)(46)
9/28/2012
149,126

127,091

58,806

1.7%
Common Stock (24,967 shares)(16)
5/2/2017
 
—

—

—%
 
 
 
 
 
127,091

58,806

1.7%
Universal Fiber Systems, LLC
Virginia / Textiles, Apparel & Luxury Goods
Second Lien Term Loan (11.60% (LIBOR + 9.50% with 1.00% LIBOR floor), due 10/02/2022)(3)(8)(12)
10/2/2015
37,000

36,551

37,000

1.1%
 
 
 
 
 
36,551

37,000

1.1%

See notes to consolidated financial statements.
F-31
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Universal Turbine Parts, LLC
Alabama / Trading Companies & Distributors
Senior Secured Term Loan A (8.06% (LIBOR + 5.75% with 1.00% LIBOR floor), due 7/22/2021)(3)(11)
7/22/2016
$
31,363

$
31,363

$
27,926

0.8%
Senior Secured Term Loan B (14.06% (LIBOR + 11.75% with 1.00% LIBOR floor), due 7/22/2021)(11)
7/22/2016
32,500

32,500

28,273

0.8%
 
 
 
 
 
63,863

56,199

1.6%
USG Intermediate, LLC
Texas / Leisure Products
Revolving Line of Credit – $2,500 Commitment (11.34% (LIBOR + 9.25% with 1.00% LIBOR floor), due 8/24/2018)(13)(15)
4/15/2015
2,500

2,500

2,500

0.1%
Senior Secured Term Loan A (8.84% (LIBOR + 6.75% with 1.00% LIBOR floor), due 8/24/2022)(3)(13)
4/15/2015
11,385

11,385

11,385

0.3%
Senior Secured Term Loan B (13.84% (LIBOR + 11.75% with 1.00% LIBOR floor), due 8/24/2022)(3)(13)
4/15/2015
20,741

20,741

20,741

0.6%
Equity(16)
4/15/2015
 
1

—

—%
 
 
 
 
 
34,627

34,626

1.0%
UTZ Quality Foods, LLC
Pennsylvania / Food Products
Second Lien Term Loan (9.34% (LIBOR + 7.25%, due 11/21/2025)(8)(13)
11/21/2017
10,000

9,884

9,886

0.3%
 
 
 
 
 
9,884

9,886

0.3%
VC GB Holdings, Inc.
Illinois / Household Durables
Subordinated Secured Term Loan (10.09% (LIBOR + 8.00% with 1.00% LIBOR floor), due 2/28/2025)(3)(8)(13)
2/28/2017
16,000

15,750

16,000

0.5%
 
 
 
 
 
15,750

16,000

0.5%
Venio LLC
Pennsylvania / Professional Services
Second Lien Term Loan (4.00% plus PIK 10.00% (LIBOR + 7.50% with 2.50% LIBOR floor), due 2/19/2020)(11)(46)
2/19/2014
22,048

18,066

20,001

0.6%
 
 
 
 
 
18,066

20,001

0.6%
Voya CLO 2012-2, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 0.00%, due 10/15/2022)(5)(14)(17)
8/28/2012
38,070

450

595

—%
 
 
 
 
 
450

595

—%
Voya CLO 2012-3, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 0.00%, due 10/15/2022)(5)(14)(17)
10/18/2012
46,632

—

585

—%
 
 
 
 
 
—

585

—%
Voya CLO 2012-4, Ltd.
Cayman Islands / Structured Finance
Income Notes (Residual Interest, current yield 11.96%, due 10/16/2028)(5)(14)
11/29/2012
40,613

30,893

28,264

0.8%
 
 
 
 
 
30,893

28,264

0.8%
Voya CLO 2014-1, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 16.47%, due 4/18/2031)(5)(6)(14)
3/13/2014
40,773

28,205

26,931

0.8%
 
 
 
 
 
28,205

26,931

0.8%
Voya CLO 2016-3, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 12.68%, due 10/18/2027)(5)(6)(14)
10/27/2016
28,100

27,180

22,912

0.7%
 
 
 
 
 
27,180

22,912

0.7%
Voya CLO 2017-3, Ltd.
Cayman Islands / Structured Finance
Subordinated Notes (Residual Interest, current yield 12.26%, due 7/20/2030)(5)(6)(14)
7/12/2017
44,885

47,400

43,351

1.3%
 
 
 
 
 
47,400

43,351

1.3%

See notes to consolidated financial statements.
F-32
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

 
 
 
 
June 30, 2018
Portfolio Company
Locale / Industry
Investments(1)(45)
Acquisition Date (53)
Principal Value
Amortized Cost
Fair
Value(2)
% of Net Assets
 
 
 
 
 
 
 
 
LEVEL 3 PORTFOLIO INVESTMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
 
 
 
 
 
 
 
 
 
 
 
 
 
Wink Holdco, Inc.
Texas / Insurance
Second Lien Term Loan (8.85% (LIBOR + 6.75% with 1.00% LIBOR floor), due 12/1/2025)(8)(13)
12/1/2017
$
3,000

$
2,986

$
2,986

0.1%
 
 
 
 
 
