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Filed pursuant to Rule 424b2
File No. 333-269714
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 10, 2023)
pseclogorgb0a01.jpg
Prospect Capital Corporation
Maximum of 80,000,000 Shares
Up to $2,000,000,000 Aggregate Liquidation Preference

5.50% Series A1 Preferred Stock (the “Series A1 Shares”)
6.50% Series A3 Preferred Stock (the “Series A3 Shares,” and together with the Series A1 Shares, the “A1/A3 Shares”)
Floating Rate Series A4 Preferred Stock (the “Series A4 Shares”)
5.50% Series M1 Preferred Stock (the “Series M1 Shares”)
5.50% Series M2 Preferred Stock (the “Series M2 Shares”)
6.50% Series M3 Preferred Stock (the “Series M3 Shares”, and together with the
Series M1 Shares and Series M2 Shares, the “M1/M2/M3 Shares”)
Floating Rate Series M4 Preferred Stock (the “Series M4 Shares”)

This is an offering by Prospect Capital Corporation of up to 80,000,000 shares, par value $0.001 per share of preferred stock, with a $2,000,000,000 aggregate liquidation preference (the “Preferred Stock”). The Preferred Stock will be issued in multiple series, including the 5.50% Series A1 Preferred Stock (the “Series A1 Shares”), the 6.50% Series A3 Preferred Stock (the “Series A3 Shares,” and together with the Series A1 Shares, the “A1/A3 Shares”), the Floating Rate Series A4 Preferred Stock (the “Series A4 Shares), the 5.50% Series M1 Preferred Stock (the “Series M1 Shares”), the 5.50% Series M2 Preferred Stock (the “Series M2 Shares”), the 6.50% Series M3 Preferred Stock (the "Series M3 Shares", and together with the Series M1 Shares and the Series M2 Shares, the “M1/M2/M3 Shares”), and the Floating Rate Series M4 Preferred Stock (the “Series M4 Shares). We are offering the A1/A3 Shares, the Series A4 Shares, the M1/M2/M3 Shares, and the Series M4 Shares by this prospectus supplement. If, in the future, we offer any additional series of Preferred Stock, the dividend rate, fees and expenses of such future series may vary from those of the Preferred Stock offered by this prospectus supplement and such future series will be offered under a revised or a separate prospectus supplement. This prospectus supplement and the related prospectus also cover the shares of common stock into which the A1/A3 Shares and the M1/M2/M3 Shares may be converted.

Floating Rate for Series A4 Shares and Series M4 Shares. The Series A4 Shares and Series M4 Shares will pay a monthly dividend, when, as and if authorized by, or under authority granted by, the Board, and declared by us out of funds legally available therefor, at an annualized floating rate equal to one-month Term SOFR (as defined below) plus 2.00%, subject to a minimum annualized dividend rate of 6.50% (the “Cap Rate”) and a maximum annualized dividend rate of 8.00%, each with respect to the Stated Value of $25.00 per share of the Series A4 Shares and Series M4 Shares (computed on the basis of a 360-day year consisting of twelve 30-day months). The floating dividend rate on the Series A4 Shares and Series M4 Shares will reset upon each dividend declaration by the Board, and will reset to the applicable rate as determined two U.S. Government Securities Business Days (as defined below) prior to such declaration, as adjusted for the terms herein. The Board presently declares dividends on the Preferred Stock once per quarter for the subsequent three months. Therefore, the applicable floating dividend rate on the Series A4 Shares and Series M4 Shares is presently expected to reset approximately once every three months.

Holder Optional Conversion. At any time prior to the listing of the A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, such shares of the Preferred Stock will be convertible, at the option of the holder of such Preferred Stock



(the “Holder Optional Conversion”). We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the arithmetic average of the daily volume weighted average price of shares of our common stock over each of the five consecutive trading days ending on the Holder Conversion Exercise Date (as defined herein) (such arithmetic average, the “5-day VWAP”). For the A1/A3 Shares, “Settlement Amount” means (A) $25.00 per share (the “Stated Value”), plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the A Share Holder Optional Conversion Fee applicable on the respective Holder Conversion Deadline. For the M1/M2/M3 Shares, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, but if a holder of M1/M2/M3 Shares exercises a Holder Optional Conversion within the first twelve months of issuance of such M1/M2/M3 Shares, the Settlement Amount payable to such holder will be reduced by the aggregate amount of all dividends, whether paid or accrued, on such M1/M2/M3 Shares in the three full months prior to the Holder Conversion Exercise Date. Subject to certain limited exceptions, we will not pay any portion of the Settlement Amount in cash (other than cash in lieu of fractional shares of our common stock) until the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares Preferred Stock has been issued. Beginning on the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares is issued, we may elect to settle all or a portion of any Holder Optional Conversion in cash without limitation or restriction. The right of holders to convert a share of A1/A3 Shares or M1/M2/M3 Shares will terminate upon the listing of such share on a national securities exchange. The Series A4 Shares and Series M4 Shares are not convertible.

Holder Optional Redemption. At any time prior to the listing of the Series A4 Shares or Series M4 Shares on a national securities exchange, shares of the Series A4 Shares and the Series M4 Shares will be redeemable, at the option of the holder of such Preferred Stock, on a monthly basis (the "Holder Optional Redemption"). For all shares of Series A4 Shares and Series M4 Shares duly submitted to us for redemption on or before a monthly Holder Redemption Deadline (defined below), we will determine the HOR Settlement Amount (defined below) on any business day after such Holder Redemption Deadline but before the Holder Redemption Deadline occurring two months thereafter (such date, the “Holder Redemption Exercise Date”). Within such period, we may select the Holder Redemption Exercise Date in our sole discretion. We will settle any Holder Optional Redemption by paying the HOR Settlement Amount in cash. In addition, the aggregate amount of Holder Optional Redemptions by the holders of Series A4 Shares and Series M4 Shares will be subject to the following redemption limits: (i) no more than 2% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per calendar month; (ii) no more than 5% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per fiscal quarter and (iii) no more than 20% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per Annual Redemption Period. An "Annual Redemption Period" means our then current fiscal quarter and the three fiscal quarters immediately preceding our then current fiscal quarter. A Series A4 Share is subject to an early redemption fee if it is redeemed by its holder within five years of issuance. Redemption capacity of the Series A4 Shares and the Series M4 Shares will be allocated on a pro rata basis based on the number of Series A4 Shares or Series M4 Shares, as applicable, submitted in the event that a monthly redemption is oversubscribed, based on any of the foregoing redemption limits. We may waive the foregoing redemption limits in our sole discretion at any time.

Issuer Optional Redemption. Subject to certain limited exceptions allowing earlier redemption, beginning on the earlier of the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares has been issued, or the two year anniversary of the date on which a share of Series A4 Shares or Series M4 Shares has been issued or, for listed shares of A1/A3 Shares or M1/M2/M3 Shares, five years from the earliest date on which any series that has been listed was first issued and, for listed shares of Series A4 Shares or Series M4 Shares, two years from the earliest date on which any series that has been listed was first issued (the earlier of such dates as applicable to a series of Preferred Stock, the “Redemption Eligibility Date”), such share of Preferred Stock may be redeemed at any time or from time to time at our option (the “Issuer Optional Redemption”) upon not less than 10 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for redemption thereof, at a redemption price of 100% of the Stated Value of the shares of Preferred Stock to be redeemed plus unpaid dividends accrued to, but not including, the date fixed for redemption.

Issuer Optional Conversion. Subject to certain limitations, each share of A1/A3 Shares or M1/M2/M3 Shares will be convertible at our option, upon not less than 30 calendar days nor more than 90 calendar days written notice to the holder (the



“Issuer Optional Conversion”) prior to the date fixed for conversion thereof. We will settle any Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP. For both the A1/A3 Shares and the M1/M2/M3 Shares, “IOC Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the date fixed for conversion. We will not exercise an Issuer Optional Conversion with respect to a share of A1/A3 Shares or M1/M2/M3 Shares until after the second anniversary of its issuance, except as described in this prospectus supplement. In connection with an Issuer Optional Conversion, we will use commercially reasonable efforts to obtain or maintain any stockholder approval that may be required under the Investment Company Act of 1940 (the “1940 Act”) to permit us to sell our common stock below net asset value. If we do not have or have not obtained any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the net asset value (“NAV”) per share of common stock at the close of business on the business day immediately preceding the date of conversion. We will not pay any portion of the IOC Settlement Amount from an Issuer Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the Redemption Eligibility Date. Beginning on the Redemption Eligibility Date, we may elect to settle any Issuer Optional Conversion in cash without limitation or restriction. In the event that we exercise an Issuer Optional Conversion with respect to any shares of A1/A3 Shares or M1/M2/M3 Shares, the holder of such A1/A3 Shares or M1/M2/M3 Shares may instead elect a Holder Optional Conversion with respect to such A1/A3 Shares or M1/M2/M3 Shares provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for an Issuer Optional Conversion. The Series A4 Shares and Series M4 Shares are not convertible.

Our common stock is listed on The Nasdaq Global Select Market under the symbol “PSEC.” The last reported sale price of our common stock on December 27, 2023 was $6.05 per share.

We may in the future apply for listing of one or more series of the Preferred Stock on a national securities exchange.

We are also offering shares of our preferred stock in a separate offering. See “Incorporation by Reference”.
Investing in the Preferred Stock involves certain risks, including those described in the “Risk Factors” section beginning on page S-22 of this prospectus supplement and page 12 of the accompanying prospectus.
Per Preferred Stock
Maximum Offering
Public offering price
$25.00
$2,000,000,000
Selling commission - A1/A3 Shares and Series A4 Shares (1)(2)(3)
$1.75
$140,000,000
Selling commission - M1/M2/M3 Shares and Series M4 Shares (1)(2)
$0.00
$0.00
Dealer manager fee(1)(2)(3)
$0.75
$60,000,000
Proceeds to Prospect Capital Corporation (before expenses)(3)(4)(5)
$22.50
$1,800,000,000
(1) With respect to the A1/A3 Shares and Series A4 Shares, we will pay a selling commission up to 7% of the Stated Value and a dealer manager fee equal to 3% of the Stated Value. The M1/M2/M3 Shares and Series M4 Shares will not have a selling commission and will have a dealer manager fee equal to 3% of the Stated Value. The selling commission and the dealer manager fee are payable by us to our dealer manager. Reductions in selling commissions on sales of A1/A3 Shares and Series A4 Shares will be reflected in reduced public offering prices as described in the “Plan of Distribution” section of this prospectus supplement and the net proceeds to us will generally not be impacted by such reductions; therefore, we will bear a reduction in net proceeds to us up to 7% of the Stated Value on all A1/A3 Shares and Series A4 Shares although the selling commission paid by us to our dealer manager may represent less than 7% of the Stated Value. We or our affiliates also may provide permissible forms of non-cash compensation to registered representatives of our dealer manager and the participating broker-dealers. The value of such items will be considered underwriting compensation in connection with this offering, and the corresponding payments of our dealer manager fee will be reduced by the aggregate value of such items. The combined selling commission, dealer manager fee and cash and non-cash underwriting compensation for this offering will not exceed 10% of the aggregate gross proceeds of this offering, which is referred to as FINRA's 10% underwriting compensation cap. The selling commission on the Series A4 Shares cannot be reduced below 5%. See “Plan of Distribution”.
(2) We expect our dealer manager to authorize third-party broker-dealers that are members of FINRA, which we refer to as participating broker-dealers, to sell our Preferred Stock. Our dealer manager may reallow all or a portion of its selling commission attributable to a participating broker- dealer.
(3) Assumes all shares sold were subject to maximum selling commission and dealer manager fee applicable to A1/A3 Shares and Series A4 Shares.



(4) The selling commission and dealer manager fee, when combined with issuer expenses (including due diligence expenses and fees for establishing servicing arrangements for new stockholder accounts), are not currently expected to exceed 11.5% of the gross offering proceeds (collectively, “organization and offering expenses”). Our Board of Directors may, in its discretion, authorize the Company to incur organization and offering expenses in excess of 11.5% of the gross offering proceeds, but not in excess of FINRA’s limit on organization and offering expenses of 15% of the gross proceeds. However, in no event will the combined selling commission, dealer manager fee and all other underwriting compensation exceed FINRA's 10% cap.
(5) For illustrative purposes only. Assuming all shares sold were subject to maximum selling commission and dealer manager fee applicable to A1/A3 Shares and Series A4 Shares of 10% of Stated Value and issuer expenses of 1.5%, net proceeds to us, after theses organization and offering expenses, would be $1,770,000,000.
The dealer manager of this offering is Preferred Capital Securities, LLC (“PCS”). The dealer manager is not required to sell any specific number or dollar amount of the Preferred Stock, but will use its “reasonable best efforts” to sell the Preferred Stock offered. The minimum permitted purchase is generally $5,000, but purchases of less than $5,000 may be made in our sole discretion. We may terminate this offering at any time or may offer Preferred Stock pursuant to a new registration statement.

This offering is a continuation of our continuous offering of the Preferred Stock begun on August 3, 2020. As of the date of this prospectus supplement, there remain 17,213,730 shares of Preferred Stock, with an aggregate liquidation preference of $430.3 million, available for sale. We may increase the amount of Preferred Stock available for sale in our discretion and will supplement this prospectus supplement if we determine to increase the amount of Preferred Stock available for sale in the future.

Prospect Capital Corporation is a financial services company that lends to and invests in middle market, privately-held companies. Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. 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 1940 Act. Prospect Capital Management L.P. manages our investments and Prospect Administration LLC provides the administrative services necessary for us to operate.

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.

We will deliver the A1/A3 Shares, the Series A4 Shares, the Series M1 Shares, the Series M3 Shares, and the Series M4 Shares through the facilities of The Depository Trust Company (“DTC Settlement”) or through Direct Registration System settlement (“DRS Settlement”). We will deliver the Series M2 Shares through DRS Settlement. See the section entitled “Plan of Distribution” in this prospectus supplement for a description of these settlement methods.


Preferred Capital Securities
As Dealer Manager
Prospectus Supplement dated December 29, 2023.




INCORPORATION BY REFERENCE
This prospectus supplement is part of a registration statement that we have filed with the SEC. We are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this prospectus supplement the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), including any filings on or after the date of this prospectus supplement from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to which this prospectus supplement and accompanying prospectus relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this prospectus supplement. Any statement in a document incorporated by reference into this prospectus supplement will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this prospectus supplement or (2) any other subsequently filed document that is incorporated by reference into this prospectus supplement modifies or supersedes such statement. The documents incorporated by reference herein include:
our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the SEC on September 8, 2023;
our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the SEC on November 8, 2023;
our Current Reports on Form 8-K filed with the SEC on September 29, 2023 and October 30, 2023; and
our definitive Proxy Statement on Schedule 14A filed with the SEC on September 20, 2023.
To obtain copies of these filings, see “Available Information” in this prospectus supplement. We will also provide without charge to each person, including any beneficial owner, to whom this prospectus supplement is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this prospectus supplement or the accompanying prospectus. You should direct requests for documents by writing to:
Preferred Shareholder Services
3290 Northside Parkway NW, Suite 800
Atlanta, GA 30327
This prospectus supplement is also available on our website at http://www.prospectstreet.com. Information contained on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus and should not be considered to be part of this prospectus supplement or accompanying prospectus.

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FORWARD-LOOKING STATEMENTS
    Our annual report on Form 10-K for the year ended June 30, 2023, any of our quarterly reports on Form 10-Q or current reports on Form 8-K, or any other oral or written statements made in press releases or otherwise by or on behalf of Prospect Capital Corporation including this prospectus supplement, the accompanying prospectus and any related free writing prospectus may contain forward-looking statements within the meaning of Section 21E of 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,” “continues” 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 forward-looking statements do not meet the safe harbor for forward-looking statements pursuant to Section 27A of the Securities Act of 1933, or the “Securities Act.” 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, or our portfolio companies’, future operating results;
our business prospects and the prospects of our portfolio companies;
the return or impact of current or future 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 impact of global health epidemics, wars and civil disorder and other events outside of our control, including, but not limited to, the renewed hostilities in the Middle East and the conflict between Russia and Ukraine, on our and our portfolio companies’ business and the global economy;
uncertainty surrounding inflation and the financial stability of the United States, Europe, and China;
the financial condition of, and ability of our current and prospective portfolio companies to, achieve their objectives;
difficulty in obtaining financing or raising capital, especially in the current credit and equity environment, and the impact of a protracted decline in the liquidity of credit markets on our and our portfolio companies’ business;
the level, duration and volatility of prevailing interest rates and credit spreads, magnified by the current turmoil in the credit markets;
the phase-out and the cessation of the London Interbank Offered Rate (“LIBOR”) and the use of the Secured Overnight Financing Rate (“SOFR”) as a replacement rate on our operating results;
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;
the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;
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;
the timing, form and amount of any dividend distributions;
authoritative generally accepted accounting principles or policy changes from such standard-setting bodies as the Financial Accounting Standards Board, the Securities and Exchange Commission, Internal Revenue Service, the
S-ii


NASDAQ Global Select Market, the New York Stock Exchange LLC, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business; and
any of the other risks, uncertainties and other factors identified herein or in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 and any subsequent filings we have made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act that are incorporated by reference into this prospectus or any prospectus supplement.
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, the accompanying prospectus and any related free writing prospectus 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, the accompanying prospectus and any related free writing prospectus, and such risks and uncertainties could cause actual results to differ materially from those in any forward-looking statements. The Company reminds all investors that no forward-looking statement can be relied upon as an accurate or even mostly accurate forecast because humans cannot forecast the future. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus supplement, the accompanying prospectus or any related free writing prospectus, as applicable.
You should rely only on the information contained in this prospectus supplement, the accompanying prospectus, any related free writing prospectus and the documents incorporated herein or therein. We have not, and the agent(s) or dealer(s) has 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 agents 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. You should carefully read this entire prospectus supplement, the accompanying prospectus, any free writing prospectus relating to this offering and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus before investing in the Preferred Stock.
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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENTPage
S-i
S-ii
S-1
S-4
S-16
S-18
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PROSPECTUSPage
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PROSPECTUS SUMMARY
This summary highlights some information from this prospectus supplement and the accompanying prospectus, and it may not contain all of the information that is important to you. To understand the terms of the Preferred Stock offered hereby, you should read this prospectus supplement and the accompanying prospectus carefully. Together, these documents describe the specific terms of the offering. In addition, you should read the more detailed information appearing elsewhere in this prospectus supplement, the accompanying prospectus, in any related free writing prospectus and in the documents incorporated by reference in this prospectus supplement and accompanying prospectus, as provided in “Incorporation by Reference” beginning on page S-i of this prospectus supplement and page i of the prospectus and in “Available Information” beginning on page S-83 of this prospectus supplement and on page 72 of 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.
The Company
Prospect Capital Corporation is a financial services company that primarily lends to and invests in middle market privately-held companies. Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. 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, as amended (the “Code”). We are a non-diversified company within the meaning of the 1940 Act. Our headquarters are located at 10 East 40th Street, 42nd Floor, New York, NY 10016, and our telephone number is (212) 448-0702. 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 $7.9 billion of total assets as of September 30, 2023.
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. PCF has been consolidated since operations commenced.
Investment Portfolio
As of September 30, 2023, we had investments in 128 portfolio companies and collateralized loan obligations (“CLOs”). The aggregate fair value as of September 30, 2023 of investments in these portfolio companies and CLOs held on that date is approximately $7.7 billion. Our portfolio across all our performing interest-bearing investments had an annualized current yield of 12.7% as of September 30, 2023, excluding equity investments and non-accrual loans. Our annualized current yield was 10.3% as of September 30, 2023 across all investments.
Recent Developments
On November 8, 2023, we announced the declaration of monthly dividends for our 5.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in January as a result), as follows:
Monthly Cash 5.50% Preferred Shareholder DistributionRecord DatePayment DateMonthly Amount ($ per share), before pro ration for partial periods
December 202312/20/20231/2/2024$0.114583
January 20241/17/20242/1/2024$0.114583
February 20242/21/20243/1/2024$0.114583
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On November 8, 2023, we announced the declaration of monthly dividends for our 6.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 6.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in January as a result), as follows:
Monthly Cash 6.50% Preferred Shareholder DistributionRecord DatePayment DateMonthly Amount ($ per share), before pro ration for partial periods
December 202312/20/20231/2/2024$0.135417
January 20241/17/20242/1/2024$0.135417
February 20242/21/20243/1/2024$0.135417
On November 8, 2023, we announced the declaration of quarterly dividends for our 5.35% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.35% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the 5.35% Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date, as follows:

Quarterly Cash 5.35% Preferred Shareholder DistributionRecord DatePayment DateAmount ($ per share)
November 2023 - January 20241/17/20242/1/2024$0.334375
On November 8, 2023, we announced the declaration of monthly dividends on our common stock as follows:
Monthly Cash Common Shareholder DistributionRecord DatePayment DateAmount ($ per share)
November 202311/28/202312/19/2023$0.0600
December 202312/27/20231/18/2024$0.0600
January 20241/29/20242/20/2024$0.0600



S-2


Risk Factors
See “Risk Factors” beginning on page S-17 of this prospectus supplement and page 12 of the accompanying prospectus, “Risk Factors” in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q, filed on November 8, 2023, and the risks sections in any of our other filings with the SEC and in any related free writing prospectus to read about risks that you should consider before investing in the Preferred Stock.

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The Offering
IssuerProspect Capital Corporation
Securities OfferedUp to 80,000,000 shares, par value $0.001 per share of preferred stock, with a $2,000,000,000 aggregate liquidation preference (the “Preferred Stock”). The Preferred Stock will be issued in multiple series, including the 5.50% Series A1 Preferred Stock (the “Series A1 Shares”), the 6.50% Series A3 Preferred Stock (the "Series A3 Shares," and together with the Series A1 Shares, the "A1/A3 Shares"), the Floating Rate Series A4 Preferred Stock (the “Series A4 Shares”), the 5.50% Series M1 Preferred Stock (the “Series M1 Shares”), the 5.50% Series M2 Preferred Stock (the “Series M2 Shares”), the 6.50% Series M3 Preferred Stock (the "Series M3 Shares," and together with the Series M1 Shares and the Series M2 Shares, the “M1/M2/M3 Shares”) and the Floating Rate Series M4 Preferred Stock (the “Series M4 Shares”).
Offering Price$25.00 per share (subject to adjustment for the A1/A3 Shares and Series A4 Shares based on the selling commission as disclosed herein).
Stated Value$25.00 per share.
Ranking
The A1/A3 Shares and Series A4 Shares rank, with respect to the payment of dividends and rights upon liquidation, dissolution or winding up, (a) senior to our common stock, (b) on parity with each other series of our preferred stock, including any series of Preferred Stock and (c) junior to our existing and future secured and unsecured indebtedness.

The M1/M2/M3 Shares and Series M4 Shares rank, with respect to the payment of dividends and rights upon liquidation, dissolution or winding up, (a) senior to our common stock, (b) on parity with each other series of our preferred stock, including any series of Preferred Stock and (c) junior to our existing and future secured and unsecured indebtedness.

As of December 27, 2023, we and our subsidiaries had approximately $1.6 billion of unsecured senior indebtedness outstanding and $970.2 million of secured indebtedness outstanding.
MaturityShares of the Preferred Stock have no stated maturity. Shares of the Preferred Stock will remain outstanding indefinitely unless they are redeemed, repurchased or converted. We are not required to set apart for payment funds to redeem the Preferred Stock.
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Dividends
Shares of the Preferred Stock will pay a monthly dividend, when, as and if authorized by, or under authority granted by, the Board, and declared by us out of funds legally available therefor, at (a) a fixed annual rate of 5.50% per annum for the Series A1 Shares, Series M1 Shares and Series M2 Shares, (b) a fixed annual rate of 6.50% per annum for the Series A3 Shares and the Series M3 Shares, and (c) an annualized floating rate equal to one-month Term SOFR (as defined below) plus 2.00%, subject to a minimum annualized dividend rate of 6.50% (the "Cap Rate”) and a maximum annualized dividend rate of 8.00%, for the Series A4 Shares and the Series M4 Shares, each with respect to the Stated Value of $25.00 per share of the Preferred Stock (computed on the basis of a 360-day year consisting of twelve 30-day months) payable in cash or through the issuance of additional Preferred Stock through the Preferred Stock Dividend Reinvestment Plan.

The floating dividend rate on the Series A4 Shares and Series M4 Shares will reset upon each dividend declaration by the Board, and will reset to the applicable rate as determined two U.S. Government Securities Business Days (as defined below) prior to such declaration, as adjusted for the terms herein. The Board presently declares dividends on the Preferred Stock once per quarter for the subsequent three months. Therefore, the applicable floating dividend rate on the Series A4 Shares and Series M4 Shares is presently expected to reset approximately once every three months.

Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance. If the Company is then offering a series of A1/A3 Shares or M1/M2/M3 Shares with a higher dividend rate than any other series of A1/A3 Shares or M1/M2/M3 Shares, respectively, the Company and the dealer manager will treat any subscriptions submitted for a corresponding series of A1/A3 Shares or M1/M2/M3 Shares with a lower dividend rate as a subscription for the corresponding series of A1/A3 Shares or M1/M2/M3 Shares with the higher dividend rate. For example, if the Company is then offering the Series A3 Shares, it will treat any subscriptions submitted for Series A1 Shares as subscriptions for Series A3 Shares.
Liquidation PreferenceUpon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, before any distribution or payment shall be made to holders of our common stock, the holders of shares of Preferred Stock will be entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, a liquidation preference equal to the Stated Value per share, plus an amount equal to any accrued and unpaid dividends to but excluding the date of payment, whether or not earned or declared, but excluding interest on any such distribution or payment.
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Conversion at the Option of the A1/A3 Shares or M1/M2/M3 Shares HolderAt any time prior to the listing of the A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, shares of the A1/A3 Shares and the M1/M2/M3 Shares will be convertible, at the option of the holder of such Preferred Stock (the "Holder Optional Conversion") as follows:

Holder Conversion Notice: Holders of A1/A3 Shares and M1/M2/M3 Shares may elect to convert their shares of A1/A3 Shares and M1/M2/M3 Shares at any time by delivering to Preferred Shareholder Services a notice of conversion (the “Holder Conversion Notice”)

Holder Conversion Deadline: A Holder Conversion Notice will be effective as of: the 15th day of the month (or, if the 15th day of the month is not a business day, then on the business day immediately preceding the 15th day) or the last business day of the month, whichever occurs first after a Holder Conversion Notice is duly received by Preferred Shareholder Services (each such date, a “Holder Conversion Deadline”). Any Holder Conversion Notice received after 5:00 p.m. Eastern time on a Holder Conversion Deadline will be effective as of the next Holder Conversion Deadline.

Holder Conversion Exercise Date: For all shares of A1/A3 Shares and M1/M2/M3 Shares duly submitted to us for conversion on or before a Holder Conversion Deadline, we will determine the Settlement Amount (defined below) on any business day after such Holder Conversion Deadline but before the next Holder Conversion Deadline (such date, the “Holder Conversion Exercise Date”). Within such period, we may select the Holder Conversion Exercise Date in our sole discretion. We may, in our sole discretion, permit a holder to revoke their Holder Conversion Notice at any time prior to 5:00 pm, Eastern time, on the business day immediately preceding the Holder Conversion Exercise Date.

We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the arithmetic average of the daily volume weighted average price of shares of our common stock over each of the five consecutive trading days ending on the Holder Conversion Exercise Date (such arithmetic average, the “5-day VWAP”).

For the A1/A3 Shares, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the A Share Holder Optional Conversion Fee applicable on the respective Holder Conversion Deadline.

For the M1/M2/M3 Shares, "Settlement Amount" means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, but if a holder of M1/M2/M3 Shares exercises a Holder Optional Conversion within the first twelve months of issuance of such M1/M2/M3 Shares, the Settlement Amount payable to such holder will be reduced by the aggregate amount of all dividends, whether paid or accrued, on such M1/M2/M3 Shares in the three full months prior to the Holder Conversion Exercise Date, if any (such amount, the “M1/M2/M3 Shares Clawback”). We are permitted to waive the M1/M2/M3 Shares Clawback through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Conversion during the pendency of the term of such waiver. Although we have retained the right to waive the M1/M2/M3 Shares Clawback in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.

We will not pay any portion of the Settlement Amount for a share of A1/A3 Shares or M1/M2/M3 Shares from a Holder Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the five year anniversary of the date on which such share of A1/A3 Shares or M1/M2/M3 Shares has been issued, unless our Board determines, in its sole discretion, that the issuance of common stock in satisfaction of a Holder Optional Conversion would be materially detrimental to, and not in the best interest of, existing common stockholders. Beginning on the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares is issued, we may elect to settle all or a portion of any Holder Optional Conversion in cash without limitation or restriction.

We do not need stockholder approval in order to issue shares of common stock based on a conversion rate that is below the net asset value (“NAV”) per share of common stock in connection with a Holder Optional Conversion.
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In the event that we provide notice of our intent to exercise the Issuer Optional Conversion or Issuer Optional Redemption with respect to shares of A1/A3 Shares or M1/M2/M3 Shares for which a holder has provided notice of its intent to exercise the Holder Optional Conversion, such holder may revoke its notice with respect to such shares of A1/A3 Shares or M1/M2/M3 Shares by delivering, prior to the applicable Holder Conversion Exercise Date, a written notice of revocation to the Company. In the event that we exercise an Issuer Optional Conversion (as defined below) with respect to any shares of A1/A3 Shares or M1/M2/M3 Shares, the holder of such Preferred Stock may instead elect a Holder Optional Conversion (which would be effected at the 5-day VWAP, which may represent a discount to the NAV per share of the common stock on the date of the conversion) provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for an Issuer Optional Conversion (which may be effected at a conversion rate based on the NAV per share of the common stock on the date of conversion). See "Conversion at the Option of the Issuer" and "Liquidity Event" below.

The Series A4 Shares and Series M4 Shares are not convertible.
A1/A3 Share Holder Optional Conversion Fee:
An A1/A3 Share is subject to an early conversion fee if it is converted by its holder within five years of issuance. The amount of the fee equals a percentage of the maximum public offering price disclosed herein based on the year in which the conversion occurs after the A1/A3 Share is issued as follows:

Prior to the first anniversary of the issuance of such Preferred Stock: 9.00% of the maximum public offering price disclosed herein, which equals $2.25 per A1/A3 Share;
On or after the first anniversary but prior to the second anniversary: 8.00% of the maximum public offering price disclosed herein, which equals $2.00 per A1/A3 Share;
On or after the second anniversary but prior to the third anniversary: 7.00% of the maximum public offering price disclosed herein, which equals $1.75 per A1/A3 Share;
On or after the third anniversary but prior to the fourth anniversary: 6.00% of the maximum public offering price disclosed herein, which equals $1.50 per A1/A3 Share;
On or after the fourth anniversary but prior to the fifth anniversary 5.00% of the maximum public offering price disclosed herein, which equals $1.25 per A1/A3 Share; and
On or after the fifth anniversary: 0.00%.

We are permitted to waive the Holder Optional Conversion Fee through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Conversion during the pendency of the term of such waiver. Although we have retained the right to waive the Holder Optional Conversion Fee in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.
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Redemption at the Option of the Series A4 Shares or Series M4 Shares HolderAt any time prior to the listing of the Series A4 Shares or Series M4 Shares on a national securities exchange, shares of the Series A4 Shares and the Series M4 Shares will be redeemable, at the option of the holder of such Preferred Stock (the "Holder Optional Redemption") as follows:

Holder Redemption Notice: Holders of Series A4 Shares and Series M4 Shares may elect to redeem their shares of Series A4 Shares and Series M4 Shares at any time by delivering to Preferred Shareholder Services a notice of redemption (the “Holder Redemption Notice”).

Holder Redemption Deadline: A Holder Redemption Notice will be effective as of the last business day of the month after a Holder Redemption Notice is duly received by Preferred Shareholder Services (each such date, a “Holder Redemption Deadline”). Any Holder Redemption Notice received after 5:00 p.m. Eastern time on a Holder Redemption Deadline will be effective as of the next Holder Redemption Deadline.

Holder Redemption Exercise Date: For all shares of Series A4 Shares and Series M4 Shares duly submitted to us for redemption on or before a Holder Redemption Deadline, we will determine the HOR Settlement Amount (defined below) on any business day after such Holder Redemption Deadline but before the Holder Redemption Deadline occurring two months thereafter (such date, the “Holder Redemption Exercise Date”). Within such period, we may select the Holder Redemption Exercise Date in our sole discretion. We may, in our sole discretion, permit a holder to revoke their Holder Redemption Notice at any time prior to 5:00 pm, Eastern time, on the business day immediately preceding the Holder Redemption Exercise Date.

We will settle any Holder Optional Redemption by paying the HOR Settlement Amount (as defined below) in cash.

For the Series A4 Shares, “HOR Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date, minus (C) the Series A4 Share Holder Optional Redemption Fee applicable on the respective Holder Redemption Deadline.

For the Series M4 Shares, "HOR Settlement Amount" means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date, but if a holder of Series M4 Shares exercises a Holder Optional Redemption within the first twenty-four months of issuance of such Series M4 Shares, the HOR Settlement Amount payable to such holder will be reduced by (i) during the first twelve months of issuance of such Series M4 Shares, the aggregate amount of all dividends, whether paid or accrued, on such M4 Shares in the six-month period prior to the Holder Redemption Exercise Date, and (ii) during the second twelve months of issuance of such Series M4 Shares, the aggregate amount of all dividends, whether paid or accrued, on such M4 Shares in the three-month period prior to the Holder Redemption Exercise Date (such amount, the “Series M4 Shares Clawback”). We are permitted to waive the Series M4 Shares Clawback through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Redemption during the pendency of the term of such waiver. Although we have retained the right to waive the Series M4 Shares Clawback in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.
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In addition, the aggregate amount of Holder Optional Redemptions by the holders of Series A4 Shares and Series M4 Shares will be subject to the following redemption limits: (i) no more than 2% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per calendar month; (ii) no more than 5% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per fiscal quarter; and (iii) no more than 20% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per Annual Redemption Period. An "Annual Redemption Period" means our then current fiscal quarter and the three fiscal quarters immediately preceding our then current fiscal quarter.

Redemptions pursuant to an Issuer Optional Redemption (as described below) will not count toward the 2% / 5% / 20% limits above applied to Holder Optional Redemptions by holders of the Series A4 Shares and Series M4 Shares. Optional redemptions following death of a holder (as described below) will count toward the 2% / 5% / 20% limits above but will not be subject to such limits.