2,986

2,986

0.1%
Total Non-Control/Non-Affiliate Investments (Level 3)
 
$
3,475,295

$
3,264,517

95.8%
 
 
 
 
 
Total Portfolio Investments (Level 3)
 
$
5,831,458

$
5,727,279

168.1%


See notes to consolidated financial statements.
F-33
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


(1)
The terms “Prospect,” “Company”, “we,” “us” and “our” mean Prospect Capital Corporation and its subsidiaries unless the context specifically requires otherwise. The securities in which Prospect has invested were acquired in transactions that were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These securities may be resold only in transactions that are exempt from registration under the Securities Act.
(2)
Fair value is determined by or under the direction of our Board of Directors. As of September 30, 2018 and June 30, 2018, all of our investments were valued using significant unobservable inputs. In accordance with ASC 820, such investments are classified as Level 3 within the fair value hierarchy. See Notes 2 and 3 within the accompanying notes to consolidated financial statements for further discussion.
(3)
Security, or a portion thereof, is held by Prospect Capital Funding LLC (“PCF”), our wholly-owned subsidiary and a bankruptcy remote special purpose entity, and is pledged as collateral for the Revolving Credit Facility and such security is not available as collateral to our general creditors (see Note 4). The fair values of the investments held by PCF at September 30, 2018 and June 30, 2018 were $1,490,354 and $1,307,955, respectively, representing 25.1% and 22.8% of our total investments, respectively.
(4)
In addition to the stated returns, the net profits interest held will be realized upon sale of the borrower or a sale of the interests.
(5)
This investment is in the equity class of the collateralized loan obligation (“CLO”) security. The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield, calculated using amortized cost, is based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.
(6)
Co-investment with another fund managed by an affiliate of our investment adviser, Prospect Capital Management L.P. See Note 13 for further discussion.
(7)
Engine Group. Inc., Clearstream.TV. Inc., and ORC International, Inc., are joint borrowers on the senior secured and the second lien term loans.
(8)
Syndicated investment which was originated by a financial institution and broadly distributed.
(9)
Autodata, Inc. and Autodata Solutions, Inc. are joint borrowers.
(10)
The interest rate on these investments is subject to the base rate of 6-Month LIBOR, which was 2.60% and 2.50% at September 30, 2018 and June 30, 2018, respectively. The current base rate for each investment may be different from the reference rate on September 30, 2018 and June 30, 2018.
(11)
The interest rate on these investments is subject to the base rate of 3-Month LIBOR, which was 2.40% and 2.34% at September 30, 2018 and June 30, 2018, respectively. The current base rate for each investment may be different from the reference rate on September 30, 2018 and June 30, 2018.
(12)
The interest rate on these investments is subject to the base rate of 2-Month LIBOR, which was 2.31% and 2.17% at September 30, 2018 and June 30, 2018, respectively. The current base rate for each investment may be different from the reference rate on September 30, 2018 and June 30, 2018.
(13)
The interest rate on these investments is subject to the base rate of 1-Month LIBOR, which was 2.26% and 2.09% at September 30, 2018 and June 30, 2018, respectively. The current base rate for each investment may be different from the reference rate on September 30, 2018 and June 30, 2018.
(14)
Investment has been designated as an investment not “qualifying” under Section 55(a) of the Investment Company Act of 1940 (the “1940 Act”). Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of September 30, 2018 and June 30, 2018, our qualifying assets as a percentage of total assets, stood at 74.93% and 73.20%, respectively. We monitor the status of these assets on an ongoing basis.
(15)
Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 5.00%. As of September 30, 2018 and June 30, 2018, we had $38,530 and $29,675, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies.

See notes to consolidated financial statements.
F-34
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


(16)
Represents non-income producing security that has not paid a dividend in the year preceding the reporting date.
(17)
The effective yield has been estimated to be 0% as expected future cash flows are anticipated to not be sufficient to repay the investment at cost. If the expected investment proceeds increase, there is a potential for future investment income from the investment. Distributions, once received, will be recognized as return of capital with any remaining unamortized investment costs written off if the actual distributions are less than the amortized investment cost.
(18)
Ellett Brothers, LLC, Evans Sports, Inc., Jerry’s Sports, Inc., Simmons Gun Specialties, Inc., Bonitz Brothers, Inc., and Outdoor Sports Headquarters, Inc. are joint borrowers on the second lien term loan. United Sporting Companies, Inc. (“USC”) is a parent guarantor of this debt investment, and is 100% owned by SportCo Holdings, Inc. (“SportCo”). Prospect previously held a 3.48% equity interest in SportCo and following an additional issuance common stock by SportCo, Prospect’s ownership increased to 22.0% as of September 30, 2018. As a result, Prospect’s investment in USC is classified as an affiliate investment as of September 30, 2018.
(19)
CCPI Holdings Inc., a consolidated entity in which we own 100% of the common stock, owns 94.59% of CCPI Inc. (“CCPI”), the operating company, as of September 30, 2018 and June 30, 2018. We report CCPI as a separate controlled company.
(20)
CP Holdings of Delaware LLC, a consolidated entity in which we own 100% of the membership interests, owns 99.8% of CP Energy Services Inc. (“CP Energy”) as of September 30, 2018 and June 30, 2018. CP Energy owns directly or indirectly 100% of each of CP Well Testing, LLC; Wright Foster Disposals, LLC; Foster Testing Co., Inc.; ProHaul Transports, LLC; and Wright Trucking, Inc. We report CP Energy as a separate controlled company. On October 1, 2017, we restructured our investment in CP Energy. Concurrent with the restructuring, we exchanged $35,048 of Series B Convertible Preferred Stock for $35,048 of senior secured debt. On January 18, 2018, CP Energy redeemed common shares belonging to senior management, which increased our ownership percentage from 82.3% to 94.2% as of March 31, 2018. Our ownership percentage in CP Energy further increased to 99.8% as of June 30, 2018 following the April 6, 2018 merger between Arctic Oilfield Equipment USA, Inc. (“Arctic Equipment"), a previously controlled portfolio company, and CP Energy, with CP Energy continuing as the surviving corporation. As a result of this transaction, our equity interest in Arctic Equipment was exchanged for newly issued common shares of CP Energy (See Note 14).
(21)
Credit Central Holdings of Delaware, LLC (“Credit Central Delaware”), a consolidated entity in which we own 100% of the membership interests, owns 98.26% of Credit Central Loan Company, LLC (f/k/a Credit Central Holdings, LLC (“Credit Central”)) as of September 30, 2018 and June 30, 2018. Credit Central owns 100% of each of Credit Central, LLC; Credit Central South, LLC; Credit Central of Texas, LLC; and Credit Central of Tennessee, LLC, the operating companies. We report Credit Central as a separate controlled company.
(22)
As of June 30, 2017, Prospect held a 37.1% membership interest in Edmentum Ultimate Holdings, LLC ("Edmentum Holdings"), which owns 100% of the equity of Edmentum, Inc. On February 23, 2018, certain participating members of Edmentum Holdings increased their revolving credit commitment and extended additional credit to Edmentum, Inc. in exchange for additional common units of Edmentum Holdings. As a result, Prospect's equity ownership was diluted to 11.5% and the investment was transferred from control to affiliate investment classification as of March 31, 2018.
(23)
First Tower Holdings of Delaware LLC, a consolidated entity in which we own 100% of the membership interests, owns 80.1% of First Tower Finance Company LLC (“First Tower Finance”), which owns 100% of First Tower, LLC, the operating company as of September 30, 2018 and June 30, 2018. We report First Tower Finance as a separate controlled company.
(24)
Energy Solutions Holdings Inc., a consolidated entity in which we own 100% of the equity, owns 100% of Freedom Marine Solutions, LLC (“Freedom Marine”), which owns Vessel Company, LLC, Vessel Company II, LLC and Vessel Company III, LLC. We report Freedom Marine as a separate controlled company.
(25)
MITY Holdings of Delaware Inc. (“MITY Delaware”), a consolidated entity in which we own 100% of the common stock, owns 95.58% 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 Enterprises USA, Inc.; and Broda Enterprises ULC (“Broda Canada”). We report MITY as a separate controlled company. MITY Delaware has a subordinated unsecured note issued and outstanding to Broda Canada that is denominated in Canadian Dollars (“CAD”). As of September 30, 2018 and June 30, 2018, the principal balance of this note was CAD 7,371. In accordance with ASC 830, Foreign Currency Matters (“ASC 830”), this note was remeasured into our functional currency, US Dollars (USD), and is presented on our Consolidated Schedule of Investments in USD. We formed a separate legal entity domiciled in the United States, MITY FSC, Inc., (“MITY FSC”) in which Prospect owns 96.88% of the equity, and MITY-Lite management owns the remaining portion.  MITY FSC does not have material operations.  This entity earns commission

See notes to consolidated financial statements.
F-35
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