If, after applying the redemption limits above, a holder would own less than one share of Series A4 Shares or Series M4 Shares, all of such holder’s shares of Series A4 Shares or Series M4 Shares, as applicable, will be redeemed. Otherwise, all redemption amounts will be rounded down such that after giving effect to any Holder Optional Redemption, no holder is left owning a fractional share. For example, if after applying the redemption limits, an investor would own 2.5 shares, we will redeem 0.5 fewer shares from such holder so that the holder is left owning three shares.

If, after applying the redemption limits above, the number of shares of Series A4 Shares or Series M4 Shares to be redeemed is less than the number of shares of Series A4 Shares or Series M4 Shares, as applicable, submitted for redemption by a holder, the excess shares of Series A4 Shares or Series M4 Shares, as applicable, will not be deemed submitted for redemption for future periods and, if a holder wishes to redeem additional shares, such holder will need to submit any remaining Series A4 Shares or Series M4 Shares they hold and wish to redeem on a subsequent Holder Redemption Deadline. Redemption capacity of the Series A4 Shares and the Series M4 Shares will be allocated on a pro rata basis based on the number of Series A4 Shares or Series M4 Shares, as applicable, submitted in the event that a monthly redemption is oversubscribed, based on any of the foregoing redemption limits. We may waive the foregoing redemption limits in our sole discretion at any time.
Series A4 Share Holder Optional Redemption Fee:
A Series A4 Share is subject to an early redemption fee if it is redeemed by its holder within five years of issuance. The amount of the fee equals a percentage of the maximum public offering price disclosed herein based on the year in which the redemption occurs after the Series A4 Share is issued as follows:

• Prior to the third anniversary of the issuance of such Preferred Stock: 10.00% of the maximum public offering price disclosed herein, which equals $2.50 per Series A4 Share;
• On or after the third anniversary but prior to the fourth anniversary: 8.00% of the maximum public offering price disclosed herein, which equals $2.00 per Series A4 Share;
• On or after the fourth anniversary but prior to the fifth anniversary 5.00% of the maximum public offering price disclosed herein, which equals $1.25 per Series A4 Share; and
• On or after the fifth anniversary: 0.00%.

We are permitted to waive the Holder Optional Redemption Fee through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Series A4 Shares qualifying for the waiver and exercising a Holder Optional Redemption during the pendency of the term of such waiver. Although we have retained the right to waive the Holder Optional Redemption Fee in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.
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Redemption at the Option of the Issuer
Subject to the restrictions described herein, a share of Preferred Stock may be redeemed at our option (the “Issuer Optional Redemption”) at any time or from time to time upon not less than 10 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for redemption thereof, at a redemption price of 100% of the Stated Value of the shares of Preferred Stock to be redeemed plus dividends accrued to, but excluding, the date fixed for redemption, whether or not earned or declared, but excluding interest on any such distribution or payment.

We will not exercise the Issuer Optional Redemption prior to the earlier of the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares has been issued, or the two year anniversary of the date on which a share of Series A4 Shares or Series M4 Shares has been issued or, for listed shares of A1/A3 Shares or M1/M2/M3 Shares, five years from the earliest date on which any series that has been listed was first issued or, for listed shares of Series A4 Shares or Series M4 Shares, two years from the earliest date on which any series that has been listed was first issued (the earlier of such dates as applicable to a series of Preferred Stock, the “Redemption Eligibility Date”), unless we determine, in our sole discretion, that doing so would be necessary to comply with the asset coverage requirements under the 1940 Act or to maintain our status as a RIC.

If we exercise the Issuer Optional Redemption for less than all of the outstanding shares of Preferred Stock, then shares of Preferred Stock will be selected for redemption on a pro rata basis or by lot across holders of the series of Preferred Stock selected for redemption; provided that, if the redemption occurs prior to the Redemption Eligibility Date applicable to a series of Preferred Stock, we will first redeem on a pro rata basis or by lot the minimum number of shares of such series of Preferred Stock that have met the Redemption Eligibility Date to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC, and, if the redemption of all such shares of Preferred Stock is insufficient to cause us to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC, we will then redeem on a pro rata basis or by lot the minimum number of shares of such series of Preferred Stock that have not met the Redemption Eligibility Date necessary for us to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC.

There is no Holder Optional Conversion Fee or Holder Optional Redemption Fee charged, nor do the M1/M2/M3 Shares Clawback or the Series M4 Shares Clawback, apply upon an Issuer Optional Redemption.
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Conversion at the Option of the Issuer
Subject to certain limitations, a share of A1/A3 Shares or M1/M2/M3 Shares may be converted at our option (the “Issuer Optional Conversion”) at any time or from time to time for cash or shares of our common stock upon not less than 30 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for conversion thereof. We will settle any Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP, subject to our ability to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value if the 5-day VWAP represents a discount to our net asset value per share of common stock. See “1940 Act Approval” below.

For both the A1/A3 Shares or the M1/M2/M3 Shares, “IOC Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the date fixed for conversion.

We will not pay any portion of the IOC Settlement Amount from an Issuer Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the Redemption Eligibility Date. Beginning on the Redemption Eligibility Date, we may elect to settle any Issuer Optional Conversion in cash without limitation or restriction.

We will not exercise the Issuer Optional Conversion prior to the two year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares has been issued (provided that following the listing of A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, such date shall be the two year anniversary of the first date on which shares of A1/A3 Shares or M1/M2/M3 Shares, as appliable, were issued) unless the Board determines, in its sole discretion, that the conversion of such Preferred Stock is necessary to cause the Company to comply with the asset coverage requirements of the 1940 Act applicable to the Company, to maintain the Company’s status as a RIC, to maintain or enhance one or more of the Company’s credit ratings, to help comply with regulatory or other obligations, to achieve a strategic transaction, or to improve the liquidity position of the Company.

If we exercise the Issuer Optional Conversion for less than all of the outstanding shares of A1/A3 Shares and M1/M2/M3 Shares, then shares of A1/A3 Shares and M1/M2/M3 Shares, as applicable, will be selected for conversion on a pro rata basis or by lot across holders of the series of A1/A3 Shares and M1/M2/M3 Shares selected for conversion; provided that if we exercise the Issuer Optional Conversion prior to the two year anniversary of the issuance of any shares of A1/A3 Shares and M1/M2/M3 Shares, we will first convert on a pro rata basis or by lot the minimum number of shares of A1/A3 Shares and M1/M2/M3 Shares that have been issued for more than two years necessary to achieve the Board’s objective for the conversion, and, if the conversion of all such shares of A1/A3 Shares and M1/M2/M3 Shares is insufficient to cause us to achieve such objective, we will then convert on a pro rata basis or by lot the minimum number of shares of A1/A3 Shares and M1/M2/M3 Shares that have not been outstanding for two years for us to achieve the Board’s objective.

There is no Holder Optional Conversion Fee charged nor does the M1/M2/M3 Shares Clawback apply upon an Issuer Optional Conversion.

The Series A4 Shares and Series M4 Shares are not convertible.
S-11


Stock outstanding after this offering
80,000,000 shares of Preferred Stock, assuming the maximum offering of 80,000,000 Preferred Stock in this offering.

656,353,371 shares of common stock, including shares of common stock that may be issued upon conversion of all shares of the A1/A3 Shares and M1/M2/M3 Shares offered hereby assuming all the shares of Preferred Stock so converted pay a Holder Optional Conversion Fee of 9.00% and are converted at a conversion rate based on the 5-day VWAP calculated as if the conversion date was December 26, 2023, which was $6.15. The actual 5-day VWAP of our common stock on a conversion date may be more or less than $6.15, which may result in more or less shares of common stock issued. The foregoing only reflects the impact of this offering and does not reflect the impact of common or preferred stock sold in any other offering.
Liquidity EventThe Board will consider from time to time whether to (1) keep the Preferred Stock outstanding, (2) whether to list the Preferred Stock for trading on a national securities exchange or (3) elect an Issuer Optional Conversion with regard to the A1/A3 Shares or the M1/M2/M3 Shares (the “Liquidity Event”).

The decision of whether to complete a Liquidity Event will be at our sole discretion and will be made based on economic and market conditions at the time and the judgment of the Board as to what is in the best interests of the Company and its stockholders.

If the Board decides to list the Preferred Stock on a national securities exchange, we will provide no less than 60 days' written notice of the decision to list the A1/A3 Shares or M1/M2/M3 Shares. There will be a 30 day period prior to the listing in which holders of A1/A3 Shares or M1/M2/M3 Shares may exercise the Holder Optional Conversion with the applicable Holder Optional Conversion Fee (with respect to the A1/A3 Shares) or M1/M2/M3 Shares Clawback (with respect to the M1/M2/M3 Shares) waived.

Any listing of the Series A4 Shares or the Series M4 Shares shall require the approval of the holders of the Series A4 Shares or the Series M4 Shares, as applicable, voting as a separate class. The vote required to approve such a proposal for listing is a majority of the votes cast by the holders of Series A4 Shares or Series M4 Shares, as applicable, voting on such proposal at a meeting where a quorum of Series A4 Shares or Series M4 Shares, as applicable, is present. For purposes of voting on any such proposal to list the Series A4 Shares or Series M4 Shares, the quorum required for voting on such proposal is 33 1/3% of the outstanding Series A4 Shares or Series M4 Shares, as applicable, entitled to vote on such proposal, unless the Board by resolution establishes a higher quorum. A favorable vote on any such proposal shall be non-binding and the Board shall retain sole discretion as to whether to complete such listing.
1940 Act Approval
In connection with any Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares, we will use commercially reasonable efforts to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value. If we do not have or obtain any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion. See “Description of the Preferred Stock-1940 Act Approval.”

In the event that we exercise an Issuer Optional Conversion with respect to any shares of A1/A3 Shares or M1/M2/M3 Shares, the holder of such A1/A3 Shares or M1/M2/M3 Shares may instead elect a Holder Optional Conversion provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for the Issuer Optional Conversion.
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Selling Commission - A1/A3 Shares and Series A4 SharesUp to 7.0% of the Stated Value borne paid by the Company. Reductions in selling commissions will be reflected in reduced public offering prices as described in the "Plan of Distribution" section of this prospectus supplement and the net proceeds to us will generally not be impacted by such reductions; therefore, we will bear a reduction in net proceeds to us up to 7% of the Stated Value on all A1/A3 Shares and Series A4 Shares although the selling commission compensation paid by us to our dealer manager may represent less than 7% of the Stated Value. The selling commission on the Series A4 Shares cannot be reduced below 5%.
Selling Commission - M1/M2/M3 Shares and Series M4 SharesNone.
Dealer Manager Fee3.0% on the Stated Value paid by the Company.
Offering ExpensesThe selling commission and dealer manager fee, when combined with organization and offering expenses (including due diligence expenses and fees for establishing servicing arrangements for new stockholder accounts), are not currently expected to exceed 11.5% of the gross offering proceeds. Our Board of Directors may, in its discretion, authorize the Company to incur underwriting and other offering expenses in excess of 11.5% of the gross offering proceeds. In no event will the combined selling commission, dealer manager fee and offering expenses exceed FINRA’s limit on underwriting and other offering expenses.
Preferred Stock Dividend Reinvestment Plan
Our Transfer Agent will administer a Preferred Stock Dividend Reinvestment Plan, pursuant to which Holders will have dividends on their Preferred Stock automatically reinvested in additional shares of such Preferred Stock at a price per share of Preferred Stock of $23.75 per share (95% of the Stated Value of the $25.00 per share of Preferred Stock) for Series A1 Shares, Series A3 Shares, Series M1 Shares, Series M2 Shares and Series M3 Shares, and $25.00 per share for Series A4 Shares and Series M4 Shares, if they so elect.

Shares of Preferred Stock received through the Preferred Stock Dividend Reinvestment Plan will be of the same series and have the same original issue date for purposes of the Holder Optional Conversion Fee, the Holder Optional Redemption Fee, the M1/M2/M3 Shares Clawback, or the Series M4 Shares Clawback, as applicable, and for other terms of the Preferred Stock based on issuance date as the Preferred Stock for which the dividend was declared.
Optional Redemption Following Death of a Holder
Subject to restrictions, beginning on the date of original issuance and ending upon the listing of the Preferred Stock on a national securities exchange, we will redeem shares of Preferred Stock of a beneficial owner who is a natural person (including a natural person who holds shares of Preferred Stock through an Individual Retirement Account or in a personal or estate planning trust) upon his or her death at the written request of the beneficial owner’s estate at a redemption price equal to the Stated Value plus an amount equal to any accumulated, accrued and unpaid dividends thereon to, but excluding, the date of such redemption. The beneficial owner or the beneficial owner’s estate must hold the Preferred Stock for a minimum of 6 months before their shares of Preferred Stock are eligible for such redemption.

We will have a discretionary right to limit the aggregate liquidation preference of Preferred Stock subject to redemption following the death of a beneficial owner that may be exercised in any calendar year to an amount equal to the greater of $10 million or 5% of all the Preferred Stock outstanding as of the end of the most recent calendar year. Upon any such redemption request from a beneficial owner’s estate upon the death of such beneficial owner, we have the right, in our sole discretion, to pay the redemption price in cash or, with regards to the A1/A3 Shares and the M1/M2/M3 Shares but not the Series A4 Shares nor the Series M4 Shares, in equal value of our common stock, or a combination thereof, calculated based on the 5-day VWAP, in exchange for the A1/A3 Shares or M1/M2/M3 Shares. If we do not have or have not obtained any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any redemption request from a beneficial owner's estate upon the death of such beneficial owner by paying the redemption price in cash, provided that cash is available after taking into account the leverage requirements under the 1940 Act and the terms of any of our outstanding senior securities at the time.
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Issuance Date ConsolidationAll the shares of a series of Preferred Stock that are sold to investors on a given settlement date will, as a group, be assigned a unique CUSIP number to help us track the period of time such shares of Preferred Stock have been outstanding. In order to streamline the operations of the offering relating to maintaining multiple CUSIP numbers, we have the right pursuant to the terms of the preferred stock, including the terms of the Preferred Stock, and without stockholder approval, to combine the shares of any series of preferred stock issued during a six month period into a single CUSIP number, provided that the deemed issuance date for such combined group of shares will be on the earliest actual issuance date for any shares of preferred stock during such six month period and no earlier than six months prior to the date on which such shares of preferred stock were originally issued. If we exercise this right, shares of preferred stock that were issued later during a six month period will benefit because the dates on which the Holder Optional Conversion Fee, the Holder Optional Redemption Fee, the M1/M2/M3 Shares Clawback, or the M4 Shares Clawback applicable to the Preferred Stock will be reduced or terminated will occur sooner for such shares than it would have if we did not exercise this right. However, for shares of Preferred Stock issued later in the six month period, the exercise of such right will permit us to exercise an Issuer Optional Redemption and an Issuer Optional Conversion, as applicable, and to settle an Issuer Optional Conversion, as applicable, in stock, without constraint sooner than if we did not exercise such right. Such combination of shares of one or more series of preferred stock may be effected through a mandatory tender, exchange, conversion or other reorganization transaction and in such transaction cash may be issued in lieu of fractional shares.
Voting RightsIn any matter submitted to a vote of the holders of our common stock, each holder of Preferred Stock will be entitled to one vote for each share of Preferred Stock held, and the holders of the outstanding Preferred Stock, holders of any other preferred stock we may issue and holders of the common stock will vote together as a single class. For so long as we are subject to the 1940 Act, holders of our Preferred Stock, voting separately as a single class, together with holders of any other preferred stock we may issue, have the right to elect two members of the Board at all times. The two directors elected by the holders of the Preferred Stock are designated by our Board. The Board designated William J. Gremp and Eugene S. Stark as the directors to be elected by holders of the Preferred Stock. If dividends on any of our preferred stock, including the Preferred Stock, have accumulated and been unpaid for a period of two years, the holders of our preferred stock, including the Preferred Stock, will have the power to elect a majority of the Board.

The approval of the holders of a majority of any outstanding preferred stock, voting separately as a class, is required to, among other actions, (A) amend, alter or repeal the rights, preferences or privileges of the preferred stock or amend our corporate charter in a manner that materially and adversely affects the preferred stock, provided that any such action that would materially and adversely affect the rights, preferences or privileges of one or more series of the preferred stock (the “Affected Series”) in a manner different from any other series of the preferred stock will require the approval of a majority of the outstanding shares of the Affected Series (with such Affected Series voting as a separate class) or (B) create (by reclassification or otherwise) any new class of shares having rights, preferences or privileges senior to the preferred stock; provided that the Board may adopt Articles Supplementary or amend or supplement the Charter, including in connection with listing the Preferred Stock on a national securities exchange, for the purpose of converting, exchanging, reorganizing or combining two or more series of preferred stock into a single series of preferred stock having materially the same rights, preferences or privileges as set forth herein, which amendment or other action shall not be deemed to materially and adversely affect the rights, preferences or privileges of the Preferred Stock or of one or more series of preferred stock.

The vote of the holders of a majority of the preferred stock then outstanding, including the Preferred Stock, is required to approve any plan of reorganization adversely affecting such preferred stock or any action requiring a vote of stockholders under Section 13(a) of the 1940 Act. For purposes of the preceding sentence, the phrase “vote of the holders of a majority of the preferred stock then outstanding” shall have the meaning set forth in the 1940 Act.

The holders of Preferred Stock have exclusive voting rights on a charter amendment that would alter only the contract rights of the Preferred Stock. Any such charter amendment shall first be declared advisable by the Board and then approved by the affirmative vote or consent of the holders of a majority of the outstanding shares of Preferred Stock. See “Description of the Preferred Stock-Voting Rights.”
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Absence of a Public Market for the Preferred StockThe Preferred Stock will be a new issue of securities and, initially, will not be listed for trading on any national securities exchange. We cannot assure you that any active or liquid market will develop for the Preferred Stock. See “Plan of Distribution.”

There is no established public trading market for the offered shares of Preferred Stock. We may apply for a listing of one or more series of the Preferred Stock on a national securities exchange at a later date.
The Nasdaq Global Select Market Symbol for Our Common StockOur common stock is traded on the Nasdaq Global Select Market under the symbol “PSEC.”
Transfer AgentComputershare Trust Company, N.A. (“Computershare” or the “Transfer Agent”).
Use of ProceedsAssuming that all shares of Preferred Stock sold in the offering are A1/A3 Shares and Series A4 Shares and that the organization and offering expenses (comprised of underwriting compensation and issuer expenses), do not exceed 11.5%, we estimate that the net proceeds from this offering, if fully subscribed, will be approximately $1,770,000,000 after deducting fees and estimated organization and offering expenses of approximately $230,000,000 payable by us.

We expect to use the net proceeds from this offering to maintain and enhance balance sheet liquidity, including repayment of debt under our credit facility, if any, investments in high quality short-term debt instruments or a combination thereof, and to make long-term investments in accordance with our investment objective. See “Use of Proceeds.”
U.S. Federal Income Tax ConsiderationsYou should consult your tax advisor with respect to the U.S. federal income tax consequences of the holding, disposition or conversion of the Preferred Stock and with respect to any tax consequences arising under the laws of any state, local, foreign or other taxing jurisdiction. See “Supplement to Material U.S. Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Considerations” in this prospectus supplement and the accompanying prospectus.



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SUMMARY OF PREFERRED STOCK LIQUIDITY FEATURES

The following tables are intended to assist you in understanding the liquidity features of the Preferred Stock. The tables provide only a summary of the liquidity features of the Preferred Stock. We urge you to read the Articles Supplementary for the Preferred Stock in its entirety because it, and not this summary, defines your rights as a holder of the Preferred Stock. Please also refer to "Description of the Preferred Stock."
Series A1/A3 and Series M1/M2/M3 Shares
Years after Date of IssuanceDividendSeries A1/A3 Share Holder Optional Conversion Fee*M1/M2/M3 Shares Clawback*Holder Optional Conversion*Optional Redemption on Death of Holder*Issuer Optional RedemptionIssuer Optional Conversion
Settle in StockSettle in CashSettle in StockSettle in Cash
Years 1 and 2
Pro rated dividend in month of issuance, based on number of days in month after issuance

Thereafter, monthly dividends
Year 1: 9.00%
Year 2: 8.00%

(as a % of the maximum public offering price disclosed herein; measured on a share by share basis from date of issuance)
Year 1: Settlement Amount reduced by the aggregate amount of all dividends, whether paid or accrued, on such M1/M2/M3 Shares in the three full months prior to the Holder Conversion Exercise DateYesNot available, unless Board determines settlement in stock would be materially detrimental to, and not in the best interest of, existing common stockholders
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
● May settle in cash or stock
Not available, unless Board determines redemption is necessary to comply with 1940 Act asset coverage requirements or maintain RIC statusNot available, unless Board determines it is necessary to comply with 1940 Act asset coverage or maintain RIC status, maintain or enhance credit rating, comply with regulatory or other obligations, achieve a strategic transaction, or improve the liquidity positionNo
Years 3 through 5Monthly dividends
Year 3: 7.00%
Year 4: 6.00%
Year 5: 5.00%

(as a % of the maximum public offering price disclosed herein; measured on a share by share basis from date of issuance)
NoneYesNot available, unless Board determines settlement in stock would be materially detrimental to, and not in the best interest of, existing common stockholders
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
● May settle in cash or stock
Not available, unless Board determines redemption is necessary to comply with 1940 Act asset coverage requirements or maintain RIC statusYesNo
After Year 5Monthly dividendsNoneNone
Yes

(right to convert a share of Preferred Stock terminates upon the listing of such share)
Yes

(right to convert a share of Preferred Stock terminates upon the listing of such share)
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
● May settle in cash or stock
YesYesYes

* Expires upon listing of the Preferred Stock on a national securities exchange.
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Series M4 Shares and Series A4 Shares
Years after Date of IssuanceDividendM4 Shares Clawback*Shares Optional Redemption on Death of Holder*Holder Optional Redemption*Series A4 Holder Optional Redemption Fee*Issuer Optional Redemption
Years 1 and 2Pro rated dividend in month of issuance, based on number of days in month after issuance

Thereafter, monthly dividends
Year 1: Settlement Amount reduced by the aggregate amount of all dividends, whether paid or accrued, in the six-month period prior to the Holder Redemption Exercise Date.

Year 2: Settlement Amount reduced by the aggregate amount of all dividends, whether paid or accrued, in the three-month period prior to the Holder Redemption Exercise Date.
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
● Settle in cash
Monthly Holder Optional Redemption limited to:
(a) 2% per month
(b) 5% per fiscal quarter
(c) 20% per fiscal year

Redemption limits based on the amount of Series A4 Shares and Series M4 Shares, in aggregate, outstanding as of the end of the previous fiscal quarter.
10.00%Not available, unless Board determines redemption is necessary to comply with 1940 Act asset coverage requirements or maintain RIC status
Years 3 through 5Monthly dividendsNone
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
Monthly Holder Optional Redemption limited to:
(a) 2% per month
(b) 5% per fiscal quarter
(c) 20% per fiscal year

Redemption limits based on the amount of Series A4 Shares and Series M4 Shares, in aggregate, outstanding as of the end of the previous fiscal quarter.
Year 3: 10.00%
Year 4: 8.00%
Year 5: 5.00%
Yes.
After Year 5Monthly dividendsNone
● Available to Natural Persons and their estates after 6-month holding period
● Limited to greater of $10 million or 5% of Preferred Stock
Monthly Holder Optional Redemption limited to:
(a) 2% per month
(b) 5% per fiscal quarter
(c) 20% per fiscal year

Redemption limits based on the amount of Series A4 Shares and Series M4 Shares, in aggregate, outstanding as of the end of the previous fiscal quarter.
None.Yes.
*Expires upon listing of the Preferred Stock on a national securities exchange.
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FEES AND EXPENSES

The following tables are intended to assist you in understanding the costs and expenses that an investor in shares of common stock will bear directly or indirectly in the offering. The sales load and offering expenses shown in the table below will be paid for by the Company and will be indirectly borne by holders of our common stock and not by the holders of Preferred Stock prior to any conversion of such Preferred Stock to common stock. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus supplement contains a reference to fees or expenses paid by “you” or “us” or that “we” will pay fees or expenses, the Company will pay such fees and expenses out of our net assets and, consequently, you will indirectly bear such fees or expenses if you become a common stockholder of the Company. However, you will not be required to deliver any money or otherwise bear personal liability or responsibility for such fees or expenses. Amounts are for the current fiscal year after giving effect to the anticipated net proceeds of the offering, assuming that we incur the estimated offering expenses.

Stockholder transaction expenses:A1/A3 Shares and Series A4 SharesM1/M2/M3 Shares and Series M4 Shares
Sales Load (as a percentage of offering price)10.00%(1)3.00%(2)
Offering expenses borne by the Company (as a percentage of offering price)1.50%(3)1.50%(3)
Preferred Stock Dividend reinvestment plan expenses (4)NoneNone
Total stockholder transaction expenses (as a percentage of offering price):11.50%4.50%
Annual expenses (as a percentage of net assets attributable to common stock): 
Management fees (5)4.99%
Incentive fees payable under Investment Advisory Agreement (20% of realized capital gains and 20% of pre-incentive fee net investment income) (6)2.76%
Total advisory fees7.75%
Total interest expenses (7)5.92%
Other expenses (8)0.54%
Total annual expenses (6)(8)(9)(11)14.21%
Dividends on preferred stock(10)3.38%
Total annual expenses after dividends on preferred stock (11)17.59%
Example

The following table demonstrates the projected dollar amount of cumulative expenses we would pay out of net assets and that you would indirectly bear over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we have issued $0.26 billion in preferred stock paying dividends of a floating rate (assuming 7.36% annualized, based on the floating rate as of December 27, 2023) and $0.79 billion in preferred stock paying dividends of 6.50% per annum, in addition to our $0.86 billion in preferred stock paying 5.50% per annum and $0.15 billion in preferred stock paying 5.35% per annum, we have borrowed $1.95 billion available under our line of credit, in addition to our other indebtedness of $1.6 billion, and that our annual operating expenses would remain at the levels set forth in the table above and that we would pay the costs shown in the table above.
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  1 Year 3 Years 5 Years 10 Years
A1/A3/A4 Shares - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio* $199  $435  $628  $969 
M1/M2/M3/M4 Shares - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio* $160  $399  $597  $954 
A1/A3/A4 Shares - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio** $208  $456  $655  $993 
M1/M2/M3/M4 Shares - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio** $169  $422  $625  $980 
* Assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation on our portfolio.
** Assumes no unrealized capital depreciation or realized capital losses and 5% annual return on our portfolio resulting entirely from net realized capital gains (and therefore subject to the capital gains incentive fee).

While the example assumes, as required by the SEC, a 5% annual return on our portfolio, our performance will vary and may result in a return greater or less than 5%. The income incentive fee under our Investment Advisory Agreement with Prospect Capital Management is unlikely to be material assuming a 5% annual return on our portfolio and is not included in the example. If we achieve sufficient returns on our portfolio, including through the realization of capital gains, to trigger an incentive fee of a material amount, our distributions to our common stockholders and our expenses would likely be higher. In addition, while the example assumes reinvestment of all dividends and other distributions at NAV, common stockholders that participate in our common stock dividend reinvestment plan will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by 95% of the market price per share of our common stock at the close of trading on the valuation date for the distribution.

This example and the expenses in the table above should not be considered a representation of our future expenses. Actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.

(1)    Includes up to a 7.0% selling commission on the Stated Value paid by the Company and a dealer manager fee equal to 3.0% of the Stated Value paid by the Company. Reductions in selling commissions will be reflected in reduced public offering prices as described in the “Plan of Distribution” section of this prospectus supplement and the net proceeds to us will generally not be impacted by such reductions; therefore, we will bear a reduction in net proceeds to us up to 7.0% of the Stated Value on all A1/A3 Shares and Series A4 Shares although the selling commission compensation paid by us to our dealer manager may represent less than 7.0% of the Stated Value. We may, through the Holder Optional Conversion Fee applicable to holders of the A1/A3 Shares and the Holder Optional Redemption Fee applicable to holders of the Series A4 Shares, effectively recoup a portion of the Sales Load if stockholders exercise a Holder Optional Conversion of their A1/A3 Shares or Holder Optional Redemption of their Series A4 Shares prior to the 5-year anniversary of the original issue date. The Holder Optional Conversion Fee is 9.00% of the maximum public offering price disclosed herein prior to the first anniversary of the issuance of such A1/A3 Shares, 8.00% of the maximum public offering price disclosed herein on or after the first anniversary but prior to the second anniversary, 7.00% of the maximum public offering price disclosed herein on or after the second anniversary but prior to the third anniversary, 6.00% of the maximum public offering price disclosed herein on or after the third anniversary but prior to the fourth anniversary, 5.00% of the maximum public offering price disclosed herein on or after the fourth anniversary but prior to the fifth anniversary and 0.00% on or after the fifth anniversary. The Holder Optional Redemption Fee is 10.00% of the maximum public offering price disclosed herein prior to the third anniversary of the issuance of such Series A4 Shares, 8.00% of the maximum public offering price disclosed herein on or after the third anniversary but prior to the fourth anniversary, 5.00% of the maximum public offering price disclosed herein on or after the fourth anniversary but prior to the fifth anniversary and 0.00% on or after the fifth anniversary.

(2)    Includes a dealer manager fee equal to 3.0% of the Stated Value paid by the Company for the M1/M2/M3 Shares and the Series M4 Shares.

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(3)    Organization and offering expenses (including due diligence expenses and fees for establishing servicing arrangements for new stockholder accounts), are not expected to exceed 11.5% of the gross offering proceeds. Thus, if underwriting compensation is equal to 10.0% of gross offering proceeds then issuer expenses would not be expected to exceed 1.5% of gross offering proceeds. Our Board of Directors may, in its discretion, authorize the Company to incur organizational and offering expenses in excess of 11.5% of the gross offering proceeds, but not in excess of FINRA’s limit on organization and offering expenses of 15% of the gross proceeds. However, in no event will the combined selling commission, dealer manager fee and all other forms of underwriting compensation exceed FINRA’s 10% underwriting compensation cap.

(4)    The expenses of the dividend reinvestment plan are included in “other expenses.” See “Capitalization”.

(5)    Our base management fee is 2% of our gross assets (which include any amount borrowed, i.e., total assets without deduction for any liabilities, including any borrowed amounts for non-investment purposes, for which purpose we have not and have no intention of borrowing). Although no plans are in place to borrow the full amount under our line of credit, assuming that we borrowed $1.95 billion, the 2% management fee of gross assets equals approximately 4.99% of net assets.

(6)    Based on our net investment income and realized capital gains, less realized and unrealized capital losses, earned on our portfolio for the three months ended September 30, 2023, all of which consisted of an income incentive fee. This historical amount has been adjusted to reflect the issuance of the 78,303,072 shares of preferred stock outstanding as of December 27, 2023 and offered hereby. The capital gain incentive fee is paid without regard to pre-incentive fee income. For a more detailed discussion of the calculation of the two-part incentive fee, see “Management Services-Investment Advisory Agreement” in the accompanying prospectus.

(7)    As of December 27, 2023, we had $1.6 billion outstanding of Unsecured Notes (as defined below) in various maturities, ranging from January 15, 2024 to March 15, 2052, and interest rates, ranging from 1.50% to 8.00%, some of which are convertible into shares of Company common stock at various conversion rates.

(8)    “Other expenses” are based on estimated amounts for the current fiscal year. The amount shown above represents annualized expenses during our three months ended September 30, 2023 representing all of our estimated recurring operating expenses (except fees and expenses reported in other items of this table) that are deducted from our operating income and reflected as expenses in our Statement of Operations. The estimate of our overhead expenses, including payments under an administration agreement with Prospect Administration, or the Administration Agreement is based on our projected allocable portion of overhead and other expenses incurred by Prospect Administration in performing its obligations under the Administration Agreement. See “Business-Management Services-Administration Agreement” in the accompanying prospectus.

(9)    If all 66,429,380 shares of combined 5.50% Preferred Stock and 6.50% Preferred Stock were converted into common stock and assuming all the shares of convertible preferred stock pay a Holder Optional Conversion Fee of 9.00% of the maximum public offering price disclosed within the applicable prospectus supplement and are converted at a conversion rate based on the 5-day VWAP of our common stock on December 26, 2023, which was $6.15, then management fees would be 3.46%, incentive fees payable under our Investment Advisory Agreement would be 1.91%, total advisory fees would be 5.38%, total interest expenses would be 4.10%, other expenses would be 0.38%, and total annual expenses would be 9.86% of net assets attributable to our common stock. The actual 5-day VWAP of our common stock on a conversion date may be more or less than $6.15, which may result in fees that are higher or lower than those described herein. These figures are based on the same assumptions described in the other notes to this fee table.

(10)    Based on the 5.50% per annum dividend rate applicable to the A1 Shares, M1 Shares, M2 Shares, AA1 Shares, MM1 Shares, and A2 Shares. Also based on the 5.35% per annum dividend rate applicable to the A1/A3 Shares. Also based on the 6.50% per annum dividend rate applicable to the A3 Shares, M3 Shares, AA2 Shares, and MM2 Shares. Also based on the 7.357% annualized dividend rate applicable to Series A4 Shares and Series M4 Shares based on the floating rate as of December 27, 2023. Other series of preferred stock, including other series of preferred stock being sold in different offerings,
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may bear different annual dividend rates. No dividend will be paid on shares of Preferred Stock after they have been converted to shares of common stock.

(11) The indirect expenses associated with the Company’s investments in collateralized loan obligations are not included in the fee table presentation, but if such expenses were included in the fee table presentation then the Company’s total annual expenses would have been 14.73%, or 17.97% after dividends on preferred stock.