payments from MITY-Lite based on its sales to foreign customers, and distribute it to its shareholders based on pro-rata ownership.  During the three months ended September 30, 2018, we received $201 of such commission, which we recognized as other income.
(26)
NPH Property Holdings, LLC, a consolidated entity in which we own 100% of the membership interests, owns 100% of the common equity of National Property REIT Corp. (“NPRC”) (f/k/a National Property Holdings Corp.), a property REIT which holds investments in several real estate properties. Additionally, NPRC invests in online consumer loans through ACL Loan Holdings, Inc. (“ACLLH”) and American Consumer Lending Limited (“ACLL”), its wholly-owned subsidiaries. We report NPRC as a separate controlled company. See Note 3 for further discussion of the properties held by NPRC. During the quarter ended March 31, 2018, we restructured our investment in NPRC and exchanged $14,274 of ACLLH Senior Secured Term Loan C and $97,578 of ACLL Senior Secured Term Loan C for $111,852 of Senior Secured Term Loan E. On March 31, 2018, Prospect contributed $48,832 to NPRC as an increase to the NPRC Senior Secured Term Loan E. On the same day, NPRC distributed $48,832 as a return of capital to Prospect. During the quarter ended September 30, 2018, we received partial repayments of $8,221 of our loans previously outstanding with NPRC.
(27)
Nationwide Acceptance Holdings LLC, a consolidated entity in which we own 100% of the membership interests, owns 94.48% of Nationwide Loan Company LLC (f/k/a Nationwide Acceptance LLC), the operating company, as of September 30, 2018 and June 30, 2018. We report Nationwide Loan Company LLC as a separate controlled company. On June 1, 2015, Nationwide Acceptance LLC completed a reorganization and was renamed Nationwide Loan Company LLC (“Nationwide”) and formed two new wholly-owned subsidiaries: Pelican Loan Company LLC (“Pelican”) and Nationwide Consumer Loans LLC. Nationwide assigned 100% of the equity interests in its other subsidiaries to Pelican which, in turn, assigned these interests to a new operating company wholly-owned by Pelican named Nationwide Acceptance LLC (“New Nationwide”). New Nationwide also assumed the existing senior subordinated term loan due to Prospect.
(28)
NMMB Holdings, a consolidated entity in which we own 100% of the equity, owns 91.52% of the fully diluted equity of NMMB, Inc. (“NMMB”) as of September 30, 2018 and June 30, 2018. NMMB owns 100% of Refuel Agency, Inc., which owns 100% of Armed Forces Communications, Inc. We report NMMB as a separate controlled company.
(29)
On June 3, 2017, Gulf Coast Machine & Supply Company (“Gulf Coast”) sold all of its assets to a third party, for total consideration of $10,250, including escrowed amounts. The proceeds from the sale were primarily used to repay a $6,115 third party revolving credit facility, and the remainder was used to pay other legal and administrative costs incurred by Gulf Coast. As no proceeds were allocated to Prospect, our debt and equity investment in Gulfco was written-off and we recorded a realized loss of $66,103, during the year ended June 30, 2017. In June 2018, Gulf Coast received escrow proceeds of $2,050 related to the sale. On June 28, 2017, Gulf Coast was renamed to SB Forging Company II, Inc.
(30)
Prospect owns 99.96% of the equity of USES Corp. as of September 30, 2018 and June 30, 2018.
(31)
Valley Electric Holdings I, Inc., a consolidated entity in which we own 100% of the common stock, owns 100% of Valley Electric Holdings II, Inc. (“Valley Holdings II”), another consolidated entity. Valley Holdings II owns 94.99% of Valley Electric Company, Inc. (“Valley Electric”). Valley Electric owns 100% of the equity of VE Company, Inc., which owns 100% of the equity of Valley Electric Co. of Mt. Vernon, Inc. We report Valley Electric as a separate controlled company.
(32)
On March 14, 2017, assets previously held by Ark-La-Tex Wireline Services, LLC (“Ark-La-Tex”) were assigned to Wolf Energy Services Company, LLC, a new wholly-owned subsidiary of Wolf Energy Holdings, in exchange for a full reduction of Ark-La-Tex’s Senior Secured Term Loan A and a partial reduction of the Senior Secured Term Loan B cost basis, in total equal to $22,145. The cost basis of the transferred assets is equal to the appraised fair value of assets at the time of transfer. During the three months ended June 30, 2017, Ark-La-Tex Term Loan B was written-off and a loss of $19,818 was realized. On June 30, 2017, the 18.00% Senior Secured Promissory Note, due April 15, 2018, in Wolf Energy, LLC was contributed to the equity of Wolf Energy LLC. There was no impact from the transaction due to the note being on non-accrual status and having zero cost basis.
(33)
Prospect owns 16.04% of the equity in Targus Cayman HoldCo Limited, the parent company of Targus International LLC (“Targus”) as of September 30, 2018 and June 30, 2018, respectively. On September 25, 2017, Prospect exchanged $1,600 of Senior Secured Term Loan A and $4,799 of Senior Secured Term Loan B investments in Targus into 6,120,658 of common shares, and recorded a realized gain of $846, as a result of this transaction.
(34)
We own 99.9999% of AGC/PEP, LLC (“AGC/PEP”). As of September 30, 2016, AGC/PEP, owned 2,038 out of a total of 93,485 shares (including 7,456 vested and unvested management options) of American Gilsonite Holding Company (“AGC Holdco”) which owns 100% of American Gilsonite Company (“AGC”). On October 24, 2016, AGC filed for a joint prepackaged plan of reorganization under Chapter 11 of the bankruptcy code. During the year ended June 30, 2017, AGC emerged from bankruptcy and AGC Holdco was dissolved. AGC/PEP received a total of 131 shares representing a total ownership stake of 0.05% in AGC.

See notes to consolidated financial statements.
F-36
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


(35)
Centerfield Media Holding Company and Oology Direct Holdings, Inc. are joint borrowers and guarantors on the senior secured loan facilities.
(36)
Keystone Acquisition Corp. is the parent borrower on the second lien term loan. Other joint borrowers on this debt investment include Keystone Peer Review Organization, Inc., KEPRO Acquisitions, Inc., APS Healthcare Bethesda, Inc., Ohio KEPRO, Inc., and APS Healthcare Quality Review, Inc.
(37)
These investments are in the debt class of the CLO security. As of June 30, 2018, the all-in interest rate of the Galaxy XXVIII CLO, Ltd. Class F Junior Note was not yet determined as the investment was unsettled.
(38)
The consolidated revenue interest is equal to the lesser of (i) 2.0% of consolidated revenue for the twelve-month period ending on the last day of the prior fiscal quarter (or portion thereof) and (ii) 25% of the amount of interest accrued on the Notes at the cash interest rate for such fiscal quarter (or portion thereof).
(39)
As of September 30, 2018 and June 30, 2018, Prospect owns 8.57% of the equity in Encinitas Watches Holdco, LLC (f/k/a Nixon Holdco, LLC), the parent company of Nixon, Inc. On February 26, 2018, Prospect entered into a debt forgiveness agreement with Nixon, Inc., which terminated $17,472 Senior Secured Term Loan receivable due to us. We recorded a realized loss of $14,197 in our Consolidated Statement of Operations for the year ended June 30, 2018 as a result of this transaction.
(40)
On May 29, 2018, Prospect exercised its rights and remedies under its loan documents to exercise the shareholder voting rights in respect of the stock of Pacific World Corporation (“Pacific World”) and to appoint a new Board of Directors of Pacific World. As a result, Prospect’s investment in Pacific World is classified as a control investment.
(41)
Our wholly-owned subsidiary Prospect Small Business Lending, LLC purchases small business whole loans from small business loan originators, including On Deck Capital, Inc.
(42)
Turning Point Brands, Inc. and North Atlantic Trading Company, Inc. are joint borrowers and guarantors on the secured loan facility.
(43)
The overriding royalty interests held receive payments at the stated rates based upon operations of the borrower.
(44)
The following shows the composition of our investment portfolio at cost by control designation, investment type and by industry as of September 30, 2018:
Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Cost Total
Control Investments
 
 
 
 
 
 
Aerospace & Defense
$
49,223

$
—

$
—

$
—

$
22,738

$
71,961

Commercial Services & Supplies
118,071

—

—

7,200

6,849

132,120

Construction & Engineering
43,311

—

—

—

26,204

69,515

Consumer Finance
—

337,925

—

—

116,839

454,764

Electronic Equipment, Instruments & Components
20,476

—

—

—

6,759

27,235

Energy Equipment & Services
35,048

—

—

—

191,858

226,906

Equity Real Estate Investment Trusts (REITs)
293,203

—

—

—

216,860

510,063

Health Care Providers & Services
235,851

—

—

—

—

235,851

Machinery
—

28,622

—

—

6,866

35,488

Media
7,614

—

—

—

12,869

20,483

Online Lending
217,960

—

—

—

100,949

318,909

Personal Products
213,325

—

—

—

15,000

228,325

Total Control Investments
$
1,234,082

$
366,547

$
—

$
7,200

$
723,791

$
2,331,620

Affiliate Investments
 
 
 
 
 
 
Diversified Consumer Services
$
—

$
177

$
—

$
31,512

$
6,577

$
38,266

Distributors
—

127,091

—

—

—

127,091

Textiles, Apparel & Luxury Goods
—

—

—

—

9,878

9,878


See notes to consolidated financial statements.
F-37
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Cost Total
 Total Affiliate Investments
$
—

$
127,268

$
—

$
31,512

$
16,455

$
175,235

Non-Control/Non-Affiliate Investments
 
 
 
 
 