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RISK FACTORS
Your investment in shares of our Preferred Stock will involve certain risks. Before deciding whether to invest in shares of our Preferred Stock, you should, in consultation with your own financial and legal advisors, carefully consider the following supplementary risk factors together with the risk factors set forth in the accompanying prospectus and as described in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q, as well as in subsequent filings with the SEC, which are incorporated by reference into this prospectus supplement and the accompanying prospectus in their entirety, together with other information in this prospectus supplement, the accompanying prospectus, the documents incorporated by reference herein and therein, and any free writing prospectus that we may authorize for use in connection with this offering. The risks described below and in these documents are not the only risks we face. Additional risks and uncertainties not presently known to us might also impair our operations and performance. If any of the events described herein or in such documents occur, our business, financial condition and results of operations could be materially and adversely affected. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Please also read carefully the section titled “Forward-Looking Statements” in this prospectus supplement and the accompanying prospectus.
Risks Relating to the Preferred Stock

The price of our common stock may fluctuate significantly during the period used to calculate any 5-day VWAP and up to 18 calendar days will pass between the Holder Conversion Deadline and the applicable Holder Exercise Date, and this may make it difficult for you to resell the A1/A3 Shares or M1/M2/M3 Shares or common stock issuable upon conversion of the A1/A3 Shares and M1/M2/M3 Shares when you want or at prices you find attractive.
The price of our common stock on the Nasdaq Global Select Market constantly changes. We expect that the market price of our common stock will continue to fluctuate. Because the A1/A3 Shares and M1/M2/M3 Shares are convertible into our common stock based on the 5-day VWAP, volatility or declining prices for our common stock during the period used to determine the 5-day VWAP or during the period between when a holder delivers a Holder Conversion Notice and the related Holder Conversion Exercise Date, could have a similar effect on the value of the A1/A3 Shares and M1/M2/M3 Shares or the trading price thereof when and if the Preferred Stock is ever listed.
Our stock price may fluctuate as a result of a variety of factors, many of which are beyond our control. These factors include:
quarterly variations in our investment results;
operating results that vary from the expectations of management, securities analysts and investors;
changes in expectations as to our future financial performance;
the operating and securities price performance of other companies that investors believe are comparable to us;
future sales of our equity or equity-related securities;
the rate at which investors purchase, sell, short sell or otherwise transact in shares of our common stock;
changes in general conditions in our industry and in the economy and the financial markets; and
departures of key personnel.
In addition, in recent years, the stock market in general has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons often unrelated to their operating performance. These broad market fluctuations may adversely affect our stock price, regardless of our operating results.
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The consideration paid upon a Holder Optional Conversion and Issuer Optional Conversion is uncertain.

Under the terms of the A1/A3 Shares and M1/M2/M3 Shares, we or holders of shares of the Preferred Stock may choose to convert shares of A1/A3 Shares or M1/M2/M3 Shares at a time when the market price of common stock has dropped significantly. If we elect to settle conversions in shares of our common stock, this may cause significant dilution to the net asset value per share of our outstanding shares of common stock, including shares of common stock owned by holders of A1/A3 Shares or M1/M2/M3 Shares that had previously converted their A1/A3 Shares or M1/M2/M3 Shares into common stock. We may elect to settle conversions solely in cash, provided that cash is available after taking into account the leverage requirements under the 1940 Act and the terms of any of our outstanding senior securities at the time, and provided that either the Redemption Eligibility Date has passed or we are otherwise entitled to satisfy redemptions in cash as described in this prospectus supplement.
The conversion rates for the Holder Optional Conversion and, assuming we have the necessary approval under the 1940 Act, the Issuer Optional Conversion are both based on the 5-day VWAP, which may represent a discount to the NAV per share of our common stock. If we do not have or obtain any required stockholder approval under the 1940 Act to sell our common stock below net asset value, A1/A3 Shares or M1/M2/M3 Shares may be converted into common stock in connection with an Issuer Optional Conversion at a conversion rate based on our NAV per share of common stock if the 5-day VWAP represents a discount to the NAV per share of our common stock. In this circumstance, there may be fewer shares of common stock issued upon conversion of the shares of A1/A3 Shares or M1/M2/M3 Shares; while this would reduce dilution to existing common stockholders, including former holders of A1/A3 Shares or M1/M2/M3 Shares who had previously converted their holdings to common stock, it would also reduce the proportionate interest in the Company (and thus the economic benefit to the holder of A1/A3 Shares or M1/M2/M3 Shares) for holders of A1/A3 Shares or M1/M2/M3 Shares subject to such an Issuer Optional Conversion. Conversely, a conversion rate based on the 5-day VWAP, if it represents a discount to our net asset value per share of common stock, would result in greater dilution to existing common stockholders (including former holders of A1/A3 Shares or M1/M2/M3 Shares who had previously converted their holdings to common stock), and this outcome may be more likely given that the notice period for a Holder Optional Conversion is shorter than the notice period for an Issuer Optional Conversion, so holders of A1/A3 Shares or M1/M2/M3 Shares can supersede any Issuer Optional Conversion and obtain a conversion rate based on the 5-day VWAP (assuming the A1/A3 Shares or M1/M2/M3 Shares is settled in shares of our common stock and not cash). See “Sales of Our Common Stock Below Net Asset Value.”

Unlike the Series A1/A3 Shares and the Series M1/M2/M3 Shares, the Series A4 Shares and Series M4 Shares do not have a Holder Optional Conversion feature.
At any time prior to the listing of the A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, such shares of the Preferred Stock will be convertible, at the option of the holder of such Preferred Stock. We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the arithmetic average of the daily volume weighted average price of shares of our common stock over each of the five consecutive trading days ending on the Holder Conversion Exercise Date (as defined herein) (such arithmetic average, the “5-day VWAP”). The Series A4 Shares and Series M4 Shares do not have a Holder Optional Conversion feature and as such, Holders of such shares will have different, and in some respects more limited, liquidity options as compared to Holders of Series A1/A3 Shares or Series M1/M2/M3 should they no longer wish to hold the shares.

There is no cap on the number of shares of common stock that can be issued upon the conversion of shares of A1/A3 Shares or M1/M2/M3 Shares. The conversion of A1/A3 Shares or M1/M2/M3 Shares into shares of common stock could cause the price of common stock to decline significantly.

There is no cap on the number of shares of common stock that can be issued upon the conversion of shares of A1/A3 Shares or M1/M2/M3 Shares. Because the number of shares of common stock issued upon conversion of the A1/A3 Shares or M1/M2/M3 Shares will be based on the price of shares of common stock, the lower the price of our common stock at the time
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of conversion, the more shares of our common stock into which the A1/A3 Shares or M1/M2/M3 Shares are convertible and the greater the dilution that will be experienced by holders of our common stock. Accordingly, there is no limit on the amount of dilution that may be experienced by holders of our common stock.
The issuance of the Preferred Stock may be followed by a decline in the price of our common stock, creating additional dilution to the existing holders of the common stock. Such a price decline may allow holders of A1/A3 Shares or M1/M2/M3 Shares to convert shares of A1/A3 Shares or M1/M2/M3 Shares into large amounts of the Company’s common stock. As these shares of common stock are issued upon conversion of the A1/A3 Shares or M1/M2/M3 Shares, our common stock price may decline further.

Additionally, the issuance of the Preferred Stock could result in our failure to comply with the Nasdaq Global Select Market’s listing standards. The Nasdaq Global Select Market’s listing standards that may be affected by the issuance of the Preferred Stock include voting rights rules, bid price requirements, listing of additional shares rules, change in control rules and the Nasdaq Global Select Market’s discretionary authority rules. Failure to comply with any of these rules could result in the delisting of the Company’s common stock from the Nasdaq Global Select Market or impact the ability to list the Preferred Stock on a national securities exchange.

The potential decline in the price of our common stock described above may negatively affect the price of our common stock and our ability to obtain financing in the future. In addition, the issuance of the A1/A3 Shares or M1/M2/M3 Shares may provide incentives for holders thereof that intend to convert their shares to seek to cause a decline in the price of our common stock (including through selling our common stock short) in order to receive an increased number of shares of our common stock upon such conversion of the A1/A3 Shares or M1/M2/M3 Shares, and may encourage other investors to sell short or otherwise dispose of our common stock.

Our charter currently authorizes us to issue approximately 0.93 billion shares of common stock, in addition to our shares of common stock currently outstanding or reserved for issuance upon conversion of the convertible notes, and after reflecting the reclassification of 647.9 million shares of common stock as preferred stock. Although the Board of Directors can increase the amount of our authorized common stock and reclassify unissued preferred stock as common stock without stockholder approval, if they did not do so for any reason and our 5-day VWAP fell below approximately $2.16 per share of common stock (assuming we issued all 80,000,000 shares of the Preferred Stock available pursuant to this offering), we would be required to settle any conversion of A1/A3 Shares or M1/M2/M3 Shares in cash (to the extent we had cash available) or list the A1/A3 Shares and M1/M2/M3 Shares on a national securities exchange and the value of our shares of Preferred Stock would then equal their market price, which may be less than $25.00 per share.
Illustration of Impact of Leverage.    
The following tables illustrate the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of interest expense. The calculations in the tables below are hypothetical and actual returns may be higher or lower than those appearing below.
The below calculation assumes (i) $8.2 billion in total assets, (ii) an average cost of funds of 5.66% (including preferred dividend payments), (iii) $2.5 billion in debt outstanding, (iv) $0.9 billion in liquidation preference of 5.50% Preferred Stock outstanding, (v) $0.15 billion in 5.35% Preferred Stock outstanding, (vi) $0.8 billion in liquidation preference of 6.50% Preferred Stock outstanding, (vii) $0.3 billion in liquidation preference of Floating Rate Preferred Stock outstanding, and (viii) $3.7 billion of common stockholders’ equity.
Assumed Return on Our Portfolio (net of expenses)(10)%(5)%0%5%10%
Corresponding Return to Common Stockholder(1)(30.0)%(18.6)%(7.2)%4.2%15.6%
(1) Assumes no conversion of 5.50% Preferred Stock and 6.50% Preferred Stock to common stock.
The below calculation assumes (i) $8.2 billion in total assets, (ii) an average cost of funds of 5.47% (including preferred dividend payments), (iii) $2.5 billion in debt outstanding, (iv) $0.15 billion in 5.35% Preferred Stock outstanding, (v) $0.3 billion in Floating Rate Preferred Stock outstanding, and (vi) $5.4 billion of common stockholders’ equity.

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Assumed Return on Our Portfolio (net of expenses)(10)%(5)%0%5%10%
Corresponding Return to Common Stockholder(2)(18.1)%(10.5)%(2.9)%4.7%12.2%
(2) Assumes the conversion of $0.9 billion in 5.50% Preferred Stock and $0.8 billion in 6.50% Preferred Stock at a conversion rate based on the 5-day VWAP of our common stock on December 26, 2023, which was $6.15, and a Holder Optional Conversion Fee (as defined in the prospectus supplement relating to the applicable offering) of 9.00% on Series A1 Preferred Stock, Series A3 Preferred Stock, and Series AA2 Preferred Stock of the maximum public offering price disclosed within the applicable prospectus supplements. The actual 5-day VWAP of our common stock on a Holder Conversion Exercise Date may be more or less than $6.15, which may result in more or less shares of common stock issued.
The assumed portfolio return is required by regulation of the SEC and is not a prediction of, and does not represent, our projected or actual performance. Actual returns may be greater or less than those appearing in the table.
Future sales of our common stock in the public market or the issuance of securities senior to our common stock could adversely affect the trading price of our common stock and our ability to raise funds in new stock offerings, and may affect the value of the Preferred Stock.
Future sales of substantial amounts of our common stock or equity-related securities in the public market, or the perception that such sales could occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through future offerings of equity or equity-related securities, and may affect the value of the Preferred Stock. No prediction can be made as to the effect, if any, that future sales of shares of common stock or the availability of shares of common stock for future sale, will have on the trading price of our common stock or the value of the Preferred Stock.
The Preferred Stock will be subject to a risk of early redemption or conversion at our option and holders may not be able to reinvest their funds.

Subject to certain limited exceptions, we may elect to convert any outstanding share of A1/A3 Shares or M1/M2/M3 Shares at any time after it has been outstanding for two years and to redeem any outstanding shares of Preferred Stock beginning on the Redemption Eligibility Date. We also may be forced to redeem or convert some or all of the outstanding shares of Preferred Stock to meet tax and regulatory asset coverage requirements. Any such redemption or conversion may occur at a time that is unfavorable to holders of the Preferred Stock. We may have an incentive to redeem or convert the Preferred Stock if market conditions allow us to issue additional shares of Preferred Stock or debt securities at a dividend or interest rate that is lower than the dividend rate on the Preferred Stock. The possibility of early redemption or conversion at our option may also limit the potential for price appreciation in the event of a change in market conditions. We will not, however, exercise an Issuer Optional Conversion with respect to a share of A1/A3 Shares or M1/M2/M3 Shares for so long as our 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock is outstanding. See “Description of the Preferred Stock-“Redemption at the Option of the Issuer” and “Conversion at the Option of the Issuer.”

If we redeem or convert shares of the Preferred Stock, the holders of such redeemed or converted shares face the risk that the return on an investment purchased with proceeds from such redemption or conversion may be lower than the return previously obtained from the investment in Preferred Stock.

The terms of other series of preferred stock we have issued, or may issue in the future, limit or may limit our ability to exercise the Issuer Optional Conversion.

The terms of the A1/A3 Shares and M1/M2/M3 Shares permit us to exercise the Issuer Optional Conversion at any time if the Board determines, in its sole discretion, that the conversion of the A1/A3 Shares or M1/M2/M3 Shares is necessary to cause the Company to comply with the asset coverage requirements of the 1940 Act applicable to the Company, to maintain the Company's status as a RIC, to maintain or enhance one or more of the Company's credit ratings, to help comply with regulatory or other obligations, to achieve a strategic transaction, or to improve the liquidity position of the Company. However, the terms of other series of preferred stock that we have issued, or may issue in the future, provide that we will not exercise an Issuer Optional Conversion with respect to a share of A1/A3 Shares or M1/M2/M3 Shares for so long as such other series is outstanding. This could impair our ability to use the Issuer Optional Conversion as a tool to manage our leverage position, liquidity, regulatory, contractual or other obligations or to achieve our strategic objectives. Our inability to use the
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Issuer Optional Conversion as such a tool may require us to address any such matters in a different manner that may not be as advantageous as using the Issuer Optional Conversion.

Holders of the Preferred Stock will bear dividend risk.

We may be unable to pay dividends on the Preferred Stock under some circumstances. In addition, the terms of any future indebtedness we may incur could preclude the payment of dividends in respect of equity securities, including the Preferred Stock, under certain conditions.

We may be unable to invest a significant portion of the net proceeds of our offering on acceptable terms in an acceptable timeframe.
Delays in investing the net proceeds of our offering may impair our performance. We cannot assure you that we will be able to identify any investments that meet our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of our offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results. As a result, we may not have as great an ability to pay distributions while our portfolio is not fully invested in securities meeting our investment objective as we may be able to when our portfolio is fully invested in securities meeting our investment objective.
Interest Rate Risk.
The A1/A3 Shares and M1/M2/M3 Shares pay dividends at fixed rates and the Series A4 Shares and Series M4 Shares pay dividends at floating rates (subject to a minimum total dividend rate of 6.50% and a maximum total dividend rate of 8.00%). The market values of fixed income investments tend to vary inversely with changes in market yields. The market yields on securities comparable to the Preferred Stock may increase, which would likely result in a decline in the market value of the Preferred Stock if it were to be traded on a national securities exchange. Additionally, if interest rates rise, securities comparable to the Preferred Stock may pay higher dividend rates and holders of the Preferred Stock, if it were listed on a national securities exchange, may not be able to sell the Preferred Stock at the Stated Value on a national securities exchange and reinvest the proceeds at market rates. The Company may be subject to a greater risk of rising interest rates due to the current period of rising interest rates and high inflation. The Federal Reserve has aggressively raised interest rates in recent years, which is likely to drive down the prices of income or dividend-paying securities. There is a risk that interest rates may continue to rise.
Floating rate securities have risks that conventional fixed rate securities do not.
Because the interest rate of floating rate securities may be based upon the SOFR or Term SOFR, there will be significant risks not associated with conventional fixed rate securities. These risks include fluctuation of the dividend rates and the possibility that you will receive a lower amount of dividends in the future as a result of such fluctuations. We have no control over various matters that are important in determining the existence, magnitude and longevity of these risks, including economic, financial and political events.
Additionally, the dividend rate on the Series A4 Shares and Series M4 Shares only resets in connection with the Board’s declaration of dividends on such Preferred Stock. While the Board’s current practice is to declare dividends on such Preferred Stock once per quarter for the subsequent three months, which presently results in the dividend rate on the Series A4 Shares and the Series M4 Shares resetting approximately every three months, the Board may change its practice in this respect in the future. This could result in more or less frequent resets of the Series A4 Shares and Series M4 Shares dividend rate, which would impact whether the dividend rate on such Preferred Stock, at any given point in time, reflects market interest rates. If the dividend rate on the Series A4 Shares and Series M4 Shares does not reflect market interest rates, it could negatively impact the value of such Preferred Stock and investors’ ability to sell such Preferred Stock in any secondary market that my develop.

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Reform of SOFR and the regulation or discontinuation of this and other “benchmarks” may adversely affect the value of and return on any securities based on or linked to a “benchmark.”

SOFR and other indices which are deemed “benchmarks” have been the subject of recent national, international, and other regulatory guidance and reform. These reforms may cause such benchmarks to perform differently than in the past, or to be discontinued, or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on the value of and return on any notes based on or linked to a “benchmark.”

Any of the international, national or other proposals for reform or the general increased regulatory scrutiny of “benchmarks” could increase the costs and risks of administering or otherwise participating in the setting of a “benchmark” and complying with any such regulations or requirements. Such factors may have the effect of discouraging market participants from continuing to administer or participate in certain “benchmarks,” trigger changes in the rules or methodologies used in certain “benchmarks,” or lead to the disappearance of certain “benchmarks.”

Any consequential changes to SOFR or any other “benchmark” as a result of United States or other international, national, or other proposals for reform or other initiatives or investigations, or any further uncertainty in relation to the timing and manner of implementation of such changes could have a material adverse effect on the value of and return on any securities based on or linked to such “benchmark.”

SOFR has a limited history, and the future performance of SOFR cannot be predicted based on historical performance; SOFR may also be modified or discontinued.

The publication of SOFR began in April 2018, and, therefore, it has a very limited history. In addition, the future performance of SOFR cannot be predicted based on its limited historical performance. Future levels of SOFR may bear little or no relation to the historical actual or historical indicative data. Prior observed patterns, if any, in the behavior of market variables and their relation to SOFR, such as correlations, may change in the future. Because only limited historical data has been released by the Federal Reserve Bank of New York, such analysis inherently involves assumptions, estimates and approximations. The future performance of SOFR is impossible to predict and therefore no future performance of SOFR may be inferred from any of the historical actual or historical indicative data. Hypothetical or historical performance data are not indicative of, and have no bearing on, the potential performance of SOFR or any SOFR-linked securities.

SOFR is a relatively new rate, and the Federal Reserve Bank of New York (or a successor), as administrator of SOFR, may make methodological or other changes that could change the value of SOFR, including changes related to the methods by which SOFR is calculated, eligibility criteria applicable to the transactions used to calculate SOFR, or the averages or periods used to report SOFR. If the manner in which SOFR is calculated is changed, that change may result in a reduction of the amount of interest or dividends payable on SOFR securities, which may adversely affect the trading prices and marketability of those notes. The administrator of SOFR may withdraw, modify, amend, suspend or discontinue the calculation or dissemination of SOFR in its sole discretion and without notice and has no obligation to consider the interests of holders of the notes in calculating, withdrawing, modifying, amending, suspending or discontinuing SOFR.

Term SOFR has a limited history, and the future performance of Term SOFR cannot be predicted based on historical performance; Term SOFR may also be modified or discontinued.

The publication of Term SOFR began in April 2021, and, therefore, it has a limited history. In addition, the future performance of Term SOFR cannot be predicted based on its limited historical performance. Future levels of Term SOFR may bear little or no relation to the historical actual or historical indicative data. Prior observed patterns, if any, in the behavior of market variables and their relation to Term SOFR, such as correlations, may change in the future. Because only limited historical data has been released by CME Group Benchmark Administration Limited, as administrator of Term SOFR, such analysis inherently involves assumptions, estimates and approximations. The future performance of Term SOFR is impossible to predict and therefore no future performance of Term SOFR may be inferred from any of the historical actual or historical
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indicative data. Hypothetical or historical performance data are not indicative of, and have no bearing on, the potential performance of Term SOFR or any Term SOFR-linked securities.

Term SOFR is a relatively new rate, and CME Group Benchmark Administration Limited (or a successor), as administrator of Term SOFR, may make methodological or other changes that could change the value of Term SOFR, including changes related to the methods by which Term SOFR is calculated, eligibility criteria applicable to the transactions used to calculate Term SOFR, or the averages or periods used to report Term SOFR. If the manner in which Term SOFR is calculated is changed, that change may result in a reduction of the amount of interest or dividends payable on Term SOFR-linked securities, which may adversely affect the trading prices and marketability of those securities. The administrator of Term SOFR may withdraw, modify, amend, suspend or discontinue the calculation or dissemination of Term SOFR in its sole discretion and without notice and has no obligation to consider the interests of holders of the notes in calculating, withdrawing, modifying, amending, suspending or discontinuing Term SOFR. If a SOFR Transition Event occurs, the Series A4 Shares and Series M4 Shares will be subject to the Cap Rate, which will be fixed and will not be reset by reference to any benchmark. This could result in investors receiving less than a market rate of interest, which would negatively impact the value of Series A4 Shares and Series M4 Shares, or could result in us paying higher than a market rate of interest, which could negatively impact our performance and results of operations.

Any failure of SOFR to gain market acceptance could adversely affect the SOFR and Term SOFR notes.

According to the Alternative Reference Rates Committee, SOFR was developed for use in certain U.S. dollar derivatives and other financial contracts as an alternative to USD LIBOR in part because it is considered a good representation of general funding conditions in the overnight U.S. Treasury repurchase agreement market. However, as a rate based on transactions secured by U.S. Treasury securities, it does not measure bank-specific credit risk and, as a result, is less likely to correlate with the unsecured short-term funding costs of banks. This may mean that market participants would not consider SOFR a suitable substitute, replacement or successor for all of the purposes for which USD LIBOR historically has been used (including, without limitation, as a representation of the unsecured short-term funding costs of banks), which may, in turn, lessen market acceptance of SOFR. Any failure of SOFR to gain market acceptance could adversely affect the return on and value of the Series A4 Shares and Series M4 Shares, and the price at which investors may be able to sell the Series A4 Shares and Series M4 Shares in the secondary market if any such market were to exist.

Very limited market precedent exists for securities that use SOFR as the interest or dividend rate and the method for calculating an interest or dividend rate based upon SOFR in those precedents varies. In addition, if SOFR does not become widely used as a benchmark in securities that are similar or comparable to the Series A4 Shares and Series M4 Shares, the trading price of the Series A4 Shares and Series M4 Shares, if listed, may be lower than those of securities that are linked to rates that are more widely used. Similarly, market terms for floating rate securities linked to SOFR, such as the spread over the base rate reflected in interest or dividend rate provisions or the manner of compounding the base rate, may evolve over time, and trading prices of the Series A4 Shares and Series M4 Shares, if listed, may be lower than those of later-issued SOFR-based securities as a result. Investors in the Series A4 Shares and Series M4 Shares may not be able to sell the Series A4 Shares and Series M4 Shares at all or may not be able to sell the Series A4 Shares and Series M4 Shares at prices that will provide them with a return comparable to similar investments that have a developed secondary market, and may consequently suffer from increased pricing volatility and market risk.

SOFR and Term SOFR may be more volatile than other benchmark or market rates.

Since the initial publication of SOFR and Term SOFR, daily changes in the rates have, on occasion, been more volatile than daily changes in other benchmark or market rates, such as USD LIBOR, during corresponding periods. In addition, although changes in Term SOFR and simple average SOFR generally are not expected to be as volatile as changes in daily levels of SOFR, the return on, value of and market for the Series A4 Shares and Series M4 Shares may fluctuate more than floating rate income securities with interest or dividend rates based on less volatile rates. In addition, the volatility of SOFR has reflected the underlying volatility of the overnight U.S. Treasury repo market. The Federal Reserve Bank of New York has at
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times conducted operations in the overnight U.S. Treasury repo market in order to help maintain the federal funds rate within a target range. There can be no assurance that the Federal Reserve Bank of New York will continue to conduct such operations in the future, and the duration and extent of any such operations is inherently uncertain. The effect of any such operations, or of the cessation of such operations to the extent they are commenced, is uncertain and could be materially adverse to investors in the Series A4 Shares and Series M4 Shares.

Illiquidity Prior to Exchange Listing.
There is no guarantee that the Preferred Stock will be listed on a national securities exchange. From time to time, the Board will consider whether to complete a Liquidity Event. The decision of whether to complete a Liquidity Event will be at our sole discretion and will be made based on economic and market conditions at the time and the judgment of the Board as to what is in the best interests of the Company and its stockholders. Notwithstanding the foregoing, the Board may elect to list any series of the Preferred Stock on a national securities exchange or elect an Issuer Optional Conversion for the A1/A3 Shares and M1/M2/M3 Shares (subject to the limitations described herein on an Issuer Optional Conversion) at any time after issuance. If the Board elects to list the Preferred Stock on a national securities exchange, there is no guarantee that the Preferred Stock will be approved for such listing. Prior to any Liquidity Event, an investment in the Preferred Stock may be illiquid and there is no guarantee that the Board will ever determine to elect a Liquidity Event. Any listing of the Series A4 Shares or the Series M4 Shares shall require the approval of the holders of the Series A4 Shares or the Series M4 Shares, as applicable, voting as a separate class. The vote required to approve such a proposal for listing is a majority of the votes cast by the holders of Series A4 Shares or Series M4 Shares, as applicable, voting on such proposal at a meeting where a quorum of Series A4 Shares or Series M4 Shares, as applicable, is present. For purposes of voting on any such proposal to list the Series A4 Shares or Series M4 Shares, the quorum required for voting on such proposal is 33 1/3% of the outstanding Series A4 Shares or Series M4 Shares, as applicable, entitled to vote on such proposal, unless the Board by resolution establishes a higher quorum. A favorable vote on any such proposal shall be non-binding and the Board shall retain sole discretion as to whether to complete such listing.
Notice Period Prior to Issuer Optional Redemption.
There is a minimum notice period of 10 calendar days required in connection with our decision to exercise the Issuer Optional Redemption and a period of up to 18 calendar days between a Holder Conversion Deadline and the applicable Holder Conversion Exercise Date, in each case with regard to the A1/A3 Shares or M1/M2/M3 Shares. This creates a risk that holders of a series of A1/A3 Shares or M1/M2/M3 Shares intending to exercise the Holder Optional Conversion will lose the opportunity to convert their shares of A1/A3 Shares or M1/M2/M3 Shares if we provide notice that we intend to exercise the Issuer Optional Redemption after a holder of A1/A3 Shares or M1/M2/M3 Shares submits a Holder Conversion Notice and prior to the applicable Holder Conversion Exercise Date.
Market Price Fluctuation and Reinvestment Risk.
From time to time, the Board will consider whether to list the Preferred Stock on a national securities exchange. The decision of whether to list or convert the Preferred Stock will be at our sole discretion and will be made based on economic and market conditions at the time and the judgment of the Board as to what is in the best interests of the Company and its stockholders. Notwithstanding the foregoing, the Board may elect to list the Preferred Stock on a national securities exchange or elect an Issuer Optional Conversion for the A1/A3 Shares or the M1/M2/M3 Shares (subject to the limitations described herein on an Issuer Optional Conversion) at any time after issuance. Subject to certain limited exceptions allowing earlier redemption, beginning on the two year anniversary of the date on which a share of Series A4 Shares or Series M4 Shares has been issued, and for listed shares of Series A4 Shares or Series M4 Shares, two years from the earliest date on which any series that has been listed was first issued, such share of Series A4 Shares or Series M4 Shares may be redeemed at any time or from time to time at our option upon not less than 10 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for redemption thereof, at a redemption price of 100% of the Stated Value of the shares of Series A4 Shares or Series M4 Shares to be redeemed plus unpaid dividends accrued to, but not including, the date fixed for redemption.
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We cannot predict the prices at which shares of the Preferred Stock would trade if listed on a national securities exchange. To the extent the Preferred Stock is listed on a national securities exchange, such Preferred Stock may trade at a premium to or discount from liquidation value for various reasons, including changes in interest rates, perceived credit quality and other factors.
Moreover, the Preferred Stock is redeemable at our option at various intervals following the issuance date as described herein. We may choose to redeem or convert (if applicable) Preferred Stock at times when prevailing interest rates are lower than the dividend rate paid on such Preferred Stock. In this circumstance holders of Preferred Stock may not be able to reinvest their redemption or conversion proceeds at an effective rate as high as their redeemed or converted Preferred Stock..

Shares of common stock, which shares of A1/A3 Shares or M1/M2/M3 Shares may be converted into, rank junior to the Preferred Stock with respect to dividends and upon liquidation.

We may choose to convert the A1/A3 Shares or M1/M2/M3 Shares to shares of our common stock (subject to the limitations described herein on an Issuer Optional Conversion). Holders of A1/A3 Shares or M1/M2/M3 Shares may also choose to convert their A1/A3 Shares or M1/M2/M3 Shares, subject to our election to settle conversions in cash or shares of our common stock or a combination thereof. The rights of the holders of shares of Preferred Stock rank senior to the rights of the holders of shares of our common stock as to dividends and payments upon liquidation. Unless full cumulative dividends on our shares of Preferred Stock for all past dividend periods have been declared and paid (or set apart for payment), we will not declare or pay dividends with respect to any shares of our common stock for any period. Upon liquidation, dissolution or winding up of the Company, the holders of shares of our Preferred Stock are entitled to receive the Stated Value of $25.00 per share, plus an amount equal to any accumulated, accrued and unpaid dividends at the applicable rate, after provision is made for our senior liabilities, but prior and in preference to any distribution to the holders of shares of our common stock or any other class of our equity securities junior to our Preferred Stock.

We may issue shares of our common stock in offerings other than the offering described in this prospectus supplement and we may also issue additional preferred stock or debt securities that are convertible into shares of our common stock.

We may issue shares of common stock in one or more offerings other than those described in this prospectus supplement. In addition, we may issue additional preferred stock or debt securities that are convertible into shares of our common stock. The net effect of both types of offerings would be to increase the number of shares of our common stock outstanding or available, which could negatively impact the market price of our common stock and cause the market value of our common stock to become more volatile. Given that the A1/A3 Shares and M1/M2/M3 Shares are convertible into common stock, it may also impact the value of our Preferred Stock (including the market value following any listing). Further, to the extent that shares of our common stock are offered or converted at a price below the then net asset value per share, existing stockholders who do not participate in such offerings would experience dilution of their interest (both voting and economic, in terms of net asset value) in the Company.

Redemption Following Death of a Holder may be limited in amount.

We will have a discretionary right to limit the aggregate liquidation preference of Preferred Stock subject to redemption following the death of a beneficial owner that may be exercised in any calendar year to an amount equal to the greater of $10 million or 5% of all Preferred Stock outstanding as of the end of the most recent calendar year. Accordingly, no assurance can be given that exercise of a redemption following the death of a beneficial owner for the desired amount will be permitted in any single calendar year.

Redemption of our Series A4 Shares and Series M4 Shares at the Holder’s option is limited.

The aggregate amount of Holder Optional Redemptions by the holders of Series A4 Shares and Series M4 Shares will be subject to the following redemption limits: (i) no more than 2% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per calendar month; (ii) no more than 5% of the
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outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per fiscal quarter; and (iii) no more than 20% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per Annual Redemption Period. An "Annual Redemption Period" means our then current fiscal quarter and the three fiscal quarters immediately preceding our then current fiscal quarter. We may waive the foregoing redemption limits in our sole discretion at any time.

Redemptions pursuant to an Issuer Optional Redemption will not count toward the 2% / 5% / 20% limits above applied to Holder Optional Redemptions by holders of the Series A4 Shares and Series M4 Shares. Optional redemptions following death of a holder (as described below) will count toward the 2% / 5% / 20% limits above but will not be subject to such limits.

Moreover, redemptions can only be submitted once per month and we have the option to settle such redemptions up to the Holder Redemption Deadline occurring two months thereafter. Holders of Series A4 Shares and Series M4 Shares may thus experience a significant delay in receiving redemption proceeds.

Special Risks to Holders of Preferred Stock
Common Stock Repurchases. Repurchases of common stock by the Company may reduce the asset coverage of the Preferred Stock, which could adversely affect their liquidity or market prices.
Common Stock Distribution Policy. In the event the Company does not generate a total return from dividends and interest received and net realized capital gains in an amount at least equal to its distributions for a given year, the Company may return capital as part of its distribution. This would decrease the asset coverage per share with respect to the Preferred Stock, which could adversely affect their liquidity or market prices.
Credit Quality Ratings. Series A1/A3 Shares and the Series M1/M2/M3 Shares have been rated BB by S&P and BBB- by Egan-Jones. These credit ratings could be reduced or withdrawn while an investor holds such Preferred Stock. A reduction or withdrawal of the credit rating would likely have an adverse effect on the market value of the Series A1/A3 Shares and the Series M1/M2/M3 Shares following a listing. In addition, a credit rating does not eliminate or mitigate the risks of investing in the Series A1/A3 Shares and the Series M1/M2/M3 Shares.
1940 Act Risks. We have obtained stockholder approval under Section 63 of the 1940 Act to sell shares of common stock below net asset value until June 9, 2024. We believe that pursuant to this approval any shares of A1/A3 Shares or M1/M2/M3 Shares sold prior to June 9, 2024 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate at any time, including after June 9, 2024. We believe any shares of A1/A3 Shares or M1/M2/M3 Shares sold after June 9, 2024 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate only if we have obtained stockholder approval for the period in which such shares of A1/A3 Shares or M1/M2/M3 Shares were sold if the 5-day VWAP results in a price below net asset value.
The application of Section 63 of the 1940 Act with respect to the conversion of A1/A3 Shares or M1/M2/M3 Shares under the Issuer Optional Conversion is unclear. It is possible the SEC will assert a position that stockholder approval to issue shares of common stock below net asset value must be obtained for the year in which the Issuer Optional Conversion is exercised, instead of the time at which the A1/A3 Shares or M1/M2/M3 Shares are sold. If the SEC asserted this position and prevailed, we would be required to obtain stockholder approval under the 1940 Act for the years in which we exercise the Issuer Optional Conversion. Obtaining this approval may cause us to incur additional costs and there can be no assurance such stockholder approval will be obtained. If we cannot obtain stockholder approval required by the 1940 Act to issue shares of common stock below net asset value at the time of an Issuer Optional Conversion, then the Issuer Optional Conversion will be effected at a conversion rate equal to:

any portion of the IOC Settlement Amount that we elect to pay in cash; and
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a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion.