 
Auto Components
$
—

$
25,388

$
—

$
—

$
—

$
25,388

Building Products
—

19,824

—

—

—

19,824

Capital Markets
$
—

$
26,531

$
—

$
—

$
—

$
26,531

Commercial Services & Supplies
87,093

163,982

—

—

—

251,075

Communications Equipment
—

47,872

—

—

—

47,872

Consumer Finance
19,748

—

—

—

—

19,748

Distributors
174,191

—

—

—

—

174,191

Diversified Consumer Services
—

118,289

—

—

—

118,289

Electronic Equipment, Instruments & Components
12,572

14,860

—

—

—

27,432

Energy Equipment & Services
32,159

—

—

—

—

32,159

Entertainment
29,915

16,907

—

—

—

46,822

Food Products
—

9,888

—

—

—

9,888

Health Care Equipment & Supplies
35,380

7,465

—

—

—

42,845

Health Care Providers & Services
142,957

61,912

—

—

1,252

206,121

Hotels, Restaurants & Leisure
29,625

7,483

—

—

—

37,108

Household Durables
16,894

22,592

—

—

—

39,486

Household Products
24,875

—

—

—

—

24,875

Insurance
—

2,987

—

—

—

2,987

Interactive Media & Services
48,718

—

—

—

—

48,718

IT Services
269,808

25,110

—

—

—

294,918

Leisure Products
32,552

10,910

—

—

1

43,463

Media
103,279

35,000

—

—

—

138,279

Paper & Forest Products
—

11,337

—

—

—

11,337

Pharmaceuticals
—

11,882

—

—

—

11,882

Professional Services
95,246

65,928

—

—

—

161,174

Real Estate Management & Development
41,580

—

—

—

—

41,580

Software
—

69,462

—

—

—

69,462

Technology Hardware, Storage & Peripherals
—

12,388

—

 
—

12,388

Textiles, Apparel & Luxury Goods
272,618

36,578

—

—

—

309,196

Tobacco
—

14,399

—

—

—

14,399

Trading Companies & Distributors
63,700

—

—

—

—

63,700

Transportation Infrastructure
—

27,515

—

—

—

27,515

Structured Finance (A)
—

—

1,132,307

—

—

1,132,307

 Total Non-Control/ Non-Affiliate
$
1,532,910

$
866,489

$
1,132,307

$
—

$
1,253

$
3,532,959

Total Portfolio Investment Cost
$
2,766,992

$
1,360,304

$
1,132,307

$
38,712

$
741,499

$
6,039,814

The following table shows the composition of our investment portfolio at fair value by control designation, investment type and by industry as of September 30, 2018:
Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Fair Value Total
Fair Value % of Net Assets
Control Investments
 
 
 
 
 
 
 
Aerospace & Defense
$
49,223

$
—

$
—

$
—

$
38,152

$
87,375

2.5
%
Commercial Services & Supplies
66,709

—

—

5,702

1,121

73,532

2.1
%
Construction & Engineering
43,311

—

—

—

38,632

81,943

2.4
%
Consumer Finance
—

341,435

—

—

207,611

549,046

16.0
%

See notes to consolidated financial statements.
F-38
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Fair Value Total
Fair Value % of Net Assets
Electronic Equipment, Instruments & Components
20,476

—

—

—

14,213

34,689

1.0
%
Energy Equipment & Services
35,048

—

—

—

124,428

159,476

4.6
%
Equity Real Estate Investment Trusts (REITs)
293,203

—

—

—

546,434

839,637

24.5
%
Health Care Providers & Services
220,299

—

—

—

—

220,299

6.4
%
Machinery
$
—

$
24,782

$
—

$
—

$
—

$
24,782

0.7
%
Media
7,614

—

—

—

12,460

20,074

0.7
%
Online Lending
217,960

—

—

—

14,366

232,326

6.8
%
Personal Products
164,158

—

—

—

—

164,158

4.8
%
Total Control Investments
$
1,118,001

$
366,217

$
—

$
5,702

$
997,417

$
2,487,337

72.5
%
Fair Value % of Net Assets
32.6
%
10.7
%
—
%
0.2
%
29.1
%
72.5
%
 
Affiliate Investments
 
 
 
 
 
 
 
Diversified Consumer Services
$
—

$
177

$
—

$
25,476

$
—

$
25,653

0.7
%
Distributors
—

50,670

—

—

—

50,670

1.5
%
Textiles, Apparel & Luxury Goods
—

—

—

—

19,670

19,670

0.6
%
Total Affiliate Investments
$
—

$
50,847

$
—

$
25,476

$
19,670

$
95,993

2.8
%
Fair Value % of Net Assets
—
%
1.5
%
—
%
0.7
%
0.6
%
2.8
%
 
Non-Control/Non-Affiliate Investments
 
 
 
 
 
 
 
Auto Components
$
—

$
24,851

$
—

$
—

$
—

$
24,851

0.7
%
Building Products
—

20,000

—

—

—

20,000

0.6
%
Capital Markets
—

26,675

—

—

—

26,675

0.8
%
Commercial Services & Supplies
86,389

165,096

—

—

932

252,417

7.4
%
Communications Equipment
—

48,000

—

—

—

48,000

1.4
%
Consumer Finance
21,371

—

—

—

—

21,371

0.6
%
Distributors
174,191

—

—

—

—

174,191

5.1
%
Diversified Consumer Services
—

118,289

—

—

—

118,289

3.4
%
Electronic Equipment, Instruments & Components
12,566

15,300

—

—

—

27,866

0.8
%
Energy Equipment & Services
32,842

—

—

—

—

32,842

1.0
%
Entertainment
29,965

16,976

—

—

—

46,941

1.4
%
Food Products
—

9,888

—

—

—

9,888

0.3
%
Health Care Equipment & Supplies
35,380

7,465

—

—

—

42,845

1.3
%
Health Care Providers & Services
141,380

61,912

—

—

262

203,554

5.9
%
Hotels, Restaurants & Leisure
29,625

7,483

—

—

—

37,108

1.1
%
Household Durables
15,399

22,254

—

—

—

37,653

1.1
%
Household Products
24,875

—

—

—

—

24,875

0.7
%
Insurance
—

2,987

—

—

—

2,987

0.1
%
Interactive Media & Services
48,718

—

—

—

—

48,718

1.4
%
IT Services
269,808

25,486

—

—

—

295,294

8.6
%
Leisure Products
32,552

11,000

—

—

—

43,552

1.3
%
Media
103,259

34,320

—

—

—

137,579

4.0
%
Paper & Forest Products
—

11,337

—

—

—

11,337

0.3
%
Pharmaceuticals
—

12,000

—

—

—

12,000

0.3
%
Professional Services
95,600

70,008

—

—

—

165,608

4.9
%
Real Estate Management & Development
41,580

—

—

—

—

41,580

1.2
%
Software
—

70,259

—

—

—

70,259

2.0
%
Technology Hardware, Storage & Peripherals
—

12,500

—

—

—

12,500

0.4
%
Textiles, Apparel & Luxury Goods
272,618

37,000

—

—

—

309,618

9.0
%
Tobacco
—

14,399

—

—

—

14,399

0.4
%
Trading Companies & Distributors
45,129

—

—

—

—

45,129

1.3
%

See notes to consolidated financial statements.
F-39
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Fair Value Total
Fair Value % of Net Assets
Transportation Infrastructure
—

28,104

—

—

—

28,104

0.8
%
Structured Finance (A)
$
—

$
—

$
965,323

$
—

$
—

$
965,323

28.1
%
Total Non-Control/ Non-Affiliate
$
1,513,247

$
873,589

$
965,323

$
—

$
1,194

$
3,353,353

97.7
%
Fair Value % of Net Assets
44.1
%
25.5
%
28.1
%
—
%
—
%
97.7
%
 
Total Portfolio
$
2,631,248

$
1,290,653

$
965,323

$
31,178

$
1,018,281

$
5,936,683

173.0
%
Fair Value % of Net Assets
76.7
%
37.6
%
28.1
%
0.9
%
29.7
%
173.0
%
 
(A) Our CLO investments do not have industry concentrations and as such have been separated in the table above.
(B) Equity, unless specifically stated otherwise, includes our investments in preferred stock, common stock, membership interests, net profits interests, net operating income interests, net revenue interests, overriding royalty interests, escrows receivable, and warrants.
(C) We hold three CLO debt investments: the Class E Notes of Cent CLO 21 Limited, the Class F Notes of CIFC Funding 2014-V, Ltd., and the Class F Subordinated Notes of Galaxy XXVIII CLO, Ltd. As of September 30, 2018 the cost and fair value are $26,085 and $27,424, respectively, and makes up 0.8% of our net assets. Our remaining CLO investments are held in CLO equity tranches which earn residual interest. As of September 30, 2018 the cost and fair value of our investment in the equity tranches are $1,106,222 and $937,899, respectively, and make up 27.3% of our net assets.
(45)
The following table shows the composition of our investment portfolio at cost by control designation, investment type and by industry as of June 30, 2018:
Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Cost Total
Control Investments
 
 
 
 
 
 
Aerospace & Defense
$
47,099

$
—

$
—

$
—

$
22,738

$
69,837

Commercial Services & Supplies
117,861

—

—

7,200

6,849

131,910

Construction & Engineering
38,211

—

—

—

26,204

64,415

Consumer Finance
—

337,972

—

—

116,839

454,811

Electronic Equipment, Instruments & Components
20,700

—

—

—

6,759

27,459

Energy Equipment & Services
35,048

—

—

—

191,812

226,860

Equity Real Estate Investment Trusts (REITs)
293,203

—

—

—

206,655

499,858

Health Care Providers & Services
212,701

—

—

—

—

212,701

Machinery
—

28,622

—

—

6,866

35,488

Media
8,614

—

—

—

12,869

21,483

Online Lending
226,180

—

—

—

100,949

327,129

Personal Products
213,575

—

—

—

15,000

228,575

    Total Control Investments
$
1,213,192

$
366,594

$
—

$
7,200

$
713,540

$
2,300,526

Affiliate Investments
 
 
 
 
 
 
Diversified Consumer Services
$
—

$
7,834

$
—

$
31,348

$
6,577

$
45,759

Textiles, Apparel & Luxury Goods
—

—

—

—

9,878

9,878

   Total Affiliate Investments
$
—

$
7,834

$
—

$
31,348

$
16,455

$
55,637

Non-Control/Non-Affiliate Investments
 
 
 
 
 
 
Auto Components
$
—

$
12,681

$
—

$
—

$
—

$
12,681

Building Products
—

9,905

—

—

—

9,905

Capital Markets
—

19,799

—

—

—

19,799

Commercial Services & Supplies
90,364

163,913

—

—

—

254,277

Communications Equipment
—

39,860

—

—

—

39,860

Consumer Finance
30,570

—

—

—

—

30,570

Distributors
343,659

127,091

—

—

—

470,750


See notes to consolidated financial statements.
F-40
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Cost Total
Diversified Consumer Services
9,647