Additional Risks of Notes to Holders of Preferred Stock
In addition to our obligations under our Revolving Credit Facility, we currently have the following notes outstanding: 2025 Notes, 6.375% 2024 Notes, 2026 Notes, 3.364% 2026 Notes, 3.437% 2028 Notes and Prospect Capital InterNotes® (together, the “Notes”). We may in the future issue additional Notes. Our obligations to pay dividends or make distributions and, upon liquidation of the Company, liquidation payments in respect of the Preferred Stock is subordinate to our obligations to make any principal and interest payments due and owing with respect to its outstanding Notes. Accordingly, our Notes have the effect of creating special risks for our preferred stockholders that would not be present in a capital structure that did not include such securities.

Senior securities, including debt and preferred stock, expose us to additional risks, including the typical risks associated with leverage and could adversely affect our business, financial condition and results of operations.

We currently use our revolving credit facility to leverage our portfolio and we expect in the future to borrow from and issue senior debt securities to banks and other lenders and may securitize certain of our portfolio investments. We also have the unsecured notes outstanding, which are a form of leverage and are senior in payment rights to our common stock.

With certain limited exceptions, as a BDC, we are only allowed to borrow amounts or otherwise issue senior securities such that our asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing or other issuance. The amount of leverage that we employ will depend on the Investment Adviser’s and the Board’s assessment of market conditions and other factors at the time of any proposed borrowing. There is no assurance that a leveraging strategy will be successful. Leverage involves risks and special considerations for stockholders, any of which could adversely affect our business, financial condition and results of operation.

The Small Business Credit Availability Act (the “SBCAA”), which was signed into law in March 2018, decreased the asset coverage requirements of the 1940 Act applicable to BDCs from 200% to 150% (subject to either stockholder approval or approval of both a majority of the Board and a majority of directors who are not interested persons). On March 30, 2020, the Board approved, and on May 5, 2020, at a special meeting of our stockholders, our stockholders approved, the application to us of the reduced asset coverage requirements in Section 61(a) of the 1940 Act. The application of the reduced asset coverage requirement, which became effective on May 6, 2020, permits us, provided certain requirements are satisfied, to double the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirement applicable to us from 200% to 150% (a 2:1 debt to equity ratio, as opposed to a 1:1 debt to equity ratio), as provided for in Section 61(a)(2) of the 1940 Act, a successor provision to Section 61(a)(1) of the 1940 Act (see "Illustration of Impact of Leverage" above).

Compliance with the SEC’s Regulation Best Interest by participating broker-dealers may negatively impact our ability to raise capital in this offering, which could harm our ability to achieve our investment objectives.

Broker-dealers are required to comply with Regulation Best Interest, which, among other requirements, enhances the existing standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. The full impact of Regulation Best Interest on broker-dealers participating in our offering cannot be determined at this time, and it may negatively impact whether participating broker-dealers and their associated persons recommend this offering to certain retail customers. Regulation Best Interest imposes a duty of care for broker-dealers to evaluate reasonable alternatives in the best interests of their clients. Reasonable alternatives to the Fund exist and may be less costly or have a lower investment risk. Certain alternatives in listed entities may involve lower or no commissions at the initial time of purchase. Under Regulation Best Interest, broker-dealers participating in our offering must consider whether such alternatives are in the best interests of their clients. Broker-dealers may recommend a more costly or complex product as long as they have a reasonable basis to
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believe is in the best interest of a particular retail customer. If Regulation Best Interest reduces our ability to raise capital in this offering, it may harm our ability to achieve our objectives.

Risks Relating to Our Common Stock
Because the A1/A3 Shares and M1/M2/M3 Shares may be converted into shares of common stock, holders who exercise their option to convert A1/A3 Shares or M1/M2/M3 Shares into shares of common stock, or whose shares of A1/A3 Shares or M1/M2/M3 Shares are converted into common stock at our option, will be subject to the risks of an investment in our common stock. These risks are reflected in the risk factors included in our Form 10-Q and Form 10-K filings with the SEC. See “Incorporation By Reference.”
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DESCRIPTION OF THE PREFERRED STOCK
The following description is only a summary of the material provisions of the Preferred Stock. We urge you to read the Articles Supplementary for the Preferred Stock in its entirety because it, and not this description, defines your rights as a holder of the Preferred Stock. You may request copies of these documents as set forth under the caption “Available Information”.
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.
Brief Description of the Preferred Stock

Our authorized capital stock consists of 2,000,000,000 shares of stock, par value $0.001 per share, consisting of 1,352,100,000 classified as common stock, par value $0.001 per share, and 647,900,000 of convertible preferred stock, par value $0.001 per share, of which 80,000,000 have been classified and designated as Series A1 Shares, 80,000,000 have been classified and designated as Series A3 Shares, 80,000,000 have been classified and designated as Series A4 Shares, 80,000,000 have been classified and designated as Series M1 Shares, 80,000,000 have been classified and designated as Series M2 Shares, 80,000,000 have been classified and designated as Series M3 Shares, and 80,000,000 have been classified and designated as Series M4 Shares. The Preferred Stock will be issued in multiple series, including the Series A1 Shares, the Series A3 Shares, the Series A4 Shares, the Series M1 Shares, the Series M2 Shares, the Series M3 Shares, and the Series M4 Shares. The A1/A3 Shares, the Series A4 Shares, the M1/M2/M3 Shares, and the Series M4 Shares will be sold at each bi-weekly closing pursuant to this offering. We are offering only the A1/A3 Shares, the Series A4 Shares, the M1/M2/M3 Shares, and the Series M4 Shares by this prospectus supplement. If, in the future, we offer any additional series of preferred stock, the dividend rate, fees and expenses of such future series may vary from those of the other series of preferred shares offered by this prospectus supplement and such future series will be offered under a revised or a separate prospectus supplement.

The following is a brief description of the terms of the Preferred Stock. The description of the Preferred Stock contained herein does not purport to be complete and is qualified in its entirety by reference to the Articles Supplementary for our Preferred Stock, which have been filed with the SEC and are incorporated by reference as an exhibit to the registration statement, of which this prospectus is a part.

Rank. With respect to dividend rights and rights upon our liquidation, winding-up or dissolution:

the Preferred Stock rank senior to our common stock;

the Preferred Stock is on parity with each other series of our preferred stock, including any other series of Preferred Stock; and

the Preferred Stock rank junior to all our existing and future debt obligations.

As of December 26, 2023, we and our subsidiaries had approximately $1.6 billion of unsecured senior indebtedness outstanding and $970.2 million of secured indebtedness outstanding.

Offering Price and Stated Value. Each share of Preferred Stock will have an offering price ranging from $22.50 to $25.00 per share and a Stated Value of $25.00, plus accrued and unpaid dividends. See “Plan of Distribution.”

Dividends. The holders of shares of Series A1 Shares, Series M1 Shares and Series M2 Shares are entitled to receive, when, as and if authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share of such series of Preferred Stock at an annual rate of 5.50% per annum of the Stated Value for each share of Series A1 Shares, Series M1 Shares and Series M2 Shares, computed on the basis of a 360-day year consisting of twelve 30-day months. The holders of shares of Series A3 Shares and Series M3 Shares are entitled to receive, when, as and if authorized by the Board
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and declared by us out of legally available funds, cumulative cash dividends on each share of such series of Preferred Stock at an annual rate of 6.50% per annum of the Stated Value for each share of Series A3 Shares and Series M3 Shares, computed on the basis of a 360-day year consisting of twelve 30-day months. The holders of shares of Series A4 Shares and Series M4 Shares are entitled to receive, when, as and if authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share of such series of Preferred Stock at an annualized floating rate equal to one-month Term SOFR (as defined below) plus 2.00%, subject to a minimum annualized dividend rate of 6.50% (the “Cap Rate”) and a maximum annualized dividend rate of 8.00%, of the Stated Value for each share of Series A4 Shares and Series M4 Shares, computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends on the Preferred Stock are payable in cash or in additional shares of Preferred Stock pursuant to the terms of any dividend reinvestment plan we may adopt for the Preferred Stock.
Dividends on each share of Preferred Stock begin accruing on, and are cumulative from, the date of issuance or, if later, from the most recent date on which dividends have been paid in full. Any such dividends are payable monthly on the first day of the month following the month for which the dividend was declared (or the next Business Day if the first day is not a Business Day) (each, a “Dividend Payment Date”) to holders of record of the Preferred Stock at the close of business on the date designated by the Board as the record date for such Dividend Payment Date, which shall be a date not more than 20 days or less than 7 days prior to the applicable Dividend Payment Date. Dividends on account of arrears for any past dividend period may be declared and paid at any time, without reference to any scheduled dividend payment date, to holders of record on such date. The timing and amount of such dividends will be determined by, or under authority granted by, the Board, and may vary from time to time. Any dividend payment made on the Preferred Stock will first be credited against the dividends accumulated with respect to the earliest dividend period for which dividends have not been paid.
Holders of our shares of Preferred Stock are not entitled to any dividend in excess of full cumulative dividends on our shares of Preferred Stock. Unless full cumulative dividends on our shares of Preferred Stock for all past dividend periods have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment, we will not declare and pay or declare and set apart for payment dividends and we will not declare and make any other distribution of cash or other property, directly or indirectly, on or with respect to any shares of our common stock or repurchase, redeem or otherwise acquire for consideration any shares of our common stock.
The floating dividend rate on the Series A4 Shares and Series M4 Shares will reset upon each dividend declaration by the Board, and will reset to the applicable rate as determined two U.S. Government Securities Business Days (as defined below) prior to such declaration, as adjusted for the terms herein. The Board presently declares dividends on the Preferred Stock once per quarter for the subsequent three months. Therefore, the applicable floating dividend rate on the Series A4 Shares and Series M4 Shares is presently expected to reset approximately once every three months, and the Dividend Period (as defined below) for the Series A4 Shares and Series M4 Shares is presently expected to run from and including the Dividend Payment Date following each such declaration, to but excluding the fourth Dividend Payment Date following such declaration (e.g., if the Board, in November, declares dividends for December, January and February, the Dividend Period will run from and including December 1, to but excluding March 1).

If we are then offering a series of A1/A3 Shares or M1/M2/M3 Shares with a higher dividend rate than any other series of A1/A3 Shares or M1/M2/M3 Shares, respectively, we and the dealer manager will treat any subscriptions submitted for a corresponding series of A1/A3 Shares or M1/M2/M3 Shares with a lower dividend rate as a subscription for the corresponding series of A1/A3 Shares or M1/M2/M3 Shares with the higher dividend rate. For example, if we are then offering the Series A3 Shares, we will treat any subscriptions submitted for Series A1 Shares as subscriptions for Series A3 Shares.

Term SOFR” means, with respect to any Dividend Period: (a) the Term SOFR Reference Rate for a one-month tenor determined on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the date of declaration of dividends on the Series A4 Shares and Series M4 Shares, as such rate is published by the Term SOFR Administrator; or (b) if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a SOFR Rate Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first
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preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day.

For purposes of the foregoing relating to the determination of Term SOFR:

Term SOFR Reference Rate” means the forward-looking term rate based on the Secured Overnight Financing Rate published by the Term SOFR Administrator.

Dividend Period” means the period of time from and including a Dividend Payment Date (or the date of issuance) to, but not including, the next Dividend Payment Date following a dividend declaration by the Board.

Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.

Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate).

U.S. Government Securities Business Day” is any day other than a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. Government securities.

Other capitalized terms used in the foregoing provisions relating to the determination of Term SOFR have the meanings described under “Effect of a SOFR Rate Transition Event.”

Effect of a SOFR Rate Transition Event:

If we or our designee determines that a SOFR Rate Transition Event and its related SOFR Rate Replacement Date have occurred in respect of any determination of Term SOFR on any date, the Cap Rate will replace Term SOFR for all purposes in respect of such determination on such date and all determinations on all subsequent dates.

SOFR Rate Replacement Date” means the earliest to occur of the following events with respect to Term SOFR:

(1)in the case of clause (1) of the definition of “SOFR Rate Transition Event,” the date of the determination referenced therein; or
(2)in the case of clause (2) or (3) of the definition of “SOFR Rate Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Term SOFR permanently or indefinitely ceases to provide the Term SOFR; or
(3)in the case of clause (4) of the definition of “SOFR Rate Transition Event,” the date of the public statement or publication of information referenced therein.

SOFR Rate Transition Event” means the occurrence of one or more of the following events with respect to Term SOFR:

(1)we or our designee, after consulting with us, determines that the use of a forward-looking rate for the tenor specified based on Term SOFR is not administratively feasible;
(2)a public statement or publication of information by or on behalf of the administrator of the Term SOFR announcing that such administrator has ceased or will cease to provide the Term SOFR, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Term SOFR;
(3)a public statement or publication of information by the regulatory supervisor for the administrator of the Term SOFR, the central bank for the currency of the Term SOFR, an insolvency official with jurisdiction over the administrator for the Term SOFR, a resolution authority with jurisdiction over the administrator for the Term SOFR or a court or an entity with similar insolvency or resolution authority over the administrator for the Term SOFR, which states that the
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administrator of the Term SOFR has ceased or will cease to provide the Term SOFR permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Term SOFR ; or
(4)a public statement or publication of information by the regulatory supervisor for the administrator of the Term SOFR announcing that the Term SOFR is no longer representative.

Additional Information About SOFR

In general, the discussion in this “Additional Information About SOFR” section relating to SOFR is based on information available on the SOFR Administrator’s Website. SOFR is published by the Federal Reserve Bank of New York (FRBNY) and is intended to be a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. FRBNY reports that SOFR “includes all trades in the Broad General Collateral Rate plus bilateral Treasury repurchase agreement (repo) transactions cleared through the Delivery-versus-Payment (DVP) service offered by the Fixed Income Clearing Corporation (FICC), which is filtered to remove a portion of transactions considered ‘specials’”. FRBNY further notes that “specials are repos for specific-issue collateral, which take place at cash-lending rates below those for general collateral repos because cash providers are willing to accept a lesser return on their cash in order to obtain a particular security.” FRBNY further reports “SOFR is calculated as a volume-weighted median of transaction-level tri-party repo data collected from the Bank of New York Mellon as well as GCF Repo transaction data and data on bilateral Treasury repo transactions cleared through FICC's DVP service, which are obtained from the U.S. Department of the Treasury’s Office of Financial Research (OFR). Each business day, the New York Fed publishes the SOFR on the New York Fed website at approximately 8:00 a.m. ET.” FRBNY notes that it obtains information from DTCC Solutions LLC, an affiliate of DTCC.

FRBNY currently publishes SOFR daily on its website at https://apps.newyorkfed.org/markets/autorates/sofr. FRBNY states on its publication page for SOFR that use of SOFR is subject to important disclaimers, limitations and indemnification obligations, including that FRBNY may alter the methods of calculation, publication schedule, rate revision practices or availability of SOFR at any time without notice.

Each U.S. government securities business day, the FRBNY publishes SOFR on its website at approximately 8:00 a.m., New York City time. If errors are discovered in the transaction data provided by The Bank of New York Mellon or DTCC Solutions LLC, or in the calculation process, subsequent to the initial publication of SOFR but on that same day, SOFR and the accompanying summary statistics may be republished at approximately 2:30 p.m., New York City time. Additionally, FRBNY notes “if transaction data from The Bank of New York Mellon or DTCC Solutions LLC had previously not been available in time for publication, but became available later in the day, the affected rate or rates may be republished at around this time. Rate revisions will only be effected on the same day as initial publication and will only be republished if the change in the rate exceeds one basis point. Any time a rate is revised, a footnote to the FRBNY’s publication would indicate the revision. This revision threshold will be reviewed periodically by the FRBNY and may be changed based on market conditions.”

With respect to the Series A4 Shares and Series M4 Shares, Term SOFR is a forward-looking SOFR rate and is not administered by FRBNY. Term SOFR is published and administered by CME Group Benchmark Administrated Limited.

The Company shall not be under any obligation to monitor, determine or verify the unavailability or cessation of SOFR or Term SOFR, or whether or when there has occurred, or to give notice to any other transaction party of the occurrence of , any SOFR Rate Transition Event or SOFR Rate Replacement Date.
The Company shall not be responsible or liable for the actions or omissions of the designee or any failure or delay in the performance of its duties or obligations, nor shall they be under any obligation to oversee or monitor its performance; and the Company shall be entitled to rely conclusively upon, any determination made, and any instruction, notice, officer certificate, or other instrument or information provided, by the designee, without independent verification, investigation or inquiry of any kind by the Company.
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Conversion at the Option of the Holder. At any time prior to the listing of the A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, shares of the A1/A3 Shares and M1/M2/M3 Shares will be convertible, at the option of the holder of the A1/A3 Shares or M1/M2/M3 Shares (the “Holder Optional Conversion”) as follows:

Holder Conversion Notice: Holders of A1/A3 Shares or M1/M2/M3 Shares may elect to convert their shares of A1/A3 Shares or M1/M2/M3 Shares at any time by delivering to Preferred Shareholder Services a notice of conversion (the “Holder Conversion Notice”)
Holder Conversion Deadline: A Holder Conversion Notice will be effective as of:
the 15th day of the month (or, if the 15th day of the month is not a business day, then on the business day immediately preceding the 15th day) or
the last business day of the month,

whichever occurs first after a Holder Conversion Notice is duly received by Preferred Shareholder Services (each such date, a “Holder Conversion Deadline”). Any Holder Conversion Notice received after 5:00 p.m. Eastern time on a Holder Conversion Deadline will be effective as of the next Holder Conversion Deadline.

Holder Conversion Exercise Date: For all shares of A1/A3 Shares or M1/M2/M3 Shares duly submitted to us for conversion on or before a Holder Conversion Deadline, we will determine the Settlement Amount (defined below) on any business day after such Holder Conversion Deadline but before the next Holder Conversion Deadline (such date, the “Holder Conversion Exercise Date”). Within such period, we may select the Holder Conversion Exercise Date in our sole discretion. We may, in our sole discretion, permit a holder to revoke their Holder Conversion Notice at any time prior to 5:00 pm, Eastern time, on the business day immediately preceding the Holder Conversion Exercise Date.
With respect to any conversion of the A1/A3 Shares or M1/M2/M3 Shares, we may elect, at our sole discretion and subject to the restrictions and limitations described herein, to pay any portion (or no portion) of the amount owed in cash and settle the remaining portion in shares of our common stock. We will not pay any portion of the conversion proceeds for a share of A1/A3 Shares or M1/M2/M3 Shares from a Holder Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the five year anniversary of the date on which such share of A1/A3 Shares or M1/M2/M3 Shares has been issued, unless our Board determines, in its sole discretion, that the issuance of common stock in satisfaction of a Holder Optional Conversion would be materially detrimental to, and not in the best interest of, existing common stockholders. Beginning on the five year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares is issued, we may elect to settle all or a portion of any Holder Optional Conversion in cash without limitation or restriction.
An A1/A3 Share is subject to a Holder Optional Conversion Fee if it is converted by its holder within five years of its issuance. The amount of the fee equals a percentage of the Offering Price disclosed herein based on the year in which the conversion occurs after an A1/A3 Share is issued as follows:
Prior to the first anniversary of the issuance of such Preferred Stock: 9.00% of the maximum public offering price disclosed herein, which equals $2.25 per A1/A3 Share;
On or after the first anniversary but prior to the second anniversary: 8.00% of the maximum public offering price disclosed herein, which equals $2.00 per A1/A3 Share;
On or after the second anniversary but prior to the third anniversary: 7.00% of the maximum public offering price disclosed herein, which equals $1.75 per A1/A3 Share;
On or after the third anniversary but prior to the fourth anniversary: 6.00% of the maximum public offering price disclosed herein, which equals $1.50 per A1/A3 Share;
On or after the fourth anniversary but prior to the fifth anniversary 5.00% of the maximum public offering price disclosed herein, which equals $1.25 per A1/A3 Share; and
On or after the fifth anniversary: 0.00%.
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We are permitted to waive the Holder Optional Conversion Fee through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Conversion during the pendency of the term of such waiver. Although we have retained the right to waive the Holder Optional Conversion Fee in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.
We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP.
For the A1/A3 Shares, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the A Share Holder Optional Conversion Fee applicable on the respective Holder Conversion Deadline.
For the M1/M2/M3 Shares, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, but if a holder of M1/M2/M3 Shares exercises a Holder Optional Conversion within the first twelve months of issuance of such M1/M2/M3 Shares, the Settlement Amount payable to such holder will be reduced by the aggregate amount of all dividends, whether paid or accrued, on such M1/M2/M3 Shares in the three full months prior to the Holder Conversion Exercise Date, if any (such amount, the “M1/M2/M3 Shares Clawback”). We are permitted to waive the M1/M2/M3 Shares Clawback through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Conversion during the pendency of the term of such waiver. Although we have retained the right to waive the M1/M2/M3 Shares Clawback in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.

The following table is intended to assist investors in understanding the stated value and liquidation preference of a share of A1/A3 Shares or M1/M2/M3 Shares, after factoring in upfront and ongoing fees, and the impact of the Holder Optional Conversion on the Settlement Amount of such share of A1/A3 Shares or M1/M2/M3 Shares if exercised within five years of the issuance of such share of A1/A3 Shares or M1/M2/M3 Shares. This table provides only a summary of certain features of the A1/A3 Shares or M1/M2/M3 Shares. Please also refer to “Fees and Expenses.”

Impact at Purchase and Every Year of Ownership
Stated ValueDividend Rate
Stated Value (determined annually)(1)$25.006.50%
Stated Value after Upfront Fees(2)$25.006.50%
Stated Value after Ongoing Fees(2)$25.006.50%
Impact of Holder Optional Conversion on the Settlement
Amount of a Share of A1/A3 Shares or M1/M2/M3 Shares(3)
A1/A3 ShareM1/M2/M3 Share
Year 1$22.75$25.00(4)
Year 2$23.00$25.00
Year 3$23.25$25.00
Year 4$23.50$25.00
Year 5$23.75$25.00
After Year 5 and Beyond$25.00$25.00
(1)The Stated Value is expected to be determined annually by the Company solely for the purpose of facilitating participating broker dealers’ compliance with FINRA Rule 2231.
(2)The sales and offering expenses are borne by the Company. See “Fees and Expenses.”
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(3)In addition, will include unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date.
(4)The Settlement Amount payable to an M1/M2/M3 Share holder who exercises the Holder Optional Conversion will include any accrued and unpaid dividends, but will be reduced by the M1/M2/M3 Shares Clawback.
We will determine the 5-day VWAP by reference to the daily per share volume-weighted average price of our common stock (for each trading day during the relevant five consecutive trading day period) as displayed under the heading “Bloomberg VWAP” on Bloomberg page PSEC <equity> AQR (or its equivalent successor if such page is not available) in respect of the daily period from the scheduled opening time of the exchange to the scheduled closing time of the exchange (or if such volume-weighted average price is unavailable, we will determine the 5-day VWAP in good faith and in a commercially reasonable manner). If, as of any date of determination of the 5-day VWAP, the common stock is not listed or quoted on a national securities exchange or automated quotation system, references to the 5-day VWAP will instead refer to the last quoted bid price for the common stock in the over-the-counter market as reported by OTC Markets Group Inc. or any similar organization, or, if that bid price is not available, the market price of the common stock on that date as determined by an independent financial advisor retained by the Company for such purpose.
We do not need stockholder approval in order to issue shares of common stock based on a conversion rate that is below the NAV per share of common stock in connection with a Holder Optional Conversion.
In the event that we provide notice of our intent to exercise the Issuer Optional Conversion or Issuer Optional Redemption with respect to shares of A1/A3 Shares or M1/M2/M3 Shares for which a holder has provided a Holder Conversion Notice, such holder may revoke its notice with respect to such shares of A1/A3 Shares or M1/M2/M3 Shares by delivering, prior to the applicable Holder Conversion Exercise Date, a written notice of revocation to the Company. In the event that we exercise an Issuer Optional Conversion with respect to any shares of A1/A3 Shares or M1/M2/M3 Shares, the holder of such A1/A3 Shares or M1/M2/M3 Shares may instead elect a Holder Optional Conversion (which would be effected at the 5-day VWAP, which may represent a discount to the NAV per share of the common stock on the date of the conversion) provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for the Issuer Optional Conversion (which may be effected at a conversion rate based on the NAV per share of the common stock on the date of conversion). See “Conversion at the Option of the Issuer,” “Liquidity Event” and “Listing” below.
The Series A4 Shares and Series M4 Shares are not convertible.
Redemption at the Option of the Holder. At any time prior to the listing of the Series A4 Shares or Series M4 Shares on a national securities exchange, shares of the Series A4 Shares and Series M4 Shares will be redeemable, at the option of the holder of the Series A4 Shares or Series M4 Shares (the “Holder Optional Redemption”) as follows:
Holder Redemption Notice: Holders of Series A4 Shares or Series M4 Shares may elect to redeem their shares of Series A4 Shares or Series M4 Shares at any time by delivering to Preferred Shareholder Services a notice of conversion (the “Holder Redemption Notice”)

Holder Redemption Deadline: A Holder Redemption Notice will be effective as of the last business day of the month after a Holder Redemption Notice is duly received by Preferred Shareholder Services (each such date, a “Holder Redemption Deadline”). Any Holder Redemption Notice received after 5:00 p.m. Eastern time on a Holder Redemption Deadline will be effective as of the next Holder Redemption Deadline.

Holder Redemption Exercise Date: For all shares of Series A4 Shares or Series M4 Shares duly submitted to us for redemption on or before a Holder Redemption Deadline, we will determine the HOR Settlement Amount (defined below) on any business day after such Holder Redemption Deadline but before the Holder Redemption Deadline occurring two months thereafter (such date, the “Holder Redemption Exercise Date”). Within such period, we may select the Holder Redemption Exercise Date in our sole discretion. We may, in our sole discretion, permit a holder to revoke their Holder Redemption Notice at any time prior to 5:00 pm, Eastern time, on the business day immediately preceding the Holder Redemption Exercise Date.
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With respect to any redemption of the Series A4 Shares or Series M4 Shares, we will, subject to the restrictions and limitations described herein, pay the amount owed in cash.
A Series A4 Share is subject to a Holder Optional Redemption Fee if it is redeemed by its holder within five years of its issuance. The amount of the fee equals a percentage of the Offering Price disclosed herein based on the year in which the redemption occurs after the Series A4 Share is issued as follows:
Prior to the third anniversary of the issuance of such Preferred Stock: 10.00% of the maximum public offering price disclosed herein, which equals $2.50 per Series A4 Share;
On or after the third anniversary but prior to the fourth anniversary: 8.00% of the maximum public offering price disclosed herein, which equals $2.00 per Series A4 Share;
On or after the fourth anniversary but prior to the fifth anniversary 5.00% of the maximum public offering price disclosed herein, which equals $1.25 per Series A4 Share; and
On or after the fifth anniversary: 0.00%.
We are permitted to waive the Holder Optional Redemption Fee through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Series A4 Shares qualifying for the waiver and exercising a Holder Optional Redemption during the pendency of the term of such waiver. Although we have retained the right to waive the Holder Optional Redemption Fee in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.
We will settle any Holder Optional Redemption by paying the HOR Settlement Amount (as defined below) in cash.
For the Series A4 Shares, “HOR Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date, minus (C) the Series A4 Share Holder Optional Redemption Fee applicable on the respective Holder Redemption Deadline.
For the Series M4 Shares, “HOR Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date, but if a holder of Series M4 Shares exercises a Holder Optional Redemption within the first twenty-four months of issuance of such Series M4 Shares, the HOR Settlement Amount payable to such holder will be reduced by (i) during the first twelve months of issuance of such Series M4 Shares, the aggregate amount of all dividends, whether paid or accrued, on such M4 Shares in the six-month period prior to the Holder Redemption Exercise Date, and (ii) during the second twelve months of issuance of such Series M4 Shares, the aggregate amount of all dividends, whether paid or accrued, on such M4 Shares in the three-month period prior to the Holder Redemption Exercise Date (such amount, the “Series M4 Shares Clawback”). We are permitted to waive the Series M4 Shares Clawback through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Series M4 Shares qualifying for the waiver and exercising a Holder Optional Redemption during the pendency of the term of such waiver. Although we have retained the right to waive the Series M4 Shares Clawback in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.

In addition, the aggregate amount of Holder Optional Redemptions by the holders of Series A4 Shares and Series M4 Shares will be subject to the following redemption limits: (i) no more than 2% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per calendar month; (ii) no more than 5% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent fiscal quarter will be redeemed per fiscal quarter; and (iii) no more than 20% of the outstanding Series A4 Shares and Series M4 Shares, in aggregate, as of the end of the most recent quarter will be redeemed per Annual Redemption Period. An "Annual Redemption Period" means our then current fiscal quarter and the three fiscal quarters immediately preceding our then current fiscal quarter.

Redemptions pursuant to an Issuer Optional Redemption will not count toward the 2% / 5% / 20% limits above applied to Holder Optional Redemptions by holders of the Series A4 Shares and Series M4 Shares. Optional redemptions following death of a holder (as described below) will count toward the 2% / 5% / 20% limits above but will not be subject to such limits.

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If, after applying the redemption limits above, a holder would own less than one share of Series A4 Shares or Series M4 Shares, all of such holder’s shares of Series A4 Shares or Series M4 Shares, as applicable, will be redeemed. Otherwise, all redemption amounts will be rounded down such that after giving effect to any Holder Optional Redemption, no holder is left owning a fractional share. For example, if after applying the redemption limits, an investor would own 2.5 shares, we will redeem 0.5 fewer shares from such holder so that the holder is left owning three shares. If, after applying the redemption limits above, the number of shares of Series A4 Shares or Series M4 Shares to be redeemed is less than the number of shares of Series A4 Shares or Series M4 Shares, as applicable, submitted for redemption by a holder, the excess shares of Series A4 Shares or Series M4 Shares, as applicable, will not be deemed submitted for redemption for future periods and, if a holder wishes to redeem additional shares, such holder will need to submit any remaining Series A4 Shares or Series M4 Shares they hold and wish to redeem on a subsequent Holder Redemption Deadline. Redemption capacity of the Series A4 Shares and the Series M4 Shares will be allocated on a pro rata basis based on the number of Series A4 Shares or Series M4 Shares, as applicable, submitted in the event that a monthly redemption is oversubscribed, based on any of the foregoing redemption limits. We may waive the foregoing redemption limits in our sole discretion at any time.
The following table is intended to assist investors in understanding the stated value and liquidation preference of a share of Series A4 Shares or Series M4 Shares, after factoring in upfront and ongoing fees, and the impact of the Holder Optional Redemption on the HOR Settlement Amount of such share of Series A4 Shares or Series M4 Shares if exercised within five years of the issuance of such share of Series A4 Shares or Series M4 Shares. This table provides only a summary of certain features of the Series A4 Shares or Series M4 Shares. Please also refer to “Fees and Expenses.”

Impact at Purchase and Every Year of Ownership
Stated Value
Dividend Rate
Stated Value (determined annually)(1)
$25.00
Floating Rate
Stated Value after Upfront fees(2)
$25.00
Floating Rate
Stated Value after Ongoing Fees(2)
$25.00
Floating Rate
Impact of Holder Optional Redemption on the Settlement
Amount of a Share of Series A4 Shares or Series M4 Shares(3)

A4 Share
M4 Share
Year 1
$22.50
$25.00(4)
Year 2
$22.50
$25.00
Year 3
$22.50
$25.00
Year 4
$23.00
$25.00
Year 5
$23.75
$25.00
After Year 5 and Beyond
$25.00
$25.00

(1)The Stated Value is expected to be determined annually by the Company solely for the purpose of facilitating participating broker dealers’ compliance with FINRA Rule 2231.
(2)The sales and offering expenses are borne by the Company. See “Fees and Expenses.”
(3)In addition, will include unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date.
(4)The HOR Settlement Amount payable to a Series M4 Share holder who exercises the Holder Optional Redemption will include any accrued and unpaid dividends, but will be reduced by the Series M4 Shares Clawback.
Redemption at the Option of the Issuer. Subject to the restrictions described in the immediately following paragraph, a share of Preferred Stock may be redeemed at our option at any time or from time to time upon not less than 10 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for redemption thereof, at a redemption price of 100% of the Stated Value of the shares of Preferred Stock to be redeemed plus dividends accrued to, but excluding, the date fixed for redemption, whether or not earned or declared, but excluding interest on any such distribution or payment.
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We will not exercise the Issuer Optional Redemption prior to the Redemption Eligibility Date applicable to the relevant series of the Preferred Stock, unless we determine, in our sole discretion, that doing so would be necessary to comply with the asset coverage requirements under the 1940 Act or to maintain our status as a RIC.
If we exercise the Issuer Optional Redemption for less than all of the outstanding shares of Preferred Stock, then shares of Preferred Stock will be selected for redemption on a pro rata basis or by lot across holders of the series of Preferred Stock selected for redemption; provided that, if the redemption occurs prior to the Redemption Eligibility Date applicable to a series of Preferred Stock, we will first redeem on a pro rata basis or by lot the minimum number of shares of such series of Preferred Stock that have met the Redemption Eligibility Date necessary to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC, and, if the redemption of all such shares of Preferred Stock is insufficient to cause us to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC, we will then redeem on a pro rata basis or by lot the minimum number of shares of such series of Preferred Stock that have not met the Redemption Eligibility Date for us to comply with the asset coverage requirements of the 1940 Act or to maintain our status as a RIC.
There is no Holder Optional Conversion Fee or Holder Optional Redemption Fee charged, nor do the M1/M2/M3 Shares Clawback or the Series M4 Shares Clawback apply, upon an Issuer Optional Redemption.
Conversion at the Option of the Issuer. Subject to certain limitations, a share of A1/A3 Shares or M1/M2/M3 Shares may be converted at our option at any time or from time to time for cash or shares of our common stock upon not less than 30 calendar days nor more than 90 calendar days written notice to the holder prior to the date fixed for conversion thereof.
We will settle any Issuer Optional Conversion by paying or delivering, as the case may be and subject to the restrictions and limitations described herein:
any portion of the IOC Settlement Amount (as defined below) that we elect to pay in cash; and
a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP, subject to our ability to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value. See “1940 Act Approval” below.
For both the A1/A3 Shares or the M1/M2/M3 Shares, “IOC Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the date fixed for conversion.
We will not pay any portion of the IOC Settlement Amount from an Issuer Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the Redemption Eligibility Date. Beginning on the Redemption Eligibility Date, we may elect to settle any Issuer Optional Conversion in cash without limitation or restriction.
We will not exercise the Issuer Optional Conversion prior to the two year anniversary of the date on which a share of A1/A3 Shares or M1/M2/M3 Shares has been issued (provided that following the listing of A1/A3 Shares or M1/M2/M3 Shares on a national securities exchange, such date shall be the two year anniversary of the first date on which shares of A1/A3 Shares or M1/M2/M3 Shares, as applicable, were issued) unless the Board determines, in its sole discretion, that the conversion of such Preferred Stock is necessary to cause the Company to comply with the asset coverage requirements of the 1940 Act applicable to the Company, to maintain the Company’s status as a RIC, to maintain or enhance one or more of the Company’s credit ratings, to help comply with regulatory or other obligations, to achieve a strategic transaction, or to improve the liquidity position of the Company. Pursuant to the terms of the 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, the Series A4 Shares and the Series M4 Shares, we will not exercise an Issuer Optional Conversion for so long as our 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, Series A4 Shares or Series M4 Shares are outstanding.
If we exercise the Issuer Optional Conversion for less than all of the outstanding shares of A1/A3 Shares and M1/M2/M3 Shares, then shares of A1/A3 Shares and M1/M2/M3 Shares, as applicable, will be selected for conversion on a pro rata basis or by lot across holders of the series of A1/A3 Shares and M1/M2/M3 Shares selected for conversion; provided that if we exercise the Issuer Optional Conversion prior to the two year anniversary of the issuance of any shares of A1/A3 Shares and M1/M2/M3 Shares, we will first convert on a pro rata basis or by lot the minimum number of shares of A1/A3 Shares and M1/
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M2/M3 Shares that have been issued for more than two years necessary to achieve the Board’s objective for the conversion, and, if the conversion of all such shares of A1/A3 Shares and M1/M2/M3 Shares is insufficient to cause us to achieve such objective, we will then convert on a pro rata basis or by lot the minimum number of shares of A1/A3 Shares and M1/M2/M3 Shares that have not been outstanding for two years for us to achieve the Board’s objective.
In addition to the Issuer Optional Conversion and the Issuer Optional Redemption, we may purchase shares of Preferred Stock on the open market (if the Preferred Stock has been listed on a national securities exchange), or repurchase shares of Preferred Stock by means of privately negotiated transactions, tender offers or otherwise, in accordance with applicable law.
There is no Holder Optional Conversion Fee charged nor does the M1/M2/M3 Shares Clawback apply upon an Issuer Optional Conversion.
Conversion Date. The Holder Conversion Exercise Date will be the “Conversion Date” with respect to any Holder Optional Conversion and the date we fix for conversion will be the “Conversion Date” with respect to any Issuer Optional Conversion. A converting holder will cease to be holder of the relevant shares of A1/A3 Shares or M1/M2/M3 Shares as of the close of business on the relevant Conversion Date and shall be deemed to be a record holder of any shares of our common stock to be issued in connection with such conversion as of the open of business on the business day immediately following the relevant Conversion Date.
Settlement on Conversion. We will settle any conversions by paying or delivering, as the case may be, cash, shares of our common stock or a combination thereof on or about the second Business Day after any Conversion Date. To the extent we elect to settle any conversion obligations by the delivery of shares of our common stock, we will deliver a number of shares of our common stock per $25.00 of Stated Value equal to the relevant conversion rate, provided that we will deliver cash in lieu of any fractional shares (with such fractional shares determined after aggregating all conversions on such Conversion Date by a single beneficial owner and valued based on the 5-day VWAP used to determine the relevant conversion rate).
No fractional shares of common stock will be issued upon conversion of any shares of A1/A3 Shares or M1/M2/M3 Shares into shares of common stock. In lieu of fractional shares otherwise issuable, each holder will be entitled to receive an amount in cash equal to the fraction of a share of common stock multiplied by the conversion price applicable to such Conversion Date. In order to determine whether the number of shares of common stock to be delivered to a holder upon the conversion of such holder’s shares of A1/A3 Shares or M1/M2/M3 Shares will include a fractional share, such determination will be based on the aggregate number of shares of A1/A3 Shares or M1/M2/M3 Shares of such holder that are being converted on any single Conversion Date. Notwithstanding the foregoing, if on any Conversion Date, the Company is prohibited from making any cash distribution pursuant to the 1940 Act or the terms of the Company’s senior securities then outstanding, no fractional shares will be issued and no cash in lieu of fractional shares will be paid and the amount of shares of common stock to be delivered to a holder upon conversion will be rounded down to the nearest whole share of common stock.
Forms for the exercise of the optional conversion rights described above may be obtained from the Transfer Agent at Computershare, 150 Royall St, Canton, MA 02021, Attention: Corporate Actions or by calling at (800) 546-5141.
Liquidity Event. The Board will consider from time to time whether to (1) keep the Preferred Stock outstanding, (2) list the Preferred Stock for trading on a national securities exchange or (3) elect an Issuer Optional Conversion with regard to the A1/A3 Shares or the M1/M2/M3 Shares (each of (2) and (3), a “Liquidity Event”). If the Board decides to list the Preferred Stock on a national securities exchange, we will provide no less than 60 days’ written notice of the decision to list the Series A1/A3 Shares or the M1/M2/M3 Shares. There will be a 30 day period prior to the listing in which holders of Series A or Series M may exercise the Holder Optional Conversion with the applicable Holder Optional Conversion Fee (with respect to the A1/A3 Shares) or M1/M2/M3 Shares Clawback (with respect to the M1/M2/M3 Shares) waived. Any listing of the Series A4 Shares or the Series M4 Shares shall require the approval of the holders of the Series A4 Shares or the Series M4 Shares, as applicable, voting as a separate class. The vote required to approve such a proposal for listing is a majority of the votes cast by the holders of Series A4 Shares or Series M4 Shares, as applicable, voting on such proposal at a meeting where a quorum of Series A4 Shares or Series M4 Shares, as applicable, is present. For purposes of voting on any such proposal to list the Series A4 Shares or Series M4 Shares, the quorum required for voting on such proposal is 33 1/3% of the outstanding Series A4
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Shares or Series M4 Shares, as applicable, entitled to vote on such proposal, unless the Board by resolution establishes a higher quorum. A favorable vote on any such proposal shall be non-binding and the Board shall retain sole discretion as to whether to complete such listing.
1940 Act Approval. In connection with any Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares, we will use commercially reasonable efforts to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value. If we do not have or obtain any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares by paying or delivering, as the case may be:
any portion of the IOC Settlement Amount that we elect to pay in cash; and
a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion.
We have obtained stockholder approval under Section 63 of the 1940 Act to issue shares of common stock below net asset value until June 9, 2024. We believe that pursuant to this approval any shares of A1/A3 Shares or M1/M2/M3 Shares issued prior to June 9, 2024 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate at any time, including after June 9, 2024. We believe any shares of A1/A3 Shares or M1/M2/M3 Shares issued after June 9, 2024 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate only if we have obtained stockholder approval for the period in which such shares of A1/A3 Shares or M1/M2/M3 Shares were issued and the 5-day VWAP results in a price below net asset value.
The application of Section 63 of the 1940 Act with respect to the conversion of the A1/A3 Shares or M1/M2/M3 Shares under the Issuer Optional Conversion is unclear. It is possible the SEC will assert a position that stockholder approval to issue shares of common stock below net asset value must be obtained for the year in which the Issuer Optional Conversion is exercised, instead of the time at which the A1/A3 Shares or M1/M2/M3 Shares are issued. If the SEC asserted this position and prevailed, we would be required to obtain stockholder approval under the 1940 Act for the years in which we exercise the Issuer Optional Conversion. Obtaining this approval may cause us to incur additional costs and there can be no assurance such stockholder approval will be obtained. If we cannot obtain stockholder approval required by the 1940 Act to issue shares of common stock below net asset value at the time of an Issuer Optional Conversion, then the Issuer Optional Conversion will be effected at a conversion rate equal to:
any portion of the IOC Settlement Amount that we elect to pay in cash; and
a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion.
In the event that we exercise an Issuer Optional Conversion with respect to any shares of A1/A3 Shares or M1/M2/M3 Shares, the holder of such A1/A3 Shares or M1/M2/M3 Shares may instead elect a Holder Optional Conversion provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for the Issuer Optional Conversion.
Preferred Stock Dividend Reinvestment Plan. We currently intend for our Transfer Agent to administer a Preferred Stock Dividend Reinvestment Plan, pursuant to which Holders will have dividends on their Preferred Stock automatically reinvested in additional shares of such Preferred Stock at a price per share of $23.75 for A1/A3 Shares and M1/M2/ M3 Shares, and at a price per share of $25.00 for Series A4 Shares and Series M4 Shares, if they so elect. Shares of Preferred Stock received through the Preferred Stock Dividend Reinvestment Plan will be of the same series and have the same original issue date for purposes of the Holder Optional Conversion Fee, the Holder Optional Redemption Fee, the M1/M2/M3 Shares Clawback, or the Series M4 Shares Clawback, as applicable, and for other terms of the Preferred Stock based on issuance date
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as the Preferred Stock for which the dividend was declared. We may terminate the Preferred Stock Dividend Reinvestment Plan at any time in our sole discretion.
Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, before any distribution or payment shall be made to holders of our common stock, the holders of shares of Preferred Stock will be entitled to be paid out of our assets legally available for distribution to our stockholders, after payment or provision for our debts and other liabilities, a liquidation preference equal to the Stated Value per share, plus an amount equal to any accrued and unpaid dividends to but excluding the date of payment, whether or not earned or declared, but excluding interest on any such distribution or payment.
If, upon any liquidation, dissolution or winding up our affairs, whether voluntary or involuntary, our assets available for distribution among the holders of all of our outstanding preferred stock, including the Preferred Stock, shall be insufficient to permit the payment in full to the holders thereof of the amounts to which they are entitled, then the available assets will be distributed among such holders ratably in any distribution of assets according to the respective amounts which would be payable on all our outstanding preferred stock if all amounts thereon were paid in full.
After payment of the full amount of the liquidating distributions to which they are entitled, the holders of our shares of Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation or merger with or into any other corporation, trust or other entity, the consolidation or merger of any other corporation, trust or entity with or into us, the sale or transfer of any or all our assets or business, or a statutory share exchange will not be deemed to constitute a liquidation, dissolution or winding-up of our affairs.
In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, call, redemption or other acquisition of shares of our stock or otherwise, is permitted under the Maryland General Corporation Law, amounts that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of holders of the Preferred Stock will not be added to our total liabilities.
Voting Rights. In any matter submitted to a vote of the holders of our common stock, each holder of Preferred Stock will be entitled to one vote for each share of Preferred Stock held, and the holders of the outstanding Preferred Stock, holders of any other preferred stock we may issue and the common stock will vote together as a single class. For so long as we are subject to the 1940 Act, holders of our Preferred Stock, voting separately as a single class, together with holders of any other preferred stock we may issue, have the right to elect two members of the Board at all times. The two directors elected by the holders of the Preferred Stock are designated by our Board. The Board has designated William J. Gremp and Eugene S. Stark as the directors to be elected by holders of the Preferred Stock. If dividends on any of our preferred stock, including the Preferred Stock, have accumulated and been unpaid for a period of two years, the holders of our preferred stock, including the Preferred Stock, will have the power to elect a majority of the Board.
During any period in which any one or more of the conditions described below shall exist (such period, a “Voting Period”), the number of directors constituting the Board automatically will be increased by the smallest number that, when added to the two directors elected exclusively by the holders of the preferred stock as described above, would constitute a majority of the Board as so adjusted, and the holders of outstanding shares of Preferred Stock, voting separately as one class with any other outstanding preferred stock so entitled to vote, subject to compliance with the 1940 Act and the rules thereunder, will have the power to elect such additional directors. A Voting Period will commence (A) if at any time accumulated dividends and distributions (whether or not earned or declared, and whether or not funds are then legally available in an amount sufficient therefor) on the outstanding Preferred Stock equal to at least two full years’ dividends and distributions shall be due and unpaid; or (B) if at any time holders of any other preferred stock are entitled to elect a majority of the directors of the Board under the 1940 Act or Articles Supplementary creating such shares. If we subsequently pay, or declare and set apart for payment in full, all dividends payable on all outstanding shares of Preferred Stock and any other outstanding preferred stock for all past dividend periods, the additional voting rights of the holders of the Preferred Stock and any other preferred stock as described above will cease, and the terms of office of all of the additional directors elected by the holders of the Preferred Stock and any other preferred stock (but not of the directors with respect to whose election the holders of shares of common stock were entitled to vote or the two directors the holders of the Preferred Stock and any other preferred stock have the right to elect at all
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times) will terminate immediately and automatically, subject always, however, to the reverting of such voting rights to the holders of the Preferred Stock and any other preferred stock so entitled to vote upon the further occurrence of any of the events described in this paragraph.
The approval of the holders of a majority of any outstanding preferred stock, voting separately as a class, is required to, among other actions, (A) amend, alter or repeal the rights, preferences or privileges of the preferred stock or amend our corporate charter in a manner that materially and adversely affects the preferred stock, provided that any such action that would materially and adversely affect the rights, preferences or privileges of one or more series of the preferred stock (the “Affected Series”) in a manner different from any other series of the preferred stock will require the approval of a majority of the votes cast by the holders of the outstanding shares of the Affected Series (with such Affected Series voting as a separate class) or (B) create (by reclassification or otherwise) any new class of shares having rights, preferences or privileges senior to the preferred stock; provided that the Board may adopt Articles Supplementary or amend or supplement the Charter, including in connection with listing the Preferred Stock on a national securities exchange, for the purpose of converting, exchanging, reorganizing or combining two or more series of preferred stock into a single series of preferred stock having materially the same rights, preferences or privileges as set forth herein, which amendment or other action shall not be deemed to materially and adversely affect the rights, preferences or privileges of the Preferred Stock or of one or more series of preferred stock.
The vote of the holders of a majority of the preferred stock then outstanding, including the Preferred Stock, is required to approve any plan of reorganization adversely affecting such preferred stock or any action requiring a vote of stockholders under Section 13(a) of the 1940 Act. For purposes of the preceding sentence, the phrase “vote of the holders of a majority of the preferred stock then outstanding” shall have the meaning set forth in the 1940 Act.
The holders of Preferred Stock have exclusive voting rights on a charter amendment that would alter only the contract rights of the Preferred Stock. Any such charter amendment shall first be declared advisable by the Board and then approved by the affirmative vote or consent of the holders of a majority of the outstanding shares of Preferred Stock.
Adjustment for Reorganization Events. In the event of: (i) any reclassification, statutory exchange, merger, consolidation or other similar business combination of the Company with or into another person, in each case, pursuant to which our common stock is changed or converted into, or exchanged for, cash, securities or other property of the Company or another person; (ii) any sale, transfer, lease or conveyance to another person, in one or a series of related transactions, of all or a majority of the property and assets of the Company, in each case pursuant to which the common stock is converted into cash, securities or other property; or (iii) any statutory exchange of securities of the Company with another person (other than in connection with a merger or acquisition) or reclassification, recapitalization or reorganization of the common stock into other securities (each of which is referred to as a “Reorganization Event”), each reference herein to a share of our common stock will, without the consent of the holders and subject to the terms of the Articles Supplementary, become a reference to the number, kind and amount of securities, cash and other property (the “Exchange Property”) that each share of our common stock was converted into, or exchanged for, in such Reorganization Event. If the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of common stock held immediately prior to such Reorganization Event by a person, then for the purpose of this paragraph, each reference to a share of the common stock will be deemed to refer to the weighted average of the types and amounts of consideration per share of our common stock received by the holders of common stock.
The Company (or any successor) shall, no less than 30 calendar days prior to the anticipated effective date of any Reorganization Event (or, if such anticipated effective date cannot be reasonably determined 30 calendar days prior to the date thereof, as promptly as reasonably practicable after the Company (or any successor) has become aware of the anticipated effective date), provide written notice to the holders of Preferred Stock of such occurrence of such event and of the kind and amount of the cash, securities or other property that is expected constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of these adjustments for Reorganization Events.
The Company shall not enter into any agreement for a transaction constituting a Reorganization Event unless (A) such agreement provides for or does not interfere with or prevent (as applicable) conversion of the Preferred Stock into the Exchange Property in a manner that is consistent with and gives effect to these adjustments for Reorganization Events, and (B) to the
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extent that the Company is not the surviving legal entity in such Reorganization Event or will be dissolved in connection with such Reorganization Event, proper provision shall be made in the agreements governing such Reorganization Event for the conversion of the Preferred Stock into stock of the Person surviving such Reorganization Event or such other continuing entity in such Reorganization Event. The Company (or any successor) shall continue to have the right to settle any conversions in cash, Exchange Property or a combination thereof.
We may, as we determine appropriate in our sole discretion, adjust the conversion rate for any Holder Optional Conversion or Issuer Optional Conversion to account for any stock splits, stock combinations or stock dividends the ex-dividend date for which occurs during the period used for calculating the 5-day VWAP for any conversion.
Optional Redemption Following Death of a Holder. Subject to restrictions, beginning on the date of original issuance and ending upon the listing of the Preferred Stock on a national securities exchange, we will redeem shares of Preferred Stock of a beneficial owner who is a natural person (including a natural person who holds shares of Preferred Stock through an Individual Retirement Account or in a personal or estate planning trust) upon his or her death at the written request of the beneficial owner’s estate at a redemption price equal to the Stated Value, plus an amount equal to any accumulated, accrued and unpaid dividends thereon to, but excluding, the date of such redemption; provided, however, that our obligation to redeem any of the shares of Preferred Stock is limited to the extent that we do not have sufficient funds available to fund any such redemption or we are restricted by applicable law from making such redemption. There is no M1/M2/M3 Shares Clawback to redeem M1/M2/M3 Shares of a beneficial owner upon his or her death. There is no M4 Shares Clawback to redeem Series M4 Shares of a beneficial owner upon his or her death. The beneficial owner or the beneficial owner’s estate must hold the Preferred Stock for a minimum of 6 months before their shares of Preferred Stock are eligible for such redemption. We will have a discretionary right to limit the aggregate liquidation preference of Preferred Stock subject to redemption following the death of a beneficial owner that may be exercised in any calendar year to an amount equal to the greater of $10 million or 5% of all the Preferred Stock outstanding as of the end of the most recent calendar year.
Upon any such redemption request from a beneficial owner’s estate upon the death of such beneficial owner, we have the right, in our sole discretion, to pay the redemption price in cash or, with regards to the A1/A3 Shares and the M1/M2/M3 Shares but not the Series A4 Shares nor the Series M4 Shares, in equal value of our common stock, or a combination thereof, calculated based on the 5-day VWAP, in exchange for the A1/A3 Shares or M1/M2/M3 Shares. We do not need stockholder approval in order to settle the redemption price in shares of common stock based on a rate that is below the NAV per share of common stock.
We are not obligated to redeem any shares of our Preferred Stock following the death of a beneficial owner if we do not have sufficient funds available to fund any such redemption or we are restricted by applicable law from making such redemption.
Forms for the exercise of the optional redemption rights described above may be obtained from the Transfer Agent at Computershare, 150 Royall St, Canton MA 02021, Attention: Corporate Actions or by calling at (800) 546-5141.
Issuance Date Consolidation All the shares of a series of Preferred Stock that are sold to investors on a given settlement date will, as a group, be assigned a unique CUSIP number to help us track the period of time such shares of Preferred Stock have been outstanding. In order to streamline the operations of the offering relating to maintaining multiple CUSIP numbers, we have the right pursuant to the terms of the preferred stock, including the terms of the Preferred Stock, and without stockholder approval, to combine the shares of any series of preferred stock issued during a six month period into a single CUSIP number, provided that the deemed issuance date for such combined group of shares will be on the earliest actual issuance date for any shares of preferred stock during such six month period and no earlier than six months prior to the date on which such shares of preferred stock were originally issued. If we exercise this right, shares of Preferred Stock that were issued later during a six month period will benefit because the dates on which the Holder Optional Conversion Fee, the Holder Optional Redemption Fee, the M1/M2/M3 Shares Clawback, or the Series M4 Shares Clawback applicable to the Preferred Stock will be reduced or terminated will occur sooner for such shares than it would have if we did not exercise this right. However, for shares of Preferred Stock issued later in the six month period, the exercise of such right will permit us to exercise an Issuer Optional Redemption and an Issuer Optional Conversion, as applicable, and to settle an Issuer Optional Conversion,
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as applicable, in cash, without constraint sooner than if we did not exercise such right. Such combination of shares of one or more series of preferred stock may be effected through a mandatory tender, exchange, conversion or other reorganization transaction and in such transaction cash may be issued in lieu of fractional shares.
Transfer Agent and Registrar
The transfer agent for shares of our Preferred Stock is Computershare.
Listing
    Our shares of common stock are listed on the Nasdaq Global Select Market under the symbol “PSEC.” Our shares of Preferred Stock are not listed for trading on any national securities exchange but we may apply to have any such shares listed for trading on a national securities exchange in the future.
    Holders of a series of Preferred Stock will no longer be able exercise the Holder Optional Conversion or Holder Optional Redemption with respect to that series of Preferred Stock if that series of Preferred Stock is listed for trading on a national securities exchange. If a series of Preferred Stock is listed for trading on a national securities exchange, we intend to reclassify all series of Preferred Stock with a common dividend rate that are listed on an exchange into a single series.
Periodic Reporting
    We will include information reflecting whether our net assets exceed the Stated Value of the aggregate amount of the shares of Preferred Stock outstanding in our annual report to shareholders filed pursuant to Section 13(a) of the Exchange Act.
Covered Security
    The term “covered security” applies to securities exempt from state registration because of their oversight by federal authorities and national-level regulatory bodies pursuant to Section 18 of the Securities Act. Securities listed on a national securities exchange are the most common type of covered security exempt from state registration. A non-traded security also can be a covered security if it has a seniority greater than or equal to other securities from the same issuer that are listed on a national exchange, such as the Nasdaq Global Select Market. The Preferred Stock is a covered security because it is senior to our common stock and therefore is exempt from state registration.
There are several advantages to both issuers and investors of a security being deemed a covered security. These include:
More Investors - Covered securities can be purchased by a broader range of investors than can non-covered securities. Non-covered securities are subject to suitability requirements that vary from state to state. These so-called “Blue Sky” regulations often prohibit the sale of securities to certain investors and may prohibit the sale of securities altogether until a specific volume of sales have been achieved in other states.
Issuance Costs - Covered securities may have lower issuance costs since they avoid the expense of dealing with the various regulations of each of the 50 states and Washington, D.C. This could save time and money and allows issuers of covered securities the flexibility to enter the market at a time of their choosing. All investors in the issuer would benefit from any lower issuance costs that may be achieved.
There are also several disadvantages to investors of a security being deemed a covered security. These include:
Lack of State Suitability Standards - Since there are no state investor eligibility requirements, there is no prohibition on the sale of the securities to certain investors, including investors that may not be suitable to purchase the securities.
No State Review - Investors will not receive an additional level of review and possible protection afforded by the various state regulators.

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Certain ERISA and Benefit Plan Considerations

The following is a summary of certain considerations associated with the acquisition and holding of the Preferred Stock by an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, or ERISA) that is subject to Title I of ERISA, a plan described in, and subject to, Section 4975 of the Code, including an individual retirement account, or IRA, or a Keogh plan, a plan subject to provisions under applicable federal, state, local, non-U.S. or other laws or regulations that are similar to the provisions of Title I of ERISA or Section 4975 of the Code, which we refer to as “Similar Laws,” and any entity whose underlying assets include “plan assets” by reason of any such employee benefit or retirement plan’s investment in such entity (each of which we refer to as a “Plan”).
General Fiduciary Matters
ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA (an “ERISA Plan”) or Section 4975 of the Code (together with an ERISA Plan, each a “Covered Plan”) and prohibit certain transactions involving the assets of a Covered Plan with its fiduciaries or other interested parties. In general, under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a Covered Plan or the management or disposition of the assets of such a Covered Plan, or who renders investment advice for a fee or other compensation (direct or indirect) to such a Covered Plan, is generally considered to be a fiduciary of the Covered Plan. In considering the acquisition, holding and, to the extent relevant, disposition of the Preferred Stock by a Plan, a fiduciary should determine, among other things, whether the investment is in accordance with the documents and instruments governing the Plan, whether the investment is consistent with the Plan’s needs for liquidity to satisfy minimum and other distribution requirements and whether the investment is in accordance with the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, applicable prudence, diversification, delegation of control, conflicts of interest and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws. Neither we, nor any of our agents or representatives, or any of our or their affiliates will provide any advice in a fiduciary capacity with respect to a Covered Plan's investment in the Preferred Stock.
Prohibited Transaction Issues
Section 406 of ERISA prohibits ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of Section 3(14) of ERISA, and Section 4975 of the Code imposes an excise tax on certain “disqualified persons,” within the meaning of Section 4975 of the Code, who engage in similar transactions with Covered Plans, in each case unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to other penalties and liabilities under ERISA and the Code. In addition, a fiduciary of an ERISA Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. In the case of an IRA, the occurrence of a prohibited transaction could cause the IRA to lose its tax-exempt status. For example, the acquisition, holding and, to the extent relevant, disposition of the Preferred Stock by an a Covered Plan with respect to which we are considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired, held and disposed of in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor (the “DOL”) has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the Preferred Stock. These class exemptions (as may be amended from time to time) include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers.

In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code each provides a limited exemption, commonly referred to as the “service provider exemption,” from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions, provided that neither the issuer of the securities 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
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any Covered Plan involved in the transaction and provided further that the Covered Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that any of the above-described exemptions or any other exemption will be applicable, or all of the conditions of any such exemptions will be satisfied, with respect to each otherwise prohibited transactions that might arise in connection with an investment in the Preferred Stock by a Covered Plan. Governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) and non-U.S. plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or Section 4975 of the Code but may be subject to similar prohibitions under Similar Laws. Fiduciaries of such plans should consult with their counsel before acquiring the Preferred Stock or any interest therein. Accordingly, the Preferred Stock (including any interest therein) may not be acquired, held or disposed of by any person investing “plan assets” of any Plan if such acquisition, holding and disposition will constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or similar violation of any applicable Similar Laws.
Plan Asset Issues
ERISA and regulations issued by the DOL (the “Plan Asset Regulations”) generally provide that when a Covered Plan acquires an “equity interest” in an entity that is neither a security issued by an investment company registered under the 1940 Act, nor a “publicly offered security,” the Covered Plan’s assets include both the equity interest and an undivided interest in each of the underlying assets of the entity. If our assets were deemed to be “plan assets” under ERISA, this would result, among other things, in (i) the application of the prudence and other fiduciary responsibility standards of ERISA to investments made by us and (ii) the possibility that certain transactions in which we might seek to engage could constitute “prohibited transactions” under ERISA and the Code.

The Preferred Stock will not be issued by an investment company registered under the 1940 Act. We expect, however, that the Preferred Stock will satisfy the requirements of a “publicly offered security” under the Plan Asset Regulations. However, as noted above, if an ERISA Plan acquires “publicly offered securities” then the Covered Plan’s assets include the equity securities acquired by the Covered Plan but do not include an undivided interest in the underlying assets of the entity. The definition of “publicly offered securities” in the Plan Asset Regulations requires that the equity securities satisfy a registration requirement under the federal securities laws, be “widely held” and “freely transferable.”

A class of securities satisfies the registration requirement under the Plan Asset Regulations if (i) the class of securities is part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act or (ii) the class of securities is part of an offering of securities registered under the Securities Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the Securities Exchange Commission) after the end of the fiscal year of the issuer during which the offering of such securities occurred. We anticipate that we will meet the registration requirements under the Plan Asset Regulations with respect to the Preferred Stock.

The Plan Asset Regulations provide that a class of securities is “widely held” for purposes of the publicly offered securities exception if it is held by 100 or more persons who are independent of the issuer. We anticipate that we will meet this requirement with respect to the Preferred Stock. The Plan Asset Regulations provide that whether a security is “freely transferable” is a question that is determined on the basis of all relevant facts and circumstances. Because we anticipate that at the time any Covered Plan acquires the Preferred Stock (including any interest therein) (i) we will satisfy the requirement under the Plan Asset Regulations to register the Preferred Stock, (ii) the securities will be held by 100 or more persons who are independent of us and (iii) the securities will be “freely transferable” under the Plan Asset Regulations, we expect that the publicly offered securities exception will apply to the Preferred Stock. However, there can be no assurance that will we qualify for the exception, especially in light of the fact that the availability of the exception will depend on actions to be taken at a later date, the number of persons who acquire the Preferred Stock and the facts and circumstances nature of the “freely transferable” requirement.