118,289

—

—

—

127,936

Electronic Equipment, Instruments & Components
$
12,490

$
14,856

$
—

$
—

$
—

$
27,346

Energy Equipment & Services
30,511

—

—

—

—

30,511

Food Products
—

9,884

—

—

—

9,884

Health Care Equipment & Supplies
35,815

7,464

—

—

—

43,279

Health Care Providers & Services
145,336

61,909

—

—

1,252

208,497

Hotels, Restaurants & Leisure
29,813

7,482

—

—

—

37,295

Household & Personal Products
24,938

—

—

—

—

24,938

Household Durables
16,894

25,645

—

—

—

42,539

Insurance
—

2,986

—

—

—

2,986

Internet & Direct Marketing Retail
4,813

35,000

—

—

—

39,813

Internet Software & Services
215,791

13,926

—

—

—

229,717

IT Services
160,588

21,595

—

—

—

182,183

Leisure Products
34,626

10,904

—

—

1

45,531

Media
118,605

2,975

—

—

—

121,580

Online Lending
—

—

—

30

—

30

Paper & Forest Products
—

11,328

—

—

—

11,328

Pharmaceuticals
—

11,882

—

—

—

11,882

Professional Services
9,468

64,804

—

—

—

74,272

Real Estate Management & Development
41,860

—

—

—

—

41,860

Software
—

66,435

—

—

—

66,435

Technology Hardware, Storage & Peripherals
—

12,384

—

—

—

12,384

Textiles, Apparel & Luxury Goods
—

36,551

—

—

—

36,551

Tobacco
—

14,392

—

—

—

14,392

Trading Companies & Distributors
63,863

—

—

—

—

63,863

Transportation Infrastructure
—

27,494

—

—

—

27,494

Structured Finance (A)
—

—

1,102,927

—

—

1,102,927

  Total Non-Control/ Non-Affiliate
$
1,419,651

$
951,434

$
1,102,927

$
30

$
1,253

$
3,475,295

Total Portfolio Investment Cost
$
2,632,843

$
1,325,862

$
1,102,927

$
38,578

$
731,248

$
5,831,458

The following table shows the composition of our investment portfolio at fair value by control designation, investment type and by industry as of June 30, 2018:
Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Fair Value Total
Fair Value % of Net Assets
Control Investments
 
 
 
 
 
 
 
Aerospace & Defense
$
47,099

$
—

$
—

$
—

$
35,179

$
82,278

2.4
%
Commercial Services & Supplies
67,011

—

—

5,563

2,639

75,213

2.2
%
Construction & Engineering
38,211

—

—

—

12,586

50,797

1.5
%
Consumer Finance
—

342,331

—

—

211,209

553,540

16.2
%
Electronic Equipment, Instruments & Components
20,700

—

—

—

15,056

35,756

1.1
%
Energy Equipment & Services
35,048

—

—

—

103,456

138,504

4.1
%
Equity Real Estate Investment Trusts (REITs)
293,203

—

—

—

518,712

811,915

23.8
%
Health Care Providers & Services
197,621

—

—

—

—

197,621

5.8
%
Machinery
—

28,622

—

—

3,264

31,886

0.9
%
Media
8,614

—

—

—

10,121

18,735

0.6
%
Online Lending
226,180

—

—

—

16,881

243,061

7.1
%

See notes to consolidated financial statements.
F-41
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)
(in thousands, except share data)

Endnote Explanations as of September 30, 2018 (Unaudited) and June 30, 2018


Industry
1st Lien
Term Loan
2nd Lien
Term Loan
CLO (C)
Unsecured Debt
Equity (B)
Fair Value Total
Fair Value % of Net Assets
Personal Products
$
165,020

$
—

$
—

$
—

$
—

$
165,020

4.9
%
Total Control Investments
$
1,098,707

$
370,953

$
—

$
5,563

$
929,103

$
2,404,326

70.6
%
 Fair Value % of Net Assets
32.2
%
10.9
%
—
%
0.2
%
27.3
%
70.6
%
 
Affiliate Investments
 
 
 
 
 
 
 
Diversified Consumer Services
$
—

$
7,834

$
—

$
27,382

$
—

$
35,216

1.0
%
Textiles, Apparel & Luxury Goods
—

—

—

 
23,220

23,220

0.7
%
Total Affiliate Investments
$
—

$
7,834

$
—

$
27,382

$
23,220

$
58,436

1.7
%
Fair Value % of Net Assets
—
%
0.2
%
—
%
0.8
%
0.7
%
1.7
%
 
Non-Control/Non-Affiliate Investments
 
 
 
 
 
 
 
Auto Components
$
—

$
12,887

$
—

$
—

$
—

$
12,887

0.4
%
Building Products
—

10,000

—

—

—

10,000

0.3
%
Capital Markets
—

20,000

—

—

—

20,000

0.6
%
Commercial Services & Supplies
89,658

164,236

—

—

917

254,811

7.5
%
Communications Equipment
—

40,000

—

—

—

40,000

1.2
%
Consumer Finance
33,438

—

—

—

—

33,438

1.0
%
Distributors
343,659

58,806

—

—

—

402,465

11.8
%
Diversified Consumer Services
9,647

118,289

—

—

—

127,936

3.8
%
Electronic Equipment, Instruments & Components
12,335

14,873

—

—

—

27,208

0.8
%
Energy Equipment & Services
32,070

—

—

—

—

32,070

0.9
%
Food Products
—

9,886

—

—

—

9,886

0.3
%
Health Care Equipment & Supplies
35,815

7,464

—

—

—

43,279

1.3
%
Health Care Providers & Services
144,130

61,933

—

—

446

206,509

6.0
%
Hotels, Restaurants & Leisure
29,813

7,482

—

—

—

37,295

1.1
%
Household & Personal Products
24,938

—

—

—

—

24,938

0.7
%
Household Durables
15,728

25,895

—

—

—

41,623

1.2
%
Insurance
—

2,986

—