The Plan Asset Regulations also provide that a Covered Plan’s assets include the equity security acquired by the Covered Plan, but not an undivided interest in the issuer’s underlying assets, if the equity security is issued by an “operating company” (including a “venture capital operating company” and a “real estate operating company”) or if less than 25% of the
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class of equity security is held by “benefit plan investors” (the “Insignificant Participation Exception”). We do not intend to rely on any of these exemptions under the Plan Asset Regulations at the time of any investment in Preferred Stock by any ERISA Plan. In addition, we do not intend to limit or monitor benefit plan investors’ investments in the Preferred Stock and so there can be no assurance that the Insignificant Participation Exception will apply to the Preferred Stock.
Representation
Each purchaser of the Preferred Stock (including any interest in Preferred Stock) by its investment in the Preferred Stock will be deemed to represent and warrant that either (1) it is not a Plan and no portion of the assets used to acquire or hold the Preferred Stock (or any interest therein) constitutes assets of any Plan for purposes of ERISA, the Code or any Similar Law, or (2) the investment in the Preferred Stock will not constitute a violation of the fiduciary responsibility rules under ERISA or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws for which there is no applicable statutory, regulatory or administrative exemption.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the Preferred Stock on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption, if necessary, would be applicable to the purchase and holding of the Preferred Stock (including any interest therein). The sale of the Preferred Stock (including any interest therein) to any Plan is in no respect a representation by us or any of our affiliates, agents or representatives that such an investment meets all relevant legal requirements with respect to investments by such Plans generally or any particular Plan, or that such an investment is appropriate or advisable for Plans generally or any particular Plan. Purchasers of the Preferred Stock have the exclusive responsibility for ensuring that their purchase and holding of the Preferred Stock (including any interest therein) complies with the applicable fiduciary responsibility rules of ERISA and does not violate the prohibited transaction rules of ERISA, the Code or applicable Similar Laws.
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PREFERRED STOCK DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan (the “Preferred Stock Dividend Reinvestment Plan”) that allows you the opportunity to purchase, through reinvestment of your dividends, additional shares of Preferred Stock. For purposes of this section, Computershare is referred to as the Administrator.
Description of the Preferred Stock Dividend Reinvestment Plan
Who is eligible to participate in the Preferred Stock Dividend Reinvestment Plan?
Holders of Preferred Stock are eligible to participate in the Preferred Stock Dividend Reinvestment Plan. If you own shares of Preferred Stock that are registered in someone else’s name (for example, a bank, broker, or trustee) and you want to participate in the Preferred Stock Dividend Reinvestment Plan, you may be able to arrange for that person to handle the reinvestment of dividends. If not, then in order to participate in the Preferred Stock Dividend Reinvestment Plan, your shares of Preferred Stock should be withdrawn from “street name” or other form of registration and should be registered in your own name. Alternatively, your broker or bank may offer a program that allows you to participate in a plan without having to withdraw your shares of Preferred Stock from “street name.”
Who is the administrator of the Preferred Stock Dividend Reinvestment Plan?
Computershare Trust Company, N.A. administers the Preferred Stock Dividend Reinvestment Plan. Certain administrative support will be provided to the Administrator by its designated affiliates. If you have questions regarding the Preferred Stock Dividend Reinvestment Plan, please write to the Administrator at the following address: Computershare Trust Company, N.A., P.O. Box 43007 Providence, RI 02940-3007 or call the Administrator at 1-877-373-6374. An automated voice response system is available 24 hours a day, 7 days a week. Customer service representatives are available from 8:00 a.m. to 8:00 p.m., Eastern Time, Monday through Friday (except holidays). In addition, you may visit the Administrator’s website at www.computershare.com/investor. At this website, you can enroll in the Preferred Stock Dividend Reinvestment Plan, obtain information, and perform certain transactions on your Preferred Stock Dividend Reinvestment Plan account. See “Administration” for more information regarding www.computershare.com/investor and the administration of the Preferred Stock Dividend Reinvestment Plan.
What are the benefits of the Preferred Stock Dividend Reinvestment Plan?
The Preferred Stock Dividend Reinvestment Plan provides you with the opportunity to automatically reinvest dividends paid on all, but not less than all, of your shares of Preferred Stock (including shares of Preferred Stock held in your Preferred Stock Dividend Reinvestment Plan account), in additional shares of Preferred Stock. The number of shares of Preferred Stock to be credited to your account will be determined by dividing the total dollar amount of the distribution payable to you by $23.75 (95% of the stated value of $25.00 per share of Preferred Stock) for A1/A3 Shares and M1/M2/ M3 Shares, or by $25.00 for Series A4 Shares and Series M4 Shares, without payment of any fees or other charges to the extent shares of Preferred Stock are purchased directly from us pursuant to the Preferred Stock Dividend Reinvestment Plan.
Subject to operating procedures of the Depository Trust Company, you may purchase fractional shares of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan, which means you may fully reinvest all dividends. Dividends on fractional shares, as well as on whole shares, also can be reinvested in additional shares of Preferred Stock, which will be credited to your Preferred Stock Dividend Reinvestment Plan account.
You will receive a transaction statement confirming the details of each transaction that you make.
What are the disadvantages of the Preferred Stock Dividend Reinvestment Plan?
We will not pay you any interest on dividends held by the Administrator before the investment date.
The dividends you reinvest under the Preferred Stock Dividend Reinvestment Plan will generally be taxable to you to the extent of our earnings and profits and may give rise to a liability for the payment of income tax without providing you with the corresponding cash to pay the tax when due.
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Will the Preferred Stock I receive through the Preferred Stock Dividend Reinvestment Plan differ from the Preferred Stock I initially purchased?
Shares of Preferred Stock received through the Preferred Stock Dividend Reinvestment Plan will be of the same series and have the same original issue date for purposes of the Holder Optional Conversion Fee and for other terms of the Preferred Stock based on issuance date as the Preferred Stock for which the dividend was declared.
How does an existing holder of shares of Preferred Stock participate in the Preferred Stock Dividend Reinvestment Plan?
Enrollment is available online through www.computershare.com/investor. Alternatively, you may enroll by completing an enrollment form and mailing it to the Administrator. Your participation in the Preferred Stock Dividend Reinvestment Plan will begin promptly after your enrollment is received. Once you enroll, your participation continues automatically for as long as you wish to participate in the Preferred Stock Dividend Reinvestment Plan.
You may change your dividend reinvestment election at any time online through www.computershare.com/investor, by telephone or by notifying the Administrator in writing prior to the record date for that dividend. If your request is received after the record date, then your dividend will be paid in cash by check or automatic deposit to a U.S. bank account that you designate and your initial dividend reinvestment will commence with the following dividend payment. The record date will typically be approximately 15 days in advance of the dividend payment date.
You may, of course, choose not to reinvest any of your dividends, in which case the Administrator will remit any such dividends to you by check or automatic deposit to a U.S. bank account that you designate.
As an existing holder of shares of Preferred Stock, what are my investment options under the Preferred Stock Dividend Reinvestment Plan?
Once enrolled in the Preferred Stock Dividend Reinvestment Plan, you may elect to reinvest all, but not less than all, of your dividends in additional shares of Preferred Stock, until you terminate your participation in the Preferred Stock Dividend Reinvestment Plan.
When are funds invested under the Preferred Stock Dividend Reinvestment Plan?
The investment date for reinvested dividends will be the dividend payment date (generally, the first business day of each month). No interest will be paid on funds held by the Administrator pending investment. Shares will be purchased directly from the company.
Who pays the fees and other expenses?
We will pay all fees or other charges on shares of Preferred Stock purchased through the Preferred Stock Dividend Reinvestment Plan.
What are the federal income tax consequences of participating in the Preferred Stock Dividend Reinvestment Plan?
The following is a summary of the federal income tax consequences of participation in the dividend reinvestment plan as of the date of this prospectus supplement. This summary, however, does not reflect every situation that could result from participation in the dividend reinvestment plan, is for general information only and does not constitute tax advice. We advise you to consult your tax and other advisors for information about your specific situation. Although the federal income tax treatment of dividend reinvestment plans is not entirely clear, stockholders participating in the Preferred Stock Dividend Reinvestment Plan are generally expected to be treated for U.S. federal income tax purposes as having received, on the date such dividends are reinvested, a distribution equal to the amount reinvested. Consequently, dividends reinvested in the Preferred Stock Dividend Reinvestment Plan may give rise to a tax payment obligation without the corresponding cash to pay such tax when it becomes due. See “Supplement to Material U.S. Federal Income Tax Considerations - Distributions” for a
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discussion of the treatment of distributions on the Preferred Stock. The total amount of cash and other distributions will be reported to stockholders and to the IRS on the appropriate tax form shortly after the end of each year. Shares acquired pursuant to the Preferred Stock Dividend Reinvestment Plan should have an initial tax basis equal to the amount of the dividend reinvested therein (plus, if applicable, brokerage costs paid by the stockholder) and a holding period that begins on the day after the date the dividend is paid.
We or the Administrator may be required to deduct “backup withholding” at the applicable rate (currently 24%) of all dividends paid to you, regardless of whether such dividends are reinvested pursuant to the Preferred Stock Dividend Reinvestment Plan. You are subject to backup withholding if: (i) you have failed properly to furnish us and the Administrator with your correct tax identification number, or TIN; (ii) the IRS or a broker notifies us or the Administrator that the TIN furnished by you is incorrect; (iii) the IRS or a broker notifies us or the Administrator that backup withholding should be commenced because you failed to properly report dividends paid to you; or (iv) when required to do so, you fail to certify, under penalties of perjury, that you are not subject to backup withholding. Backup withholding amounts will be withheld from dividends before such dividends are reinvested under the Preferred Stock Dividend Reinvestment Plan. Therefore, if you are subject to backup withholding, dividends to be reinvested under the Preferred Stock Dividend Reinvestment Plan will be reduced by the backup withholding amount.
If you are a foreign stockholder, you need to provide the required federal income tax certifications to establish your status as a foreign stockholder so that the foregoing backup withholding does not apply to you. You also need to provide the required certifications if you wish to claim the benefit of exemptions from federal income tax withholding or reduced withholding rates under a treaty or convention entered into between the United States and your country of residence. If you are a foreign stockholder whose dividends are subject to federal income tax withholding, the appropriate amount will be withheld and the balance in shares of Preferred Stock will be credited to your account.
The foregoing is intended only as a general discussion of the current federal income tax consequences of participation in the Preferred Stock Dividend Reinvestment Plan and may not be applicable to certain participants, such as tax-exempt entities. You should consult your tax and other professional advisors regarding the foreign, federal, state and local income tax consequences (including the effects of any changes in applicable law or interpretations thereof) of your individual participation in the Preferred Stock Dividend Reinvestment Plan or the disposal of shares acquired pursuant to the Preferred Stock Dividend Reinvestment Plan.
Purpose
The purpose of the Preferred Stock Dividend Reinvestment Plan is to provide a convenient and economical way for holders of shares of Preferred Stock to invest all, but not less than all, of their dividends in additional shares of Preferred Stock.
Eligibility of Existing Holders of Preferred Stock
If you are a current holder of record of shares of Preferred Stock, you may participate in the Preferred Stock Dividend Reinvestment Plan. Eligible holders of shares of Preferred Stock may enroll in the Preferred Stock Dividend Reinvestment Plan online through www.computershare.com/investor. Alternatively, you may enroll by completing an enrollment form and delivering it to the Administrator.
If you own shares of Preferred Stock that are registered in someone else’s name (for example, a bank, broker, or trustee) and you want to participate in the Preferred Stock Dividend Reinvestment Plan, you may be able to arrange for that person to handle the reinvestment of your dividends. If not, your shares of Preferred Stock should be withdrawn from “street name” or other form of registration and should be registered in your own name. Alternatively, your broker or bank may offer a program that allows you to participate in a plan without having to withdraw your shares of Preferred Stock from “street name.”
If you are already a participant in the Preferred Stock Dividend Reinvestment Plan, you need not take any further action in order to maintain your present participation.
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Administration
Computershare Trust Company, N.A. (the “Administrator”) administers the Preferred Stock Dividend Reinvestment Plan. Certain administrative support will be provided to the Administrator by its designated affiliates.
You can enroll in the Preferred Stock Dividend Reinvestment Plan, obtain information, and perform certain transactions on your Preferred Stock Dividend Reinvestment Plan account online via the Administrator’s Investor Center.
To visit the Administrator’s website:
www.computershare.com/investor
You can contact the Administrator’s stockholder relations department toll-free at:
1-877-373-6374
An automated voice response system is available 24 hours a day, 7 days a week. Customer service representatives are available from 8:00 a.m. to 8:00 p.m., Eastern Time, Monday through Friday (except holidays).
You may write to the Administrator at the following address:
Computershare Trust Company, N.A.
P.O. Box 43007
Providence, RI 02940-3007

For overnight packages:
Computershare Trust Company, N.A.
Attn: Alternative Investments
150 Royall Street
Canton, MA 02021

Please include a reference to Prospect Capital Corporation Preferred Stock in all correspondence.
Purchases and Pricing of Shares of Preferred Stock
With respect to reinvested dividends, the purchase price for purchases of shares of Preferred Stock directly from us will be $23.75 per share (95% of the Stated Value of $25.00 per share of Preferred Stock) for Series A1 Shares, Series A3 Shares, Series M1 Shares, Series M2 Shares and Series M3 Shares and will be $25.00 per share for Series A4 Shares and Series M4 Shares, and the investment date will be the dividend payment date for the month. Dividend payment dates generally occur on the first business day of each month. Your account will be credited with a full and fractional number of shares of Preferred Stock, subject to operating procedures of the Depository Trust Company, equal to the total amount to be invested by you, divided by the applicable purchase price per share.
There are no fees or other charges on shares of Preferred Stock purchased through the Preferred Stock Dividend Reinvestment Plan.
Participation
Any eligible holder of shares of Preferred Stock may enroll in the Preferred Stock Dividend Reinvestment Plan online through www.computershare.com/investor. Alternatively, you may enroll in the Preferred Stock Dividend Reinvestment Plan by completing an enrollment form and returning it to the Administrator at the address set forth above.
If the Administrator receives your enrollment form by the record date for the payment of the next dividend (approximately 10 days in advance of the dividend payment date), that dividend will be invested in additional shares of Preferred Stock for your Preferred Stock Dividend Reinvestment Plan account; provided, however, that the first dividend
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payable with respect to newly-issued shares of Preferred Stock pursuant to our primary offering will be paid in cash, with subsequent dividends reinvested pursuant to the Preferred Stock Dividend Reinvestment Plan. If the enrollment form is received in the period after any dividend record date, that dividend will be paid by check or automatic deposit to a U.S. bank account that you designate and your initial dividend reinvestment will commence with the following dividend.
By enrolling in the Preferred Stock Dividend Reinvestment Plan, you direct the Administrator to apply all, but not less than all, dividends to the purchase of additional shares of Preferred Stock in accordance with the Preferred Stock Dividend Reinvestment Plan’s terms and conditions. Unless otherwise instructed, the Administrator will thereafter automatically reinvest all, but not less than all, dividends declared on shares of Preferred Stock held under the Preferred Stock Dividend Reinvestment Plan. If you want to discontinue the reinvestment of all dividends paid on your shares of Preferred Stock, you must provide notice to the Administrator. See “Administration” for information on how to contact the Administrator.
Cost
We will pay all fees, the annual cost of administration and, unless provided otherwise in the Preferred Stock Dividend Reinvestment Plan, all other charges incurred in connection with the purchase of shares of Preferred Stock acquired under the Preferred Stock Dividend Reinvestment Plan, if any.
Number of Shares of Preferred Stock to be Purchased for the Participant
The number of shares of Preferred Stock purchased under the Preferred Stock Dividend Reinvestment Plan will depend on the amount of your dividend. Shares of Preferred Stock purchased under the Preferred Stock Dividend Reinvestment Plan will be credited to your account. Both full and fractional shares will be purchased.
Shares of Preferred Stock received through the Preferred Stock Dividend Reinvestment Plan will be of the same series and have the same original issue date for purposes of the Holder Optional Conversion Fee and for other terms of the Preferred Stock based on issuance date as the Preferred Stock for which the dividend was declared.
The aggregate number of shares issued across all series of Preferred Stock, including shares issued under the Preferred Stock Dividend Reinvestment Plan, shall not exceed 647,900,000. We cannot assure you there will be enough shares of Preferred Stock to meet the requirements under the Preferred Stock Dividend Reinvestment Plan. If we do not have a sufficient number of shares of Preferred Stock to meet the Preferred Stock Dividend Reinvestment Plan requirements during any month, the portion of any reinvested dividends received by the Administrator but not invested in shares of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan will be returned to participants without interest.
Source of Shares of Preferred Stock Purchased Under the Preferred Stock Dividend Reinvestment Plan
Shares of Preferred Stock purchased under the Preferred Stock Dividend Reinvestment Plan will come from our authorized but unissued shares of Preferred Stock.
Method for Changing Preferred Stock Dividend Reinvestment Plan Election
You may change your Preferred Stock Dividend Reinvestment Plan election at any time online through www.computershare.com/investor, by telephone or by notifying the Administrator in writing. See “Administration” for information on how to contact the Administrator. To be effective with respect to a particular dividend, any such change must be received by the Administrator prior to the record date for such dividend.
Withdrawal by Participant
You may discontinue the reinvestment of your dividends at any time by providing written or telephone notice to the Administrator. Alternatively, you may change your dividend election online through www.computershare.com/investor. See “Administration” for information on how to contact the Administrator. If the Administrator receives your notice of withdrawal prior to the record date for the payment of the next dividend, the Administrator, in its sole discretion, will distribute such dividends in cash. If the request is received after the record date for the payment of the next dividend, then that dividend will be
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reinvested. However, all subsequent dividends will be paid out in cash on all balances. The Administrator will continue to hold your shares of Preferred Stock in your Preferred Stock Dividend Reinvestment Plan account.
Generally, an eligible holder of shares of Preferred Stock may again become a participant in the Preferred Stock Dividend Reinvestment Plan. However, we reserve the right to reject the enrollment of a previous participant in the Preferred Stock Dividend Reinvestment Plan on grounds of excessive joining and termination. This reservation is intended to minimize administrative expense and to encourage use of the Preferred Stock Dividend Reinvestment Plan as a long-term investment service.
Share Certificates and Safekeeping
Shares of Preferred Stock that you acquire under the Preferred Stock Dividend Reinvestment Plan will be maintained in your Preferred Stock Dividend Reinvestment Plan account in non-certificated form. This protects your shares of Preferred Stock against loss, theft or accidental destruction and also provides a convenient way for you to keep track of your shares of Preferred Stock.
Reports to Participants
Statements of your account activity will be sent to you after each transaction, which will simplify your record keeping. Each Preferred Stock Dividend Reinvestment Plan account statement will show the amount invested, the purchase price and the number of shares of Preferred Stock purchased. The statement will include specific cost basis information in accordance with applicable law. Please notify the Administrator promptly either in writing, by telephone or through the Internet if your address changes. In addition, you will receive copies of the same communications sent to all other holders of shares of Preferred Stock, if any. You also will receive any U.S. Internal Revenue Service (“IRS”) information returns, if required. Please retain all account statements for your records. The statements contain important tax and other information.
Responsibilities under the Preferred Stock Dividend Reinvestment Plan
We, the Administrator and any agent will not be liable in administering the Preferred Stock Dividend Reinvestment Plan for any act done in good faith, or for any omission to act in good faith, including, without limitation, any claim of liability arising out of failure to terminate a participant’s account upon that participant’s death prior to the receipt of notice in writing of such death. Nor are we, the Administrator or any agent liable for any act done or not done in good faith regarding the purchase of shares or the prices at which the purchases are done at. Since we have delegated all responsibility for administering the Preferred Stock Dividend Reinvestment Plan to the Administrator, we specifically disclaim any responsibility for any of its actions or inactions in connection with the administration of the Preferred Stock Dividend Reinvestment Plan. In no event shall we, the Administrator or their agents have any liability as to any inability to purchase shares or as to the timing of any purchase.
You should recognize that neither we, the Administrator, nor any agent can assure you of a profit or protect you against a loss on shares of Preferred Stock purchased under the Preferred Stock Dividend Reinvestment Plan.
Interpretation and Regulation of the Preferred Stock Dividend Reinvestment Plan
We reserve the right to interpret and regulate the Preferred Stock Dividend Reinvestment Plan.
Suspension, Modification or Termination of the Preferred Stock Dividend Reinvestment Plan
We reserve the right to suspend, modify or terminate the Preferred Stock Dividend Reinvestment Plan at any time. Participants will be notified of any suspension, modification or termination of the Preferred Stock Dividend Reinvestment Plan. Upon our termination of the Preferred Stock Dividend Reinvestment Plan any whole book-entry shares owned will continue to be credited to a participant’s account unless specifically requested otherwise.
Miscellaneous
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Effect of Stock Dividend, Stock Split or Rights Offering. Any shares of Preferred Stock we distribute as a stock dividend on shares of Preferred Stock credited to your account under the Preferred Stock Dividend Reinvestment Plan, or upon any split of such shares of Preferred Stock, will be credited to your account. Stock dividends or splits distributed on all other shares of Preferred Stock held by you and registered in your own name will be mailed directly to you.
Effect of Transfer of All Shares of Preferred Stock in Participant’s Name. If you dispose of all shares of Preferred Stock registered in your name, but do not give notice of withdrawal to the Administrator, the Administrator will continue to reinvest the dividends on any shares of Preferred Stock held in your account under the Preferred Stock Dividend Reinvestment Plan until the Administrator is otherwise notified. See “Withdrawal by Participant” for more information on how to withdraw from the Preferred Stock Dividend Reinvestment Plan.
Voting of Participant’s Shares of Preferred Stock Held under the Preferred Stock Dividend Reinvestment Plan. Any voting rights attributable to the shares of Preferred Stock credited to your account under the Preferred Stock Dividend Reinvestment Plan will be voted in accordance with your instructions. If you are a participant in the Preferred Stock Dividend Reinvestment Plan and are not a holder of record of shares of Preferred Stock in your own name, you will be furnished with a form of proxy covering the shares of Preferred Stock credited to your account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable. If you are a participant in the Preferred Stock Dividend Reinvestment Plan and are the holder of record of shares of Preferred Stock in your own name, your proxy will be deemed to include shares of Preferred Stock, if any, credited to your account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable, and the shares of Preferred Stock held under the Preferred Stock Dividend Reinvestment Plan will be voted in the same manner as the shares of Preferred Stock registered in your own name. If a proxy is not returned, none of your shares of Preferred Stock to which any such voting rights are attributable will be voted unless you vote in person. If you want to vote in person at a meeting of stockholders, a proxy for shares of Preferred Stock credited to your account under the Preferred Stock Dividend Reinvestment Plan to which any such voting rights are attributable may be obtained upon written request received by the Administrator at least 15 days before the meeting.
Pledging of Participant’s Shares of Preferred Stock Held under the Preferred Stock Dividend Reinvestment Plan. You may not pledge any shares of Preferred Stock that you hold in your Preferred Stock Dividend Reinvestment Plan account. Any pledge of shares of Preferred Stock in a Preferred Stock Dividend Reinvestment Plan account is null and void. If you wish to pledge shares of Preferred Stock, you must first withdraw those shares of Preferred Stock from the Preferred Stock Dividend Reinvestment Plan.
Limitation of Liability
The Preferred Stock Dividend Reinvestment Plan provides that neither we nor the Administrator, nor any independent agent, will be liable in administering the Preferred Stock Dividend Reinvestment Plan for any act done in good faith or any omission to act in good faith in connection with the Preferred Stock Dividend Reinvestment Plan. This limitation includes, but is not limited to, any claims of liability relating to:
the failure to terminate your Preferred Stock Dividend Reinvestment Plan account upon your death prior to receiving written notice of your death;
the purchase prices reflected in your Preferred Stock Dividend Reinvestment Plan account or the dates of purchases of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan; or
any loss or fluctuation in the market value of shares of Preferred Stock after the purchase of shares of Preferred Stock under the Preferred Stock Dividend Reinvestment Plan.

    The foregoing limitation of liability does not represent a waiver of any rights you may have under applicable securities laws.

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SUPPLEMENT TO MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
    The following summary of certain 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 summary is for general information only and is not tax advice. This discussion does not purport to deal with all aspects of taxation that may be relevant to particular holders of Preferred Stock in light of their personal investment or tax circumstances and does not apply to holders subject to special tax rules or stockholders that own or have owned, actually or constructively, 5% or more of our common stock or any series of Preferred Stock. Except as expressly discussed below, this discussion applies only to a holder of the Preferred Stock that acquires the Preferred Stock for cash pursuant to this offering at the offering price set forth in this prospectus supplement (i.e., 100% of the Preferred Stock’ liquidation preference) and holds their share as capital assets (generally, assets held for investment). Holders that acquire Preferred Stock at a different price may be subject to different consequences than those set forth herein. Except as otherwise expressly indicated, this discussion further assumes that we will pay all dividends on the Preferred Stock on each dividend payment date and that such dividends will therefore not accumulate. No definitive or controlling legal authority or precedent exists for purposes of determining the consequences of the ownership, disposition, or conversion of the Preferred Stock. Thus, 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.
EACH PROSPECTIVE HOLDER IS ADVISED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO IT OF ACQUIRING, HOLDING, CONVERTING, EXCHANGING, OR OTHERWISE DISPOSING OF THE PREFERRED STOCK AND OF OUR ELECTION TO BE TAXED AS A RIC, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
General
Subject to the discussion below, an investment in the Preferred Stock generally is subject to the same U.S. federal income tax considerations applicable to an investment in our common stock. See “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus for a general discussion of the considerations relating to an investment in our common stock, which would also apply to common stock received upon conversion of the Preferred Stock.
Distributions
In the case of distributions with respect to the Preferred Stock, a holder of such shares generally will be subject to the same rules that are applicable to distributions received by holders of our common stock, as discussed in the accompanying prospectus. However, in determining the extent to which a distribution will be treated as being made from our earnings and profits, our earnings and profits will be allocated, on a pro rata basis, first to distributions with respect to our preferred stock, and then to our common stock. In addition, the IRS currently requires a RIC that has two or more classes of shares outstanding to designate to each such class proportionate amounts of each type of its income (e.g., ordinary income, capital gain dividends, qualified dividend income, dividends eligible for the dividends received deduction) for each tax year based upon the percentage of total dividends distributed to each class for such year. Dividends are taxable to you even if they are reinvested in additional Preferred Stock pursuant to the Preferred Stock Dividend Reinvestment Plan. Shares acquired pursuant to the Preferred Stock Dividend Reinvestment Plan should have an initial tax basis equal to the amount of the dividend reinvested therein and a holding period that begins on the day after the date the dividend is paid. The proposed regulations referred to under the heading “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus, permitting (subject to limitations) a 20% deduction with respect to certain dividends paid by us that attributable to our “qualified REIT dividends,” have been finalized.
Under Section 305(c) of the Code, a holder of convertible preferred stock of a corporation may be treated as having received a constructive distribution from the corporation if the conversion rate of the convertible preferred stock is adjusted (or fails to be adjusted) and as a result of such adjustment (or failure to adjust), the proportionate interest of such holder in the corporation’s assets or earnings and profits is increased, unless the adjustment (or failure to adjust) is made pursuant to a bona fide, reasonable anti-dilution formula. We do not expect to treat the reduction over time of the Holder Optional Conversion Fee applicable to the A1/A3 Shares as an adjustment that gives rise constructive distributions under Section 305(c). However, no assurances can be given that the IRS would not challenge that position.
In addition, in the case of preferred stock that is required to be redeemed, or for which the holder has an option to require a redemption (such as the Holder Optional Redemption with respect to the Series A4 Shares and the Series M4 Shares), Section 305(c) of the Code also requires that the holder recognize constructive distributions if the redemption price exceeds the preferred stock’s “issue price” (such excess, the “redemption premium”) by more than a statutorily defined de minimis threshold. Such constructive distributions are required to be recognized in advance of a corresponding receipt of cash under
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principles similar to the rules for “original issue discount” on debt instruments. Although the Series A4 Shares and the Series M4 Shares may be treated as issued for a price below the applicable redemption price as a result of a reduction in sales commissions or for other reasons, we currently do not expect the holders of the Series A4 Shares and the Series M4 Shares to be required to recognize constructive distributions under this rule. The determination of the “issue price” and de minimis threshold and other relevant matters with respect to the Series A4 Shares and the Series M4 Shares are uncertain, and certain factors affecting such determinations are outside of our control. Accordingly, we cannot assure you that (i) the IRS will not challenge a determination that any redemption premium is less than the de minimis threshold or (ii) that holders of Series A4 Shares or Series M4 Shares will not otherwise be required to recognize constructive distributions under the foregoing rule.
If we allow dividends on the Preferred Stock to accumulate to an amount that exceeds certain thresholds in relation to a holder’s tax basis in the Preferred Stock and subsequently pay such accumulated dividends, such payment could be characterized as an “extraordinary dividend” under the Code, with the result that certain corporate holders may be required to reduce their tax basis in the Preferred Stock by a portion of such extraordinary dividend, and a non-corporate holder may be required to treat loss on the sale of such Preferred Stock as long-term capital loss to the extent of a portion of the extraordinary dividends received. Prospective investors should consult their tax advisor with respect to these rules.
Sale or Exchange
Subject to the discussion below regarding redemptions and conversions of the Preferred Stock, a holder generally will realize capital gain or loss on a sale or other disposition of Preferred Stock measured by the difference between the holder’s amount realized on the sale or exchange and the holder’s adjusted tax basis in its Preferred Stock, and such gain or loss would be treated in accordance with the sections of the discussion in the accompanying prospectus relating to sales and exchanges of common stock.
Redemptions
A redemption of Preferred Stock (including a conversion of Preferred Stock solely for cash) will be treated under Section 302 of the Code as a taxable sale or other disposition, in accordance with the sections of this discussion and the discussion in the accompanying prospectus relating to sales or other dispositions of our stock by our stockholders (except that redemption proceeds attributable to declared but unpaid dividends, if any, generally would be treated as a distribution), if the redemption (i) is “substantially disproportionate” with respect to the holder; (ii) results in a “complete termination” of the holder’s stock interest in us; or (iii) is “not essentially equivalent to a dividend” with respect to the holder, all within the meaning of Section 302(b) of the Code. In determining whether any of these tests have been met, shares (including both Preferred Stock and common stock) actually owned and considered to be owned by the holder by reason of certain constructive ownership rules set forth in the Code generally must be taken into account. In general, a holder that owns (actually or constructively) only an insubstantial percentage of the total equity interests in us and that exercises no control over our corporate affairs will be entitled to sale or exchange treatment if such holder experiences a reduction in its equity interest in us as a result of the redemption. Because the determination as to whether any of the alternative tests of Section 302(b) of the Code is satisfied with respect to any particular holder of Preferred Stock will depend upon the facts and circumstances as of the time the determination is made, prospective investors are advised to consult their tax advisors to determine such tax treatment.
If a redemption does not satisfy any of the foregoing tests, the amount of cash received in the redemption will be treated as a distribution, generally taxable in accordance with the sections of this discussion and the discussion in the accompanying prospectus relating to distributions to our stockholders, except that we expect to allocate our current earnings and profits to regular distributions on our preferred stock and common stock (in the manner described above), if any, before redemptions on the Preferred Stock. The holder’s adjusted tax basis in the redeemed Preferred Stock would, in that case, be transferred to the holder’s remaining stockholdings in us. If, however, the holder has no remaining stockholdings in us, such basis may, under certain circumstances, be transferred to a related person, or it may be lost entirely.
With respect to a redemption of our Preferred Stock that is treated as a distribution but that is not otherwise taxable as a dividend because it exceeds our earnings and profits, the method by which a holder must reduce its basis is uncertain in situations where the holder owns different blocks of stock that were acquired at different prices and thus have different bases. Each holder should consult its own tax advisor with respect to the treatment of a redemption of our Preferred Stock that is treated as a distribution.
Conversions
Conversion of the Preferred Stock solely for common stock. Upon the conversion of Preferred Stock solely into our common stock (and cash in lieu of a fractional share), you generally will not recognize gain or loss on the conversion, except with respect to cash received in lieu of a fractional share and amounts treated as attributable to dividend arrearages, which will
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be treated as described below. Your adjusted tax basis in our common stock received upon conversion of the Preferred Stock will equal your tax basis in the corresponding Preferred Stock (reduced by any basis allocable to a fractional share), except that the tax basis of common stock that are attributable to dividend arrearages will equal the fair market value of such stock at the time of conversion. Your holding period for our common stock received generally will include the holding period for the corresponding Preferred Stock surrendered in the conversion, except that the holding period of common stock treated as attributable to dividend arrearages will commence on the day after the date of receipt.
Cash received in lieu of a fractional share upon conversion generally is expected to be treated as a payment in redemption of the fractional share in accordance with the discussion under “-Redemption.” Your tax basis in a fractional share will be determined by allocating your tax basis in the common stock received (including the fractional share deemed received) between the common stock actually received upon conversion and the fractional share, in accordance with their respective fair market values.
Any common stock received in respect of accrued and unpaid dividends that have been declared will be taxable as described above under “-Distributions.” The tax treatment of a holder’s receipt of common stock paid upon conversion in respect of accrued and unpaid dividends that have not been declared is uncertain. Such common stock may be treated as (and we may choose to report such amounts as) a distribution as described under “-Distributions” in an amount equal to the lesser of (i) the amount of such accrued but unpaid dividends and (ii) the amount by which the fair market value of the common stock received in the conversion (including fractional shares deemed received) exceeds the issue price of the Preferred Stock. References in this discussion to amounts treated as attributable to dividend arrearages include any amounts properly treated as distributions.
Conversion of the Preferred Stock solely for cash. A conversion of Preferred Stock in exchange solely for cash should be treated as a redemption in accordance with the discussion above under “-Redemptions.’’
Conversion of the Preferred Stock for cash and common stock. The tax treatment of a conversion of Preferred Stock into cash and common stock is uncertain and subject to different possible characterizations. Upon such a conversion, we intend to treat the conversion as a recapitalization under Section 368(a)(1)(E) of the Code. Under that characterization, you would recognize gain equal to the lesser of (i) the excess of the fair market value of the common stock (including any fractional share) and cash received (excluding any amounts received that are treated as attributable to dividend arrearages, which would be treated as described above) over your tax basis in the Preferred Stock and (ii) the amount of cash received (less any cash treated as attributable to dividend arrearages and any cash attributable to a fractional share). Such gain generally would be treated as capital gain on the disposition of the Preferred Stock unless the receipt of cash has the effect of a dividend under Sections 302 and 356(a)(2) of the Code, in which case the portion of such gain equal to your ratable share, if any, of our earnings and profits would be treated as a dividend (with any remainder of such gain treated as capital gain). You would not be able to recognize any loss realized in the conversion (except with respect to cash received in lieu of a fractional share). Your adjusted tax basis in the common stock received in the recapitalization (excluding any common stock treated as attributable to dividend arrearages, which would have a tax basis equal the fair market value of such stock) would equal your tax basis in the corresponding Preferred Stock (reduced by any basis allocable to a fractional share), less the amount of cash received (excluding cash treated as attributable to dividend arrearages and any cash received in lieu of a fractional share), plus the amount of any taxable gain recognized on the conversion (other than with respect to a fractional share). Your holding period for the common stock received would include the holding period for the corresponding Preferred Stock surrendered in the conversion except that the holding period of any common stock treated as attributable to dividend arrearages would commence on the day after the date of receipt.
Alternatively, if, in the unexpected event that the receipt of cash and common stock upon conversion of the Preferred Stock is not treated as a single recapitalization, it is possible that the cash payment could be treated as the proceeds from the redemption of a portion of the Preferred Stock and taxed as described above under “-Redemptions,’’ and the common stock received would be treated as received in a recapitalization of the remaining Preferred Stock, which generally would not be taxable to you except to the extent of any common stock treated as attributable to dividend arrearages. In such case, although the law on this point is not entirely clear, your basis in the common stock received would equal a proportionate part (based on the relative fair market values of the common stock and the amount of cash you receive in the conversion) of the basis of the corresponding Preferred Stock surrendered in the conversion and the holding period of the common stock received would include the period during which you held such Preferred Stock, except that the holding period of any common stock treated as attributable to dividend arrearages would commence on the day after the date of receipt.
Cash received in lieu of a fractional share upon conversion into cash and common stock generally would be treated in accordance with the discussion above of cash in lieu of fractional shares under “-Conversion of the Preferred Stock solely for common stock.”
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    Holders are urged to consult their tax advisors concerning the tax treatment to them if the Preferred Stock are converted for a combination of our common stock and cash.
Reorganization Event. The treatment of the conversion of the Preferred Stock into a security other than our common stock as a result of a Reorganization Event may depend on a number of factors, including the nature of the Reorganization Event and the security into which the Preferred Stock is convertible, and such transaction could be in whole or in part a taxable transaction for any particular holder. Holders should consult their own tax advisors as to the treatment of any such transaction.
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USE OF PROCEEDS
Assuming that all shares of Preferred Stock sold in the offering are A1/A3 Shares and A4 Shares, we estimate that the net proceeds from this offering, if fully subscribed, will be approximately $1,770.0 million after deducting organizational and offering expenses of approximately $230.0 million payable by us.
We expect to use the net proceeds from this offering to maintain and enhance balance sheet liquidity, including repayment of debt under our credit facility, if any, investments in high quality short-term debt instruments or a combination thereof, and to make long-term investments in accordance with our investment objective.
    As of December 27, 2023, we had $970.2 million in outstanding borrowings under our credit facility and, based on the assets currently pledged as collateral on the facility, a total of approximately $767.8 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 term SOFR plus 205 basis points, with no minimum SOFR floor. Additionally, the lenders charge a fee on the unused portion of the credit facility equal to either 40 basis points if more than 60% of the credit facility is drawn, or 70 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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PRICE RANGE OF COMMON STOCK
Incorporated by reference to our Form 10-Q and Form 10-K filings. See “Incorporation by Reference”.
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CAPITALIZATION
    The table below assumes that we will sell all of the 80,000,000 shares of Preferred Stock offered by this prospectus supplement at a price of $25.00 per share (excluding any shares of Preferred Stock issued pursuant to our Preferred Stock Dividend Reinvestment Plan), but there is no guarantee that there will be any sales of our Preferred Stock pursuant to this prospectus supplement and the accompanying prospectus. Actual sales, if any, of our Preferred Stock under this prospectus supplement and the accompanying prospectus may be less than as set forth in the table below. The last reported sale price per share of our common stock on the Nasdaq Global Select Market on December 27, 2023 was $6.05. The following table sets forth our capitalization as of September 30, 2023:
on an actual basis;
on an as adjusted basis giving effect to the assumed sale and issuance of an additional 8,000,000 shares of A3 preferred stock at a price of $25 per share less an assumed selling commission of 7% of the Stated Value and a dealer manager fee of 3% of the Stated Value;
on an as further adjusted basis giving effect to the transaction noted above, the assumed sale of 11,873,692 shares of our A4 preferred stock at a price of $25 per share less an assumed selling commission of 7% of the Stated Value and a dealer manager fee of 3% of the Stated Value (80,000,000 shares of our Preferred Stock less 53,104,875 shares of the A1/A3 Shares and 7,021,433 shares of the M1/M2/M3 Shares previously sold as well as the issuance of the 8,000,000 shares of A3 preferred stock assumed above); and
on an as further adjusted basis giving effect to the transactions noted above and the conversion of all shares of A1/A3 Shares and M1/M2/M3 Shares into common stock and assuming all 60,391,774 A1/A3 Shares then outstanding pay a Holder Optional Conversion Fee of 9.00% and all 6,037,606 M1/M2/M3 Shares then outstanding pay the aggregate amount of all dividends, whether paid or accrued, on such M Share in the three full months prior to the conversion date and are converted at a conversion rate based on the 5-day VWAP of our common stock on December 26, 2023, which was $6.1469 (the actual 5-day VWAP of our common stock on a conversion date may be more or less than $6.1469, which may result in more or less shares of common stock issued).
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 or incorporated by reference in this prospectus supplement and the accompanying prospectus.

We are also offering other series of preferred stock in a separate offering. The collective ongoing impact of these offerings will be reflected in the financial statements included in our Form 10-Q and Form 10-K filings with the SEC. See “Incorporation By Reference.”
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As of September 30, 2023
  Actual 
As Adjusted for
Assumed Additional A3 Shares Issued

As further
Adjusted
for the new A4
Offering
 As further
Adjusted
for Conversion
to Common
  
(In thousands, except shares and per share data)
(Unaudited)
Long-term debt, including current maturities:     
Borrowings under senior credit facility $915,021  $915,021 $915,021 $915,021 
Senior Convertible Notes 156,168  156,168 156,168  156,168 
Senior Unsecured Notes 1,081,240  1,081,240 1,081,240  1,081,240 
Prospect Capital InterNotes®
 358,834  358,834 358,834  358,834 
Total long-term debt 2,511,263  2,511,263 2,511,263 2,511,263 
Preferred Stock, par value $0.001 per share at carrying value plus cumulative accrued and unpaid dividends     
Preferred stock, par value $0.001 per share at carrying value plus cumulative accrued and unpaid dividends
 1,470,247 (1)1,650,247 (2)1,947,089 (3)466,773 (4)
Net Assets Applicable to Common Stockholders
Common stock, par value $0.001 per share (1,552,100,000 shares of common stock authorized; 408,618,704 shares outstanding actual and 408,618,704 shares outstanding as adjusted and 408,618,704 shares outstanding as further adjusted for this offering and 673,531,847 shares outstanding as further adjusted for conversion to common stock) 409  409 409 657 
Common stock paid-in capital in excess of par value 4,151,023  4,151,023 4,151,023 5,631,091 
Total distributable earnings (loss) (370,566) (370,566)(404,703)(404,703)
Total common stockholders’ equity 3,780,866  3,780,866 3,746,729 5,227,045 
Total capitalization $7,762,376  $7,942,376 $8,205,081 $8,205,081 

(1)     As of September 30, 2023, actual preferred stock includes 447,900,000 shares authorized, with 72,000,000 shares of preferred stock authorized for each of the Series A1, Series M1, Series M2, Series A3 and Series M3, and 20,000,000 shares of preferred stock authorized for each of the Series AA1, Series MM1, Series AA2 and Series MM2, and 1,000,000 shares of preferred stock authorized for the Series A2, and 6,900,000 shares of preferred stock authorized for the Series A; 30,780,669 Series A1 shares issued and outstanding; 3,155,352 Series M1 shares issued and outstanding; 0 Series M2 shares issued and outstanding; 21,611,105 Series A3 shares issued and outstanding; 2,882,254 Series M3 shares issued and outstanding; 0 Series AA1 shares issued and outstanding; 0 Series MM1 issues and outstanding; 0 Series AA2 Shares outstanding; 0 Series MM2 shares outstanding; 164,000 Series A2 shares issued and outstanding; and 5,900,345 Series A shares issued and outstanding at carrying value plus cumulative accrued and unpaid dividends.
(2)     As of September 30, 2023, preferred stock adjusted for the assumed issuance of an additional 8,000,000 shares of A3 shares includes 647,900,000 shares authorized, with 80,000,000 shares of preferred stock authorized for each of the Series A1, Series M1, Series M2, Series A3 and Series M3, and 20,000,000 shares of preferred stock authorized for each of the Series AA1, Series MM1, Series AA2 and Series MM2, and 1,000,000 shares of preferred stock authorized for the Series A2 and 6,900,000 shares of preferred stock authorized for the Series A; 30,780,669 Series A1 shares issued and outstanding; 3,155,352 Series M1 shares issued and outstanding; 0 Series M2 shares issued and outstanding; 29,611,105 Series A3 shares issued and outstanding; 2,882,254 Series M3 shares issued and outstanding; 0 Series AA1 shares issued and outstanding; 0 Series MM1 issues and outstanding; 0 Series AA2 Shares outstanding; 0 Series MM2 shares outstanding; 164,000 Series A2 shares issued and outstanding; and 5,900,345 Series A shares issued and outstanding at carrying value plus cumulative accrued and unpaid dividends.
(3)     As of September 30, 2023 and assuming all shares issued under this new offering are of Series A4, preferred stock as further adjusted for this new series offering includes 647,900,000 shares authorized, with 80,000,000 shares of preferred stock authorized for each of the Series A1, Series M1, Series M2, Series A3, Series M3, Series A4 and Series M4, and 20,000,000 shares of preferred stock authorized for each of the Series AA1, Series MM1, Series AA2 and Series MM2, and 1,000,000 shares of preferred stock authorized for the Series A2 and 6,900,000 shares of preferred stock authorized for the Series A; 30,780,669 Series A1 shares issued and outstanding; 3,155,352 Series M1 shares issued and outstanding; 0 Series M2 shares issued and outstanding; 29,611,105 Series A3 shares issued and outstanding; 2,882,254
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Series M3 shares issued and outstanding; 11,873,692 Series A4 shares issued and outstanding; 0 Series M4 shares issued and outstanding; 0 Series AA1 shares issued and outstanding; 0 Series MM1 issues and outstanding; 0 Series AA2 Shares outstanding; 0 Series MM2 shares outstanding; 164,000 Series A2 shares issued and outstanding; and 5,900,345 Series A shares issued and outstanding at carrying value plus cumulative accrued and unpaid dividends.
(4)     As of September 30, 2023 and assuming all shares issued under this offering are of Series A3 and Series A4, preferred stock as further adjusted for conversion of this offering to common includes 647,900,000 shares authorized, with 80,000,000 shares of preferred stock authorized for each of the Series A1, Series M1, Series M2, Series A3, Series M3, Series A4 and Series M4 and 20,000,000 shares of preferred stock authorized for each of the Series AA1, Series MM1, Series AA2 and Series MM2, and 1,000,000 shares of preferred stock authorized for the Series A2 and 6,900,000 shares of preferred stock authorized for the Series A; 0 Series A1 shares issued and outstanding; 0 Series M1 shares issued and outstanding; 0 Series M2 shares issued and outstanding; 0 Series A3 shares issued and outstanding; 0 Series M3 shares issued and outstanding; 11,873,692 Series A4 shares issued and outstanding; 0 Series M4 shares issued and outstanding; 0 Series AA1 shares issued and outstanding; 0 Series MM1 shares issued and outstanding; 0 Series AA2 shares issued and outstanding; 0 Series MM2 shares issued and outstanding; 164,000 Series A2 shares issued and outstanding; and 5,900,345 Series A shares issued and outstanding at carrying value plus cumulative accrued and unpaid dividends.

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SALES OF COMMON STOCK BELOW NET ASSET VALUE

We must obtain stockholder approval under the 1940 Act in order to sell shares of our common stock below NAV in connection with any Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares. Our stockholders authorized us to sell shares of our common stock at prices below net asset value until June 9, 2024. If we do not have or have not obtained any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares by paying or delivering, as the case may be:

any portion of the IOC Settlement Amount that we elect to pay in cash; and
a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion.

See “Risk Factors-Shares of Preferred Stock may be redeemed for, or converted into, shares of common stock” in this prospectus supplement.

At our special meeting of stockholders held on June 9, 2023, our stockholders approved our ability to sell an unlimited number of shares of our common stock at any level of discount from NAV per share during the twelve-month period following such approval. In order to sell shares of our common stock pursuant to this authorization, including in connection with an Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares, a majority of our directors who have no financial interest in the sale and a majority of our independent directors must (a) find that the sale is in our best interests and in the best interests of our stockholders, (b) in consultation with any underwriter or underwriters or sales manager or sales managers of the offering, if any, make a good faith determination as of a time either immediately prior to the first solicitation by us or on our behalf of firm commitments to purchase such shares, or immediately prior to the issuance of such shares of common stock, that the price at which such shares are to be sold is not less than a price which closely approximates the market value of such shares, less any distributing commission or discount and (c) the number of shares sold on any given date does not exceed 25% of its outstanding common stock immediately prior to such sale. For additional information, see “Sales of Common Stock Below Net Asset Value” in the accompanying prospectus.

We may make sales of our common stock at prices below our most recently determined NAV per share. Pursuant to the approval of the Board, we have made such sales in the past, and we may continue to do so under this prospectus supplement in connection with the sale of the Preferred Stock.

In making a determination that a sale of our common stock below NAV per share is in our and our stockholders’ best interests, the Board considers a variety of factors including matters such as:
The effect that a sale of common stock below NAV per share would have on our stockholders, including the potential dilution they would experience as a result of the sale;
The amount per share of common stock by which the sales price per share, or common stock price component of the conversion rate, and the net proceeds per share are less than the most recently determined NAV per share;
The relationship of recent market prices of our common stock to NAV per share and the potential impact of the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares on the market price per share of our common stock;
Whether the estimated offering price, or common stock price component of the conversion rate, would closely approximate the market value of our shares of common stock;
The potential market impact of being able to raise capital during the current financial market environment;
The nature of any new investors anticipated to acquire shares of common stock in the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares;
The anticipated rate of return on and quality, type and availability of investments; and
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The leverage available to us, both before and after the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares and other borrowing terms.

The Board also considers the fact that sales of the A1/A3 Shares and M1/M2/M3 Shares, which are convertible into shares of common stock at a discount will benefit our Investment Adviser as the Investment Adviser will earn additional investment management fees on the proceeds of (or assets retained as a result of) such offering, as it would from the offering of any other securities of the Company or from the offering of common stock at a premium to NAV per share.

In connection with offerings pursuant to the stockholder approval we received on June 9, 2023, including an Issuer Optional Conversion of A1/A3 Shares and M1/M2/M3 Shares, we will not sell shares of common stock (including shares of A1/A3 Shares and M1/M2/M3 Shares convertible into shares of common stock) under a prospectus supplement to our registration statement (the “current registration statement”) if the cumulative dilution to our NAV per share from offerings under the current registration statement exceeds 15%. This limit would be measured separately for each offering pursuant to the current registration statement by calculating the percentage dilution or accretion to aggregate NAV from that offering and then summing the percentage from each offering. For example, if our NAV per share of common stock determined at the time of the first offering was $9.25 and we have 408.6 million shares of common stock outstanding, a sale of A1/A3 Shares and M1/M2/M3 Shares convertible into 50.0 million shares of common stock at net proceeds to us (or assets retained in a conversion) of $4.63 per share of common stock (an approximately 50% discount) would produce dilution of 5.45%. If we subsequently determined that our NAV per share of common stock decreased to $8.75 on the then 458.6 million shares of common stock outstanding and then made an additional offering, we could, for example, sell approximately an additional 108.2 million shares of common stock at net proceeds to us (or assets retained in a conversion) of $4.37 per share of common stock (an approximate 50% discount to our decreased NAV per share of common stock of $8.75), which would produce dilution of 9.55%, before we would approach the aggregate 15% limit. If we file a new post-effective amendment, the threshold would reset.

Issuance by us of our common stock at a discount from NAV per share upon conversion of A1/A3 Shares and M1/M2/M3 Shares poses a potential risk for our existing common stockholders whether or not they participate in the Preferred Stock offering, as well as for new investors who participate in the Preferred Stock offering. Any issuance of common stock at a price below NAV per share upon conversion of A1/A3 Shares or M1/M2/M3 Shares will result in an immediate dilution to many of our existing common stockholders even if they participate in the offering of Preferred Stock.

    NAV per share of common stock used in the tables below is based on our NAV per share of common stock determined as of September 30, 2023, adjusted to give effect to issuances of an estimated 8,000,000 shares of Series A3 shares made after September 30, 2023 and before December 27, 2023. The NAV per share of common stock used for purposes of providing information in the tables below is thus an estimate and does not necessarily reflect actual NAV per share of common stock at the time sales are made. Actual NAV per share of common stock may be higher or lower based on potential changes in valuations of our portfolio securities, accruals of income, expenses and distributions declared and thus may be higher or lower at the assumed sales prices than shown below.

A holder’s exercise of his or her Holder Optional Conversion option for A1/A3 Shares or M1/M2/M3 Shares is not subject to the foregoing restrictions and limitations; however, the dilutive effects of such conversion to existing common stockholders would be the same as described below under “Impact on Existing Stockholders Who Do Not Receive Shares of Common Stock Below NAV.”

Examples of Dilutive Effect of the Issuance of Shares of Common Stock Below NAV Per Share
The tables below provide hypothetical examples of the impact that a conversion of A1/A3 Shares or M1/M2/M3 Shares using a price less than NAV per share may have on the NAV per share of common stockholders who do not receive shares of common stock below NAV. However, the tables below do not show and are not intended to show all potential changes in market price of our common stock that may occur from a conversion of A1/A3 Shares or M1/M2/M3 Shares using a price less than NAV per share and it is not possible to predict any potential market price change of our common stock that may occur from such an offering of common stock or a conversion of A1/A3 Shares or M1/M2/M3 Shares. There is no maximum level of
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discount from NAV at which we may sell (including as a result of a conversion of A1/A3 Shares or M1/M2/M3 Shares) shares of common stock pursuant to this authority.

Impact On Existing Common Stockholders Who Do Not Receive Shares of Common Stock Below NAV

Our existing common stockholders who do not receive shares of common stock below NAV per share upon conversion of A1/A3 Shares or M1/M2/M3 Shares or who do not buy additional shares of common stock in the secondary market at the same or lower price per share of common stock used in a conversion of A1/A3 Shares or M1/M2/M3 Shares (after expenses and commissions) face the greatest potential risks. These common stockholders will experience an immediate decrease (often called dilution) in the NAV of the shares of common stock they hold. These common stockholders will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than the increase we will experience in our assets, potential earning power and voting interests due to the conversion of A1/A3 Shares or M1/M2/M3 Shares. These common stockholders may also experience a decline in the market price of their shares of common stock, which often reflects to some degree announced or potential increases and decreases in NAV. This decrease could be more pronounced as the size of the offering of A1/A3 Shares or M1/M2/M3 Shares and the discount of the 5-day VWAP to our NAV per share of our common stock increases. There is no maximum level of discount from NAV at which we may issue shares of common stock (including as a result of a conversion of A1/A3 Shares or M1/M2/M3 Shares) pursuant to our stockholder authority.

The following chart illustrates the level of NAV dilution that would be experienced by a common stockholder who does not receive or acquire shares of common stock at the same discount to NAV. It is not possible to predict the level of market price decline that may occur. NAV has not been finally determined for any day after September 30, 2023. The table below is shown based upon the September 30, 2023 reported NAV per share of common stock of $9.25.

The examples assume that we have 408.6 million shares of common stock outstanding, $8,033,800,000 in total assets and $2,603,000,000 in total liabilities, and $1,650,247,000 in preferred stock at carrying value. The current NAV attributable to common holders and NAV per share of common stock are thus $3,780,553,000 and $9.25. The table illustrates the dilutive effect upon a nonparticipating common stockholder of (1) conversion of A1/A3 Shares or M1/M2/M3 Shares into 20,430,000 shares of common stock (5% of the outstanding shares of common stock) at $8.79 per share of common stock after offering expenses, commission, and conversion fees (a 5% discount from NAV); (2) conversion of A1/A3 Shares or M1/M2/M3 Shares into 40,860,000 shares of common stock (10% of the outstanding shares of common stock) at $8.33 per share of common stock after offering expenses, commissions, and conversion fees (a 10% discount from NAV); (3) conversion of A1/A3 Shares or M1/M2/M3 Shares into 102,150,000 shares of common stock (25% of the outstanding shares of common stock) at $6.94 per share of common stock after offering expenses, commissions, and conversion fees (a 25% discount from NAV); and (4) conversion of A1/A3 Shares or M1/M2/M3 Shares into 102,150,000 shares of common stock (25% of the outstanding shares of common stock) at $1.00 per share of common stock after offering expenses, commissions and conversion fees (an 89.2% discount from NAV). This example assumes the Preferred Stock offering is fully subscribed, all shares of Preferred Stock sold are A1/A3 Shares, selling and offering expenses of 1.5% and that all shares of Preferred Stock are convertible in the first year after they are sold and are subject to a 9.00% conversion fee.

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Prior to
Sale
Example 1
5% Offering at
5% Discount
Example 2
10% Offering at
10% Discount
Example 3
25% Offering at
25% Discount
Example 4
25% Offering at
89.2% Discount
Below
NAV
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Offering Price
Price per Share of common stock to Public$9.04 $8.56 $7.14 1.03 
Net Proceeds per Share of common stock to Issuer$8.79 $8.33 $6.94 1.00 
Decrease to NAV
Total Shares of common stock Outstanding408,600,000429,030,0005.00 %449,460,00010.00 %510,750,00025.00 %510,750,00025.00 %
NAV per Share of common stock$9.25 $9.23 (0.24)%$9.17 (0.91)%$8.79 (5.00)%7.60(17.83)%
Dilution to Common Stockholder
Shares Held by Common Stockholder A408,600408,600— 408,600— 408,600— 408,600— 
Percentage Held by Common Stockholder A0.10 %0.10 %(4.76)%0.09 %(9.09)%0.08 %(20.00)%0.08 %(20.00)%
Total Asset Values
Total NAV Held by Common Stockholder A$3,780,553 $3,771,552 (0.24)%$3,746,184 (0.91)%$3,591,525 (5.00)%$3,106,453 (17.83)%
Total Investment by Common Stockholder A (Assumed to be $9.25 per Share of common stock on Shares of common stock Held Prior to Sale)$3,780,553 $3,780,553 $3,780,553 $3,780,553 
Total Dilution to Common Stockholder A (Total NAV Less Total Investment)$(9,001)$(34,369)$(189,028)$(674,100)
Per Share Amounts
NAV per Share of common stock Held by Stockholder A$9.23 $9.17 $8.79 $7.60 
Investment per Share of common stock Held by Common Stockholder A (Assumed to be $9.25 per Share of common stock on Shares of common stock Held Prior to Sale)$9.25 $9.25 $9.25 $9.25 $9.25 
Dilution per Share of common stock Held by Common Stockholder A (NAV per Share Less Investment per Share)$(0.02)$(0.08)$(0.46)$(1.65)
Percentage Dilution to Common Stockholder A (Dilution per Share Divided by Investment per Share of common stock)(0.24)%(0.91)%(5.00)%(17.83)%
Impact On Existing Common Stockholders Who Do Receive Shares of Common Stock Below NAV
Our existing common stockholders who receive shares of common stock issued below NAV per share upon conversion of A1/A3 Shares or M1/M2/M3 Shares or who buy additional shares of common stock in the secondary market at the same or lower price per share of common stock used in connection with a conversion of A1/A3 Shares or M1/M2/M3 Shares (after expenses and commissions) will experience the same types of NAV dilution as the nonparticipating common stockholders, albeit at a lower level, to the extent they receive less than the same percentage of the discounted common stock as their interest in our shares of common stock immediately prior to the conversion of A1/A3 Shares or M1/M2/M3 Shares. The level of NAV dilution will decrease as the number of shares of common stock such stockholders receive increases. Existing common stockholders who receive more than such percentage will experience NAV dilution on their existing shares of common stock but will, in contrast to existing common stockholders who receive less than their proportionate share of their interest in our shares of common stock in an Issuer Optional Conversion of A1/A3 Shares or M1/M2/M3 Shares, experience an increase (often called accretion) in average NAV per share of common stock over their investment per share of common stock and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares. The level of accretion will increase as the excess number of shares of common stock such
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common stockholder purchases or receives increases. Even a common stockholder who over-participates will, however, be subject to the risk that we may make additional discounted offerings of common stock or conversions of A1/A3 Shares or M1/M2/M3 Shares in which such common stockholder does not participate, in which case such a stockholder will experience NAV dilution as described above in such subsequent offerings of common stock or conversions of A1/A3 Shares or M1/M2/M3 Shares. These common stockholders may also experience a decline in the market price of their shares of common stock, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares and level of discounts increases. There is no maximum level of discount from NAV at which we may sell (including as a result of a conversion of A1/A3 Shares or M1/M2/M3 Shares) shares of common stock pursuant to this authority.

The following chart illustrates the level of dilution and accretion for a common stockholder that acquires shares of common stock equal to (1) 50% of its proportionate share of 102,150,000 shares of common stock issued upon conversion of A1/A3 Shares or M1/M2/M3 Shares (i.e., 51,075 shares, which is 0.05% of the shares of common stock issued upon conversion of A1/A3 Shares or M1/M2/M3 Shares rather than its 0.10% proportionate share) and (2) 150% of such percentage (i.e., 153,225 shares, which is 0.15% of the shares of common stock issued upon conversion of A1/A3 Shares or M1/M2/M3 Shares rather than its 0.10% proportionate share). NAV per common share has not been finally determined for any day after September 30, 2023. The table below is shown based upon the adjusted NAV per common share of $3,780,553,000 as described above. The following example assumes an issuance upon conversion of A1/A3 Shares or M1/M2/M3 Shares of 102,150,000 shares of common stock at a price upon conversion rate of $6.94 with a 10.00% underwriting discount and commissions and 1.5% of offering expenses ($6.94 per share net of expenses). This example assumes the Preferred Stock offering is fully subscribed, all shares of Preferred Stock sold are A1/A3 Shares and that all shares of Preferred Stock are convertible in the first year after they are sold and are subject to a 9.00% conversion fee.
50 % Participation
150% Participation
Prior to
Sale Below
NAV
Following
Sale
%
Change
Following
Sale
%
Change
Offering Price
Price per Share of common stock to Public$7.14 $7.14 
Net Proceeds per Share of common stock to Issuer$6.94 $6.94 
Decrease to NAV
Total Shares of common stock Outstanding408,600,000510,750,00025.00 %510,750,00025.00 %
NAV per Share of common stock$9.25 $8.79 (5.00)%$8.79 (5.00)%
Dilution to Nonparticipating Common Stockholder
Shares Held by Common Stockholder A408,600459,67512.50 %561,82537.50 %
Percentage Held by Common Stockholder A0.10 %0.09 %(10.00)%0.11 %10.00 %
Total NAV Held by Common Stockholder A$9.25 $4,040,466 6.88 %$4,938,347 30.63 %
Total Investment by Common Stockholder A (Assumed to be $9.25 per Share) on Shares of common stock Held Prior to Sale$4,144,992 $4,873,870 
Total Dilution to Common Stockholder A (Total NAV Less Total Investment)$(104,526)$64,478 
NAV per Share of common stock Held by Common Stockholder A after offering$8.79 $8.79 
Investment per Share of common stock Held by Common Stockholder A (Assumed to be $9.25 per Share of common stock on Shares of common stock Held Prior to Sale)$9.02 $8.68 
Dilution per Share of common stock Held by Common Stockholder A (NAV per Share Less Investment per Share of common stock)$(0.23)$0.11
Percentage Dilution to Common Stockholder A (Dilution per Share of common stock Divided by Investment per Share of common stock)(2.52)%1.32 %

The tables above provide hypothetical examples of the impact that an offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares using a price less than NAV per share of common stock may have on the NAV per share of existing common stockholders who do and do not participate in such an offering of common stock or conversion of A1/A3
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Shares or M1/M2/M3 Shares. However, the tables above do not show and are not intended to show any potential changes in market price of our common stock that may occur from an offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares using a price less than NAV per share and it is not possible to predict any potential market price change that may occur from such an offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares.

Impact On New Investors
Investors who are not currently common stockholders and who participate in a conversion of A1/A3 Shares or M1/M2/M3 Shares using a common stock price below NAV but whose investment per share is greater than the resulting NAV per share due to selling compensation and expenses paid by the issuer will experience an immediate decrease, albeit small, in the NAV per share of common stock compared to the price they pay for their shares of common stock. Investors who are not currently common stockholders and who participate in a conversion of A1/A3 Shares or M1/M2/M3 Shares using a common stock price below NAV per share and whose investment per share of common stock is also less than the resulting NAV per share due to selling compensation and expenses paid by the issuer being significantly less than the discount per share will experience an immediate increase in the NAV of their shares of common stock and their NAV per share compared to the price they pay for their shares of common stock. These investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to the risk that we may make additional discounted offerings of common stock or conversions of A1/A3 Shares or M1/M2/M3 Shares in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in such subsequent offerings of common stock or conversions of A1/A3 Shares or M1/M2/M3 Shares. These investors may also experience a decline in the market price of their shares of common stock, which often reflects to some degree announced or potential increases and decreases in NAV per share. This decrease could be more pronounced as the size of the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares and level of discounts increases. There is no maximum level of discount from NAV at which we may sell (including as a result of a conversion of A1/A3 Shares or M1/M2/M3 Shares) shares of common stock pursuant to this authority.

The following chart illustrates the level of accretion for new investors that would be experienced by a new investor in the same hypothetical 5%, 10%, and 25% issuances of shares of common stock upon conversion of A1/A3 Shares or M1/M2/M3 Shares as described in the first chart above. The illustration is for a new investor who receives the same percentage (0.10%) of the shares of common stock in the conversion of A1/A3 Shares or M1/M2/M3 Shares, as the common stockholder in the prior examples held immediately prior to the offering of common stock or conversion of A1/A3 Shares or M1/M2/M3 Shares. It is not possible to predict the level of market price decline of the common stock that may occur. Actual sales prices and discounts may differ from the presentation below. There is no maximum level of discount from NAV at which shares of common stock may be issued upon conversion of A1/A3 Shares or M1/M2/M3 Shares pursuant to the stockholder authority.

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Example 1
5% Offering
at 5% Discount
Example 2
10% Offering
 at 10% Discount
Example 3
25% Offering
at 25% Discount
Prior to Sale Below NAVFollowing Sale% ChangeFollowing Sale% ChangeFollowing Sale% Change
Offering Price
Price per Share of common stock to Public$9.04 $8.56 $7.14 
Net Proceeds per Share of common stock to Issuer$8.79 $8.33 $6.94 
Decrease to NAV
Total Shares of common stock Outstanding408,600,000 429,030,000 5.00 %449,460,000 10.00 %510,750,000 25.00 %
NAV per Share of common stock$9.25 $9.23 (0.24)%$9.17 (0.91)%$8.79 (5.00)%
Dilution to Participating Stockholder
Shares Held by Common Stockholder A— 20,430 40,860 102,150 
Percentage Held by Common Stockholder A— %— %0.01 %0.02 %
Total NAV Held by Common Stockholder A$— $188,578 $374,618 $897,881 
Total investment by Common Stockholder A$184,649 $349,861 $728,878 
Total Accretion to Common Stockholder A (Total NAV Less Total Investment)$3,929 $24,757 $169,003 
NAV per Share of common stock Held by Stockholder A$9.23 $9.17 $8.79 
Investment per Share of common stock Held by Common Stockholder A$9.04 $8.56 $7.14 
Accretion per Share of common stock Held by Common Stockholder A (NAV per Share Less Investment per Share of common stock)$0.19 $0.61 $1.65 
Percentage Accretion to Common Stockholder A (Dilution per Share Divided by Investment per Share of common stock)2.10 %7.13 %23.30 %
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PLAN OF DISTRIBUTION
General

We are offering up to a maximum of 80,000,000 shares, par value $0.001 per share, of our Series A1 Shares, Series A3 Shares, Series A4 Shares, Series M1 Shares, Series M2 Shares, Series M3 Shares, and Series M4 Shares and any combination of any future series of preferred stock, collectively, the Preferred Stock, through Preferred Capital Securities, LLC, or PCS, on a “reasonable best efforts” basis, which means that the dealer manager is only required to use its good faith efforts and reasonable diligence to sell the Preferred Stock and has no firm commitment or obligation to purchase any specific number or dollar amount of the Preferred Stock. The aggregate number of shares issued in this offering across all series of Preferred Stock shall not exceed 80,000,000. The Preferred Stock will be sold at a public offering price of $25.00 per share of Preferred Stock, subject to reduction as described below under “-Dealer Manager and Participating Broker-Dealer Compensation.” The Preferred Stock will not be certificated.

We will sell the Preferred Stock using two closing services provided by DTC. The first service is DTC Settlement and the second service is DRS Settlement. Investors purchasing the Preferred Stock through DTC Settlement will coordinate with their registered representatives to pay the full purchase price for their Preferred Stock by the settlement date, and such payments will not be held in escrow. Investors who are permitted to utilize the DRS Settlement method will complete and sign subscription agreements, which will be delivered to the escrow agent, UMB Bank N.A. In addition, such investors will pay the full purchase price for their Preferred Stock to the escrow agent (as set forth in the subscription agreement), to be held in trust for the investors’ benefit pending release to us as described herein. See “-Settlement Procedures” for a description of the closing procedures.

In connection with the sale of the Preferred Stock on our behalf, PCS may be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation of PCS may be deemed to be underwriting commissions or discounts.

PCS is a securities broker-dealer registered with the SEC and a member firm of FINRA. The principal business address of PCS is 3290 Northside Parkway, NW, Suite 800, Atlanta, GA 30327.

Subject to compliance with applicable regulation, we may also sell up to $300,000,000 in aggregate liquidation preference of Preferred Stock in this offering directly to investors in negotiated transactions in which neither PCS nor any other entity is acting as an underwriter, dealer or agent. We will determine the per share price through negotiations with these investors. For such direct sales, no selling commissions or dealer manager fees will be paid and such sales will be made pursuant to Rule 3a4-1 under the Exchange Act or otherwise in accordance with applicable law. PCS will not be responsible for regulatory compliance and will not receive any related fee on any direct transactions we may conduct. The gross proceeds we receive from any such direct sales will not be included in the gross proceeds of this offering for purposes of calculating FINRA’s 10% underwriting limit described below under “-Compensation of Dealer Manager and Participating Broker-Dealers.”

Compensation of Dealer Manager and Participating Broker-Dealers

With respect to A1/A3 Shares and Series A4 Shares, we will pay a selling commission up to 7% of the Stated Value. Selling commissions are payable by us to PCS. Reductions in selling commissions on sales of A1/A3 Shares and Series A4 Shares will be reflected in reduced public offering prices as described below under “- Dealer Manager and Participating Broker-Dealer Compensation” and the net proceeds to us will generally not be impacted by such reductions; therefore, we will bear a reduction in net proceeds to us up to 7% of the Stated Value on all A1/A3 Shares and Series A4 Shares although the selling commission compensation paid by us to our dealer manager may represent less than 7% of the Stated Value. There will be no selling commission paid for the sale of shares of M1/M2/M3 Shares. We will also pay to PCS 3% of the Stated Value per share of Preferred Stock from this offering as compensation for acting as dealer manager. As dealer manager, PCS, will manage, direct and supervise its associated persons who will be wholesalers in connection with the offering. The combined selling commission, dealer manager fee, properly documented expenses associated with the offer, sale or distribution of the Preferred Stock, which are paid by or reimbursed by the Company and are deemed components of underwriting compensation under this
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offering, and all other forms of underwriting compensation paid in connection with this Offering will not exceed FINRA’s 10% underwriting compensation limit under FINRA Rule 2310(b)(4)(B)(ii), which we refer to as FINRA’s 10% underwriting compensation cap. We will not pay referral or similar fees to any accountants, attorneys or other persons in connection with the distribution of the Preferred Stock.

We expect PCS to authorize third-party broker-dealers that are members of FINRA, which we refer to as participating broker-dealers, to sell our Preferred Stock. PCS may reallow all or a portion of its selling commission attributable to a participating broker-dealer. PCS may also reallow a portion of its dealer manager fee earned on the proceeds raised by a participating broker-dealer, to such participating broker-dealer as a marketing fee. The amount of the marketing fee to be reallowed to any participating broker-dealer will be determined by the dealer manager in its sole discretion and include such factors as:

the volume of sales estimated to be made by the participating broker-dealer; or
the participating broker-dealer’s agreement to provide one or more of the following services:
providing internal marketing support personnel and marketing communications vehicles to assist the dealer manager in our promotion;
responding to investors’ inquiries concerning monthly statements, valuations, distribution rates, tax information, annual reports, redemption rights and procedures, our financial status, and the markets in which we have invested;
assisting investors with redemptions; or
providing other services requested by investors from time to time and maintaining the technology necessary to adequately service investors.

PCS, as our dealer manager, provides services to us, which include conducting broker-dealer seminars, holding informational meetings and providing information and answering any questions concerning this offering. We pay PCS a dealer manager fee equal to 3% of the Stated Value. In addition to re-allowing a portion of the dealer manager fee to the participating broker-dealers as a marketing fee, the fee will also be used for, or we will reimburse PCS for certain costs that FINRA includes in the 10% underwriting compensation limit (subject to such limit), such as the cost of the following activities:

travel and entertainment expenses;
compensation of PCS’s employees in connection with wholesaling activities (which does not include non-transaction based compensation);
expenses incurred in coordinating broker-dealer seminars and meetings;
wholesaling expense reimbursements paid by PCS or its affiliates to other entities;
the national and regional sales conferences of our selected dealers;
training and education meetings for registered representatives of our participating broker-dealers; and
permissible forms of non-cash compensation to registered representatives of our participating broker-dealers, such as logo apparel items and gifts that do not exceed an aggregate value of $100 per annum per registered representative and that are not pre-conditioned on achievement of a sales target (including, but not limited to, seasonal gifts).

Dealer Manager and Participating Broker-Dealer Compensation
The table below sets forth the nature and estimated amount of all items viewed as “underwriting compensation” by FINRA, assuming all shares of Preferred Stock sold hereunder are A1/A3 Shares and Series A4 Shares.

Selling Commission (maximum)$140,000,000
Dealer Manager fee (maximum)$60,000,000
Issuer expenses$30,000,000
Total$230,000,000

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Subject to the cap on organization and offering expenses described below, we also will reimburse PCS for reimbursements it may make to participating broker-dealers for bona fide due diligence expenses presented on detailed and itemized invoices.

We or our affiliates also may provide permissible forms of non-cash compensation to registered representatives of PCS and the participating broker-dealers, including gifts. In no event shall such gifts exceed an aggregate value of $100 per annum per participating salesperson, or be pre-conditioned on achievement of a sales target. The value of such items will be considered underwriting compensation in connection with this offering and subject to FINRA’s 10% underwriting compensation cap. The selling commission, dealer manager fee, properly documented expenses associated with the offer, sale or distribution of the Preferred Stock, which are paid by or reimbursed by the Company and are deemed components of underwriting compensation under this offering, and all other forms of underwriting compensation paid in connection with this Offering, when combined with issuer expenses (including due diligence expenses submitted on detailed and itemized invoices and fees for establishing servicing arrangements for new stockholder accounts), are not expected to exceed 11.5% of the gross offering proceeds. Our Board may, in its discretion, authorize the Company to incur organization and offering expenses in excess of 11.5% of the gross offering proceeds, but not in excess of FINRA’s limit on organization and offering expenses of 15% of the gross proceeds. However, in no event will total underwriting compensation paid in connection with this Offering exceed FINRA’s 10% underwriting compensation cap. The dealer manager’s legal expenses will be paid by the dealer manager from the dealer manager fee.

To the extent permitted by law and our charter, we will indemnify the participating broker-dealers and the dealer manager against certain civil liabilities, including certain liabilities arising under the Securities Act. However, the SEC takes the position that indemnification against liabilities arising under the Securities Act is against public policy and is not enforceable.

Issuer expenses include all expenses (other than the selling commission, the dealer manager fee and other items of underwriting compensation subject to FINRA’s 10% underwriting cap) to be paid by us or on our behalf in connection with the qualification and registration of this offering and the marketing and distribution of the shares of Preferred Stock, including, without limitation, expenses for printing and amending registration statements or supplementing prospectuses, mailing and distributing costs, all advertising and marketing expenses (including actual costs incurred for travel, meals and lodging for our employees to attend retail seminars hosted by broker-dealers or bona fide training or educational meetings hosted by us and costs and expenses incident to the travel and accommodation of the Dealer Manager acting on behalf of the Company in making road show presentations, presentations to participating broker-dealers and other broker-dealers and financial advisors with respect to the offering), charges of transfer agents, registrars and experts and fees, expenses and taxes related to the filing, registration and qualification, as necessary, of the sale of the shares of Preferred Stock under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees, and expenses in connection with non-offering issuer support services relating to the Preferred Stock.

We will be responsible for issuer expenses for the Preferred Stock in this offering, including registration fees, printing expenses and the Company’s legal and accounting fees, which we estimate will total approximately $30.0 million (excluding selling commissions and dealer manager fees).

The net proceeds to us will generally not be affected by reducing the commissions payable in connection with sales of A1/A3 Shares and Series A4 Shares. To the extent a participating broker-dealer reduces its selling commission below 7%, the public offering price per share of A1/A3 Shares or Series A4 Shares will be decreased by an amount equal to such reduction. Selling commissions will be established by each participating broker-dealer or other financial intermediary, and it is anticipated that all or a portion of the 7% selling commission on A1/A3 Shares and Series A4 Shares will be reduced for an investor that purchases A1/A3 Shares or Series A4 Shares in a fee-based or “wrap” account maintained with a participating broker-dealer or other financial intermediary. The selling commission on the Series A4 Shares cannot be reduced below 5%. It is anticipated that participating broker-dealers or other financial intermediaries whose clients purchase Series A4 Shares through fee-based or "wrap" accounts will sell Series A4 Shares at the public offering price that reflects the maximum selling commission reduction
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to 5%, but that such participating broker-dealers or other financial intermediaries will not accept any selling commission from the dealer manager. In this circumstance, the net proceeds to us from a sale of Series A4 Shares would be $23.75.

As reflected in the table below, the selling commission received by participating broker-dealers will vary depending on the fixed offering price at which the participating broker-dealers resell the A1/A3 Shares or Series A4 Shares to investors. The table below details various fixed offering prices within the established range of $23.25 to $25.00 per share of Preferred Stock only at 50 basis point intervals of the corresponding selling commission. The public offering price per share of Preferred Stock at any given selling commission will equal the product of (a) 0.93 plus the applicable selling commission, multiplied by (b) $25.00. The compensation received by the participating broker-dealers in connection with the sales of the A1/A3 Shares and Series A4 Shares will never exceed 7% of the Stated Value, plus any applicable marketing fee reallowed by the dealer manager to the participating broker-dealers.

Selling CommissionPublic Offering Price per share of A1/A3 Shares and Series A4 Shares
7.00%$25.00
6.50%$24.88
6.00%$24.75
5.50%$24.63
5.00%$24.50
4.50%$24.38
4.00%$24.25
3.50%$24.13
3.00%$24.00
2.50%$23.88
2.00%$23.75
1.50%$23.63
1.00%$23.50
0.50%$23.38
0.00%$23.25
The obligations of the Dealer Manager may be terminated upon the occurrence of certain conditions specified in the dealer manager agreement.
Settlement Procedures
We will deliver the A1/A3 Shares, Series A4 Shares, Series M1 Shares, Series M3 Shares, and Series M4 Shares through the facilities of DTC Settlement or DRS Settlement. We will deliver the Series M2 Shares through DRS Settlement.

Using DTC Settlement for the A1/A3 Shares, Series A4 Shares, Series M1 Shares, Series M3 Shares, and Series M4 Shares, you can place an order for the purchase of Preferred Stock through your broker-dealer. A broker-dealer using this service will have an account with DTC in which your funds are placed to facilitate the anticipated bi-weekly closing cycle. Orders will be executed by your broker-dealer electronically and you must coordinate with your registered representative to pay the full purchase price of the Preferred Stock by the settlement date, which depends on when you place the order during the bi-weekly settlement cycle and can be anywhere from one to 15 days after the date of your order, or longer if we delay a closing date. This purchase price will not be held in escrow. Orders will be effective upon our acceptance, and we reserve the right to reject any order in whole or in part in our sole discretion for any or no reason.

Using DRS Settlement for the A1/A3 Shares, Series M4 Shares, the M1/M2/M3 Shares, and the Series M4 Shares, you should complete and sign a subscription agreement similar to the one filed as an exhibit to the registration statement of which this prospectus is a part, which is available from your registered representative and which will be delivered to the escrow agent.
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In connection with a DRS Settlement subscription, you should pay the full purchase price of the Preferred Stock to the escrow agent as set forth in the subscription agreement. Subscribers may not withdraw funds from the escrow account. Subscriptions will be effective upon our acceptance, and we reserve the right to reject any subscription in whole or in part in our sole discretion for any or no reason.

We have the sole right, which we may delegate to our dealer manager, to, without notice to our dealer manager or the participating broker-dealers: (i) determine and change the number and timing of closings, including the ability to change the number and timing of closings after communicating the anticipated closing timing to participating broker dealers; (ii) limit the total amount of Preferred Stock sold by all participating broker-dealers per closing; (iii) limit the total amount of Preferred Stock sold by any one participating broker-dealer per closing; and (iv) limit the total number of shares of Preferred Stock sold by any one participating broker-dealer.

Irrespective of whether you purchase shares of Preferred Stock using DTC Settlement or DRS Settlement, by accepting Preferred Stock you will be deemed to have accepted the terms of our charter.

Subject to compliance with Rule 15c2-4 of the Exchange Act, in connection with purchases using DRS Settlement, our dealer manager or the broker-dealers participating in this offering promptly will deposit any checks received from subscribers in an escrow account maintained by UMB Bank N A. by the end of the next business day following receipt of the subscriber’s subscription documents and check. When our dealer manager or a participating broker-dealer’s internal supervisory procedures are conducted at the site at which the subscription documents and check were initially received from the subscriber, our dealer manager or the participating broker-dealer, as applicable, will transmit the subscription documents and check to the escrow agent by the end of the next business day following receipt of the check and subscription documents. When, pursuant to our dealer manager or a participating broker dealer’s internal supervisory procedures, the final internal supervisory procedures are conducted at a different location (the “final review office”), the dealer manager or participating broker-dealer, as applicable, shall transmit the check and subscription documents to the final review office by the end of the next business day following the receipt of the subscription documents and check. The final review office will, by the end of the next business day following its receipt of the subscription documents and check, forward the subscription documents and check to the escrow agent.

In recommending to a potential investor the purchase of Preferred Stock, each participating broker-dealer must have reasonable grounds to believe, on the basis of information obtained from the potential investor concerning his investment objectives, other investments, financial situation and needs, and any other information known by the participating broker-dealer, that the potential investor is or will be in a financial position appropriate to enable him to realize to a significant extent the benefits described in the prospectus, including the tax benefits where they are a significant aspect of the Company; the potential investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity; and the program is otherwise suitable for the potential investors. In making this determination, the participating broker-dealer will rely on relevant information provided by the investor, including information as to the investor’s age, investment objectives, investment experience, investment time horizon, income, net worth, financial situation, other investments, liquidity needs, risk tolerance and other pertinent information. Each investor should be aware that the participating broker-dealer will be responsible for determining whether this investment is appropriate for your portfolio. However, you are required to represent and warrant in the subscription agreement or, if placing an order through your registered representative not through a subscription agreement in connection with a DTC Settlement, to the registered representative, that you have received a copy of this prospectus and have had sufficient time to review this prospectus. PCS and each participating broker-dealer shall maintain records of the information used to determine that an investment in the Preferred Stock is suitable and appropriate for an investor. These records are required to be maintained for a period of at least six years.

Minimum Purchase Requirements

For your initial investment in our Preferred Stock, you must invest at least $5,000, or such lesser amounts in our sole discretion.

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Selling Restrictions

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of shares of Preferred Stock, or the possession, circulation or distribution of this prospectus supplement, the accompanying prospectus or any other material relating to us or shares of Preferred Stock where action for that purpose is required. Accordingly, shares of Preferred Stock may not be offered or sold, directly or indirectly, and neither this prospectus supplement, the accompanying prospectus nor any other offering material or advertisements in connection with shares of Preferred Stock may be distributed or published, in or from any non-U.S. jurisdiction except in compliance with any applicable rules and regulations of any such non-U.S. jurisdiction.

The dealer manager, participating broker-dealers and their respective affiliates may arrange to sell the shares of Preferred Stock offered hereby in certain jurisdictions outside the United States, either directly or through affiliates, where it is permitted to do so.

Liquidity of Prior Vehicles

FINRA Rule 2310(b)(3)(D) requires that we disclose the liquidity of prior direct participation programs or REITs sponsored by our Investment Adviser. As of the date of this prospectus, our Investment Adviser is currently sponsoring one other such program. Like us, this other program is a business development company regulated under the 1940 Act. The other program is still in its offering phase. Also, we do not provide a liquidity date as set forth in the “Prospectus Summary” and “Summary of Preferred Stock Liquidity Features” sections of this prospectus.

Notice to Prospective Investors in Israel

In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of Preferred Stock under the Israeli Securities Law, 5728-1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728-1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions (the “Addressed Investors”); or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728-1968, subject to certain conditions (the “Qualified Investors”). The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase securities in addition to the 35 Addressed Investors. The Company has not and will not take any action that would require it to publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728-1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for the shares of Preferred Stock to any person within the State of Israel, other than to Qualified Investors and up to 35 Addressed Investors.

Qualified Investors may have to submit written evidence that they meet the definitions set out in the First Addendum to the Israeli Securities Law, 5728-1968. In particular, we may request, as a condition to be offered shares of Preferred Stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728-1968; (ii) which of the categories listed in the First Addendum to the Israeli Securities Law, 5728-1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728-1968 and the regulations promulgated thereunder in connection with the offer; (iv) that the shares of Preferred Stock that it will be issued are, subject to exemptions available under the Israeli Securities Law, 5728-1968: (a) for its own account; (b) for investment purposes only; and (c) not issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728-1968; and (v) that it is willing to provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration containing, inter alia, the Addressed Investor's name, address and passport number or Israeli identification number.

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Operations

    The Company has engaged Preferred Shareholder Services, LLC, an affiliate of the Dealer Manager, to provide certain non-distribution related issuer support services relating to the Preferred Stock, including, for example, assistance with recordkeeping, answering investor inquiries regarding the Company, including regarding distribution payments and reinvestments, helping investors understand their investments upon their request and assistance with share repurchase requests, pursuant to a services agreement. The Company is responsible for any payments due under such agreement.

In order to reduce the risk of any one Preferred Stock investor exercising undue influence over the Company, other holders of any series of the Company’s preferred stock (whether sold in this offering or otherwise) and holders of the Company’s common stock, the Company intends to request that any investors or group of investors purchasing or holding significant positions in any series or combination of series of the Company’s preferred stock whether sold in this offering or otherwise, either in one transaction or as a result of a series of transactions, and whether as part of an original issuance or by virtue of any secondary market transaction of which the Company becomes aware, enter into an agreement pursuant to which such investor or group of investors will agree to vote its shares of the Company’s preferred stock in the same proportion as the vote of all other holders of the Company’s capital stock voting on the matter (also known as “mirror voting”).
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LEGAL MATTERS

The legality of the Preferred Stock will be passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, and Venable LLP, as special Maryland counsel, Baltimore, Maryland. Venable LLP has from time to time acted as counsel for us and our subsidiaries and may do so in the future.
INDEPENDENT ACCOUNTING FIRM
Deloitte & Touche LLP is the independent registered public accounting firm of the Company.
AVAILABLE INFORMATION
We have filed with the SEC a universal shelf registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the Preferred Stock offered by this prospectus supplement and accompanying prospectus. The registration statement contains additional information about us and the Preferred Stock 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 September 30, 2023, 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.
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, the accompanying prospectus and any related free writing prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the agents. This prospectus supplement, the accompanying prospectus and any related free writing prospectus do 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. The information contained in this prospectus supplement, the accompanying prospectus and any related free writing prospectus, as well as information incorporated by reference, is current only as of the date of that information. Our business, financial condition, results of operations and prospects may have changed since that date. Neither the delivery of this prospectus supplement, the accompanying prospectus or any related free writing 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 current as of any time subsequent to the date hereof.
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PROSPECTUS


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PROSPECT CAPITAL CORPORATION
Common Stock
Preferred Stock
Debt Securities
Subscription Rights
Warrants
Units
Prospect Capital Corporation(“we”, “our”, “us” or the “Company”), is a company that lends to and invests in middle market privately-held companies. Prospect Capital Corporation, a Maryland corporation, has been organized as a closed-end investment company since April 13, 2004 and has filed an election to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”) and is a non-diversified investment company within the meaning of the 1940 Act.
Prospect Capital Management L.P., our investment adviser, manages our investments and Prospect Administration LLC, our administrator, provides the administrative services necessary for us to operate.
We may offer, from time to time, in one or more offerings or series, together or separately, under this registration statement our 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, collectively, the Securities, to provide us with additional capital. Securities may be offered at prices and on terms to be disclosed in one or more supplements to this prospectus. You should read this prospectus and the applicable prospectus supplement carefully before you invest in our Securities.
We may offer shares of common stock, subscription rights, units, warrants, options or rights to acquire shares of common stock, at a discount to net asset value per share in certain circumstances. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. At our special meeting of stockholders, held on June 10, 2022, subject to the condition that the maximum number of shares salable below net asset value pursuant to this authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock immediately prior to each such offering, our stockholders approved our ability to sell or otherwise issue shares of our common stock at any level of discount from net asset value per share for a twelve month period expiring on the anniversary of the date of stockholder approval. See “Sales of Common Stock Below Net Asset Value” in this prospectus.
Our Securities may be offered directly to one or more purchasers, or through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to the offering will identify any agents, underwriters or dealers involved in the sale of our Securities, and will disclose any applicable purchase price, fee, commission or discount arrangement between us and our agents, underwriters or dealers, or the basis upon which such amount may be calculated. We may not sell any of our Securities through agents, underwriters or dealers without delivery of the prospectus and a prospectus supplement describing the method and terms of the offering of such Securities. Our common stock is traded on The NASDAQ Global Select Market under the symbol “PSEC.” As of February 8, 2023 the last reported sales price for our common stock was $7.38.
Investing in our Securities involves a heightened risk of total loss of investment, including the risk of leverage. You should read carefully the discussion of the material risks and uncertainties discussed under the caption “Risk Factors” beginning on page 12 of this prospectus, in Part I , Item 1A of our most recent Annual Report on Form 10-K, in Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, and in, or incorporated by reference into, any applicable prospectus supplement made in connection with a specific offering, and under similar headings in the other documents that we incorporate by reference into this prospectus or any prospectus supplement before investing in any of our Securities.
This prospectus contains important information about us that you should know before investing in our Securities. Please read it before making an investment decision 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. You may make inquiries or obtain this information free of charge by writing to Prospect Capital Corporation at 10 East 40th Street, 42nd Floor, New York, NY 10016, or by calling 212-448-0702. Our Internet address is http://www.prospectstreet.com. Information contained on our website is not
incorporated by reference into this prospectus or any prospectus supplement and you should not consider information contained on our website to be a part of this prospectus or any prospectus supplement. You may also obtain information about us from our website and the SEC’s website (http://www.sec.gov).
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.

The date of this Prospectus is February 10, 2023.




TABLE OF CONTENTS

Page

Statistical and market data used in this prospectus has been obtained from governmental and independent industry sources and publications. We have not independently verified the data obtained from these sources. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements contained in this prospectus, for which the safe harbor provided in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 is not available.
    You should rely only on the information contained, or incorporated by reference, in this prospectus and any accompanying prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making offers to sell these securities in any jurisdiction where such offer or sale is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front of this prospectus and the information in any accompanying prospectus supplement is accurate only as of the date on the front of the accompanying prospectus supplement. Our business, financial condition and prospects may have changed since that date. To the extent required by applicable law, we will update this prospectus during the offering period to reflect material changes to the disclosure herein. See also “Incorporation by Reference” and “Available Information.”
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INCORPORATION BY REFERENCE
This prospectus is part of a registration statement that we have filed with the SEC. Pursuant to the Small Business Credit Availability Act, or the SBCAA, we are allowed to “incorporate by reference” the information that we file with the SEC, which means we can disclose important information to you by referring you to those documents. We incorporate by reference into this prospectus the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including any filings on or after the date of this prospectus from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to which this prospectus relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this prospectus. Any statement in a document incorporated by reference into this prospectus will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this prospectus or (2) any other subsequently filed document that is incorporated by reference into this prospectus modifies or supersedes such statement. The documents incorporated by reference herein include:
our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed with the SEC on September 6, 2022, and as amended on September 12, 2022;
our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2022 filed with the SEC on November 9, 2022, and December 31, 2022 filed with the SEC on February 8, 2023;
our Current Reports on Form 8-K filed with the SEC on September 7, 2022, September 13, 2022, September 19, 2022, October 12, 2022 (two filings), October 14, 2022, October 17, 2022, November 14, 2022 and December 12, 2022;
our definitive Proxy Statement on Schedule 14A filed with the SEC on September 13, 2022;
the description of the Company’s 5.50% Series A1 Preferred Stock, 5.50% Series M1 Preferred Stock and 5.50% Series M2 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on September 8, 2020, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
the description of the Company’s 5.50% Series AA1 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on November 27, 2020, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
the description of the Company’s 5.50% Series A2 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on June 14, 2021, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
the description of the Company’s 5.35% Series A Fixed Rate Cumulative Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on July 19, 2021, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
the description of the Company’s 5.50% Series MM1 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on March 1, 2022, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
The description of the Company’s 6.50% Series A3 Preferred Stock and 6.50% Series M3 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on October 12, 2022, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby;
The description of the Company’s 6.50% Series AA2 Preferred Stock and 6.50% Series MM2 Preferred Stock contained in the Company’s Registration Statement on Form 8-A (File No. 001-35554) filed with the Commission on October 12, 2022, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby; and
the description of our common stock contained in our Registration Statement on Form 8-A (File No. 000-50691) filed with the SEC on April 16, 2004, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby.

To obtain copies of these filings, see “Available Information.” We will also provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this prospectus. You should direct requests for documents by writing to:
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Investor Relations
10 East 40th Street, 42nd Floor
New York, NY 10016
Telephone: (212) 448-0702

This prospectus is also available on our website at http://www.prospectstreet.com. Information contained on our website is not incorporated by reference into this prospectus or any prospectus supplement and you should not consider that information to be part of this prospectus or any prospectus supplement.

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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the SEC, using the “shelf” registration process as a “well-known seasoned issuer,” as defined in Rule 405 under the Securities Act. Under the shelf registration process, we may offer, from time to time on a delayed basis over a three-year period, shares of our common stock, shares of our preferred stock, debt securities, subscription rights to purchase shares of our securities, warrants representing rights to purchase our securities or units comprised of one or more of the other securities described in this prospectus in any combination. The Securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of the Securities that we may offer. Each time we use this prospectus to offer Securities, we will provide an accompanying prospectus supplement that will contain specific information about the terms of that offering. This prospectus and any accompanying prospectus supplement will together constitute the prospectus for an offering of our Securities. The accompanying prospectus supplement may also add, update or change information contained in this prospectus. Please carefully read this prospectus and any accompanying prospectus supplement together with any exhibits and the additional information described under the headings “Incorporation by Reference” and “Available Information” and the section under the heading “Risk Factors” before you make an investment decision. You should rely only on the information contained, or incorporated by reference, collectively, in this prospectus and any accompanying prospectus supplement.

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PROSPECTUS SUMMARY
The following summary contains basic information about this offering. It does not contain all the information that may be important to an investor. For a more complete understanding of this offering, we encourage you to read this entire document and the documents to which we have referred in this prospectus, together with any accompanying prospectus supplement.
Information contained or incorporated by reference in this prospectus may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements about the future that may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “plans,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. 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. The matters described in “Risk Factors” and certain other factors noted and referenced throughout this prospectus and in any exhibits to the registration statement of which this prospectus is a part, constitute cautionary statements identifying important factors with respect to any such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from those in such forward-looking statements. The Company reminds all investors that no forward-looking statement can be relied upon as an accurate or even mostly accurate forecast because humans cannot forecast the future.
The terms “we,” “us,” “our,” “Prospect,” and “Company” refer to Prospect Capital Corporation; “Prospect Capital Management” or the “Investment Adviser” refers to Prospect Capital Management L.P., our investment adviser; and “Prospect Administration” or the “Administrator” refers to Prospect Administration LLC, our administrator.
The Company
Prospect Capital Corporation is a financial services company that primarily lends to and invests in middle market privately-held companies. Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. 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, as amended (the “Code”). We are a non-diversified company within the meaning of the 1940 Act. Our headquarters are located at 10 East 40th Street, 42nd Floor, New York, NY 10016, and our telephone number is (212) 448-0702. 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 $7.9 billion of total assets as of December 31, 2022.
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. PCF has been consolidated since operations commenced.
Investment Portfolio
As of December 31, 2022, we had investments in 130 portfolio companies and collateralized loan obligations (“CLOs”). The aggregate fair value as of December 31, 2022 of investments in these portfolio companies and CLOs held on that date is approximately $7.8 billion. Our portfolio across all our performing interest-bearing investments had an annualized current yield of 12.9% as of December 31, 2022, excluding equity investments and non-accrual loans. Our annualized current yield was 10.3% as of December 31, 2022 across all investments.
The Offering
We may offer, from time to time, in one or more offerings or series, together or separately, our Securities, which we expect to use initially to maintain balance sheet liquidity, involving repayment of debt under our credit facility, investment in high quality short-term debt instruments or a combination thereof, and thereafter to make long-term investments in accordance with our investment objectives.
Our Securities may be offered directly to one or more purchasers, through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to a particular offering will disclose the terms of that offering, including the name or names of any agents, underwriters or dealers involved in the sale of our Securities by us, the
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purchase price, and any fee, commission or discount arrangement between us and our agents, underwriters or dealers, or the basis upon which such amount may be calculated. We may not sell any of our Securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of our Securities.
We may sell our common stock, subscription rights, units, warrants, options or rights to acquire our common stock, at a price below the current net asset value of our common stock upon approval of our directors, including a majority of our independent directors, in certain circumstances. Our stockholders approved our ability to issue warrants, options or rights to acquire our common stock at our 2008 annual meeting of stockholders for an unlimited time period and in accordance with the 1940 Act which provides that the conversion or exercise price of such warrants, options or rights may be less than net asset value per share at the date such securities are issued or at the date such securities are converted into or exercised for shares of our common stock. At our special meeting of stockholders, held on June 10, 2022, subject to the condition that the maximum number of shares salable below net asset value pursuant to this authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock immediately prior to each such offering, our stockholders approved our ability to sell or otherwise issue shares of our common stock at any level of discount from net asset value per share for a twelve month period expiring on the anniversary of the date of stockholder approval. See “Sales of Common Stock Below Net Asset Value” in this prospectus and in the prospectus supplement, if applicable. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. We have no current intention of engaging in a rights offering, although we reserve the right to do so in the future.
Set forth below is additional information regarding the offering of our Securities:
Use of ProceedsUnless otherwise specified in a prospectus supplement, we intend to use the net proceeds from selling Securities pursuant to this prospectus initially to maintain balance sheet liquidity, involving repayment of debt under our revolving credit facility (the “2022 Facility”), if any, investments in high quality short-term debt instruments or a combination thereof, and thereafter to make long-term investments in accordance with our investment objective. Interest on borrowings under the 2022 Facility is one-month SOFR plus 205 basis points. Additionally, the lenders charge a fee on the unused portion of the 2022 Facility equal to either 40 basis points if more than 60% of the 2022 Facility is drawn, 70 basis points if more than 35% and an amount less than or equal to 60% of the 2022 Facility is drawn, or 150 basis points if an amount less than or equal to 35% of the 2022 Facility is drawn. The 2022 Facility requires us to pledge assets as collateral in order to borrow under the 2022 Facility. See “Use of Proceeds.”
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Investment Advisory AgreementThe Company has entered into an investment advisory and management agreement with the Investment Adviser, or the “Investment Advisory Agreement,” under which the Investment Adviser, subject to the overall supervision of our Board of Directors, manages the day-to-day operations of, and provides investment advisory services to, us. Under the terms of the Investment Advisory Agreement, the Investment Adviser: (i) determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes, (ii) identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and (iii) closes and monitors investments we make.

For providing these services the Investment Adviser receives a fee from us, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 2.00% on our total assets. For services currently rendered under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters and appropriately adjusted for any share issuances or repurchases during the current calendar quarter.

The incentive fee has two parts. The first part, the income incentive fee, is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees and other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement described below, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a “hurdle rate” of 1.75% per quarter (7.00% annualized). The “catch-up” provision requires us to pay 100% of our pre-incentive fee net investment income with respect to that portion of such income, if any, that exceeds the hurdle rate but is less than 125% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming an annualized hurdle rate of 7%). The “catch-up” provision is meant to provide Prospect Capital Management with 20% of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 125% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming an annualized hurdle rate of 7%). The second part of the incentive fee, the capital gains incentive fee, is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year.
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Administration AgreementThe Company has entered into an administration agreement (the “Administration Agreement”) with Prospect Administration under which Prospect Administration, among other things, provides (or arranges for the provision of) administrative services and facilities for us. For providing these services, we reimburse Prospect Administration for our allocable portion of overhead incurred by Prospect Administration in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of our Chief Financial Officer and Chief Compliance Officer and her staff, including the internal legal staff. Under this agreement, Prospect Administration furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Prospect Administration also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, Prospect Administration assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. We reimburse Prospect Administration for our allocable portion of expenses incurred by it in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of our chief executive officer, president, chief financial officer, chief operating officer, chief compliance officer, treasurer and secretary and their respective staffs.
DistributionsIn June 2010, our Board of Directors approved a change in dividend policy from quarterly distributions to monthly distributions. Since that time, we have paid monthly distributions to the holders of our common stock and intend to continue to do so. The amount of the monthly distributions is determined by our Board of Directors and is based on our estimate of our investment company taxable income and net short-term capital gains. Certain amounts of the monthly distributions may from time to time be paid out of our capital rather than from earnings for the month as a result of our deliberate planning or accounting reclassifications. Distributions in excess of our current and accumulated earnings and profits constitute a return of capital and will reduce the stockholder’s adjusted tax basis in such stockholder’s common stock. A return of capital (1) is a return of the original amount invested, (2) does not constitute earnings or profits and (3) will have the effect of reducing the basis such that when a stockholder sells its shares the sale may be subject to taxes even if the shares are sold for less than the original purchase price. After the adjusted basis is reduced to zero, these distributions will constitute capital gains to such stockholders. Certain additional amounts may be deemed as distributed to stockholders for income tax purposes. Other types of Securities will likely pay distributions in accordance with their terms. See “Price Range of Common Stock,” “Distributions” and “Material U.S. Federal Income Tax Considerations.”
TaxationWe have qualified and elected to be treated for U.S. federal income tax purposes as a regulated investment company, or a RIC, under Subchapter M of the Internal Revenue Code of 1986, or the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To maintain our qualification as a RIC and obtain RIC tax treatment, we must satisfy certain source-of-income and asset diversification requirements and distribute annually at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See “Distributions” and “Material U.S. Federal Income Tax Considerations.”
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Dividend Reinvestment and Direct Stock Purchase PlanWe have adopted a revised dividend reinvestment and direct stock purchase plan that provides for reinvestment of all dividends or distributions declared by our Board of Directors on shares of common stock on behalf of our stockholders who do not elect to receive their distribution in cash. As a result, if our Board of Directors authorizes, and we declare, a cash dividend or other distribution, then our stockholders who have not “opted out” of our dividend reinvestment and direct stock purchase plan will have their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving the cash dividend or other distribution. If you are not a current stockholder and want to enroll or have “opted out” and wish to rejoin, you may purchase shares directly through the plan or opt in by enrolling online or by contacting the plan administrator form and, if you are not a current stockholder, making an initial investment of at least $250. Stockholders who receive dividends and distributions in the form of stock are subject to the same U.S. federal, state and local tax consequences as stockholders who elect to receive their distribution in cash. See “Dividend Reinvestment and Direct Stock Purchase Plan.”
The NASDAQ Global Select Market SymbolPSEC
Anti-takeover ProvisionsOur charter and bylaws, as well as certain statutory and regulatory requirements, contain provisions that may have the effect of discouraging a third party from making an acquisition proposal for us. These anti-takeover provisions may inhibit a change in control in circumstances that could give the holders of our common stock the opportunity to realize a premium over the market price of our common stock. See “Description Of Our Capital Stock.”
Custodian, Transfer and Dividend Paying Agent and RegistrarOur Securities are held under custody agreements by (1) U.S. Bank National Association, (2) Israeli Discount Bank of New York Ltd., (3) Fifth Third Bank, (4) Peapack-Gladstone Bank, (5) Customers Bank, (6) Key Bank National Association, and (7) BankUnited, N.A. American Stock Transfer & Trust Company acts as our transfer agent, dividend paying agent and registrar for our common stock. Computershare Trust Company, N.A. acts as our transfer agent, dividend paying agent and registrar for our preferred stock.
License AgreementWe entered into a license agreement with Prospect Capital Investment Management, LLC, an affiliate of Prospect Capital Management, pursuant to which Prospect Capital Investment Management agreed to grant us a non-exclusive, royalty free license to use the name “Prospect Capital.” Under this agreement, we have a right to use the Prospect Capital name, for so long as Prospect Capital Management or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we have no legal right to the Prospect Capital name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with our Investment Adviser is in effect.
Risk FactorsInvestment in our Securities involves certain risks relating to our structure and investment objective that should be considered by prospective purchasers of our Securities. In addition, as a business development company, our portfolio primarily includes securities issued by privately-held companies. These investments generally involve a high degree of business and financial risk, and are less liquid than public securities. We are required to mark the carrying value of our investments to fair value on a quarterly basis, and economic events, market conditions and events affecting individual portfolio companies can result in quarter-to-quarter mark-downs and mark-ups of the value of individual investments that collectively can materially affect our net asset value, or NAV. Also, our determinations of fair value of privately-held securities may differ materially from the values that would exist if there was a ready market for these investments. A large number of entities compete for the same kind of investment opportunities as we do. Moreover, our business requires a substantial amount of capital to operate and to grow and we seek additional capital from external sources. In addition, the failure to qualify as a RIC eligible for pass-through tax treatment under the Code on income distributed to stockholders could have a materially adverse effect on the total return, if any, obtainable from an investment in our Securities. See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Securities.
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Available InformationWe have filed with the SEC a registration statement on Form N-2 under the Securities Act of 1933, as amended, or the Securities Act, which contains additional information about us and our Securities being offered by this prospectus. We are obligated to file annual, quarterly and current reports, proxy statements and other information with the SEC. This information is available at the SEC’s public reference room in Washington, D.C. and on the SEC’s website at http://www.sec.gov.
We maintain a website at http://www.prospectstreet.com and we make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through this website. You may also obtain such information by contacting us at 10 East 40th Street, 42nd Floor, New York, NY 10016 or by telephone at (212) 448-0702. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or any prospectus supplement.
We incorporate by reference into this prospectus the documents listed in “Incorporation by Reference” in this prospectus and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this prospectus from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to which this prospectus relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this prospectus. Any statement in a document incorporated by reference into this prospectus will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this prospectus or (2) any other subsequently filed document that is incorporated by reference into this prospectus modifies or supersedes such statement.
We will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this prospectus. Please refer to “Incorporation by Reference” and “Available Information”
See “Incorporation by Reference” and “Available Information” in this prospectus for further information on where to access, or how to request, copies of documents or further information in connection with the Company, this prospectus or an offering of Securities to which this prospectus relates.

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FEES AND EXPENSES
The following tables are intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. In these tables, we assume that we have borrowed $1.7 billion under our credit facility, which is the maximum amount available under the credit facility with the current levels of other debt, in addition to our other indebtedness of $1.9 billion. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you” or “us” or that “we” will pay fees or expenses, the Company will pay such fees and expenses out of our net assets and, consequently, you will indirectly bear such fees or expenses as an investor in the Company. However, you will not be required to deliver any money or otherwise bear personal liability or responsibility for such fees or expenses.
Stockholder transaction expenses:
Sales load (as a percentage of offering price)(1)-
Offering expenses borne by the Company (as a percentage of offering price)(2)-
Dividend reinvestment plan expenses(3)$15.00
Total stockholder transaction expenses (as a percentage of offering price)(4)-
Annual expenses (as a percentage of net assets attributable to common stock):
Management fees(5)4.49 %
Incentive fees payable under Investment Advisory Agreement (20% of realized capital gains and 20% of pre-incentive fee net investment income)(6)2.23 %
Total advisory fees6.72 %
Total interest expense(7)5.10 %
Other expenses(8)0.84 %
Total annual expenses(6)(8)12.66 %
Dividends on Preferred Stock(9)2.00 %
Total annual expenses after dividends on Preferred Stock(10)14.66 %
Example
The following table demonstrates the projected dollar amount of cumulative expenses we would pay out of net assets and that you would indirectly bear over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we have issued $0.9 billion in 5.50% Preferred Stock paying dividends of 5.50% per annum, $0.4 billion in 6.50% Preferred Stock paying dividends of 6.50% per annum, $0.15 billion in 5.35% Preferred Stock paying dividends of 5.35% per annum, we have borrowed $1.7 billion available under our line of credit, in addition to our other indebtedness of $1.9 billion, and that our annual operating expenses would remain at the levels set forth in the table above and that we would pay the costs shown in the table above.
1 Year3 Years5 Years10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return*$130 $360 $555 $920 
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return**$