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Dynamic quotes 
OFFON

PROSPECT CAPITAL CORPORATION

(PSEC)
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PROSPECT CAPITAL CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/08/2021 | 07:04am EST
(All figures in this item are in thousands except share, per share and other
data.)
The following discussion should be read in conjunction with our consolidated
financial statements and related notes and other financial information appearing
elsewhere in this Quarterly Report. In addition to historical information, the
following discussion and other parts of this Quarterly Report contain
forward-looking information that involves risks and uncertainties. Our actual
results may differ significantly from any results expressed or implied by these
forward-looking statements due to the factors discussed in Part II, "Item 1A.
Risk Factors" and "Forward-Looking Statements" appearing elsewhere herein.
Overview
The terms "Prospect," "the Company," "we," "us" and "our" mean Prospect Capital
Corporation and its subsidiaries unless the context specifically requires
otherwise.

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

On May 15, 2007, we formed a wholly owned subsidiary Prospect Capital Funding
LLC ("PCF"), a Delaware limited liability company and a bankruptcy remote
special purpose entity, which holds certain of our portfolio loan investments
that are used as collateral for the revolving credit facility at PCF. Our wholly
owned subsidiary Prospect Small Business Lending, LLC ("PSBL") was formed on
January 27, 2014, and purchased small business whole loans from online small
business loan originators, including On Deck Capital, Inc. ("OnDeck"). On
September 30, 2014, we formed a wholly-owned subsidiary Prospect Yield
Corporation, LLC ("PYC") and effective October 23, 2014, PYC holds a portion of
our collateralized loan obligations ("CLOs"), which we also refer to as
subordinated structured notes ("SSNs"). Each of these subsidiaries have been
consolidated since operations commenced.
We consolidate certain of our wholly owned and substantially wholly owned
holding companies formed by us in order to facilitate our investment strategy.
The following companies are included in our consolidated financial statements
and are collectively referred to as the "Consolidated Holding Companies": CP
Holdings of Delaware LLC ("CP Holdings"); Credit Central Holdings of Delaware,
LLC ("Credit Central Delaware"); Energy Solutions Holdings Inc.; First Tower
Holdings of Delaware LLC ("First Tower Delaware"); MITY Holdings of Delaware
Inc. ("MITY Delaware"); Nationwide Acceptance Holdings LLC; NMMB Holdings, Inc.
("NMMB Holdings"); NPH Property Holdings, LLC ("NPH"); Prospect Opportunity
Holdings I, Inc. ("POHI"); SB Forging Company, Inc. ("SB Forging"); STI Holding,
Inc.; UTP Holdings Group Inc. ("UTP Holdings"); Valley Electric Holdings I, Inc.
("Valley Holdings I"); and Valley Electric Holdings II, Inc. ("Valley Holdings
II").
We are externally managed by our investment adviser, Prospect Capital Management
L.P. ("Prospect Capital Management" or the "Investment Adviser"). Prospect
Administration LLC ("Prospect Administration"), a wholly-owned subsidiary of the
Investment Adviser, provides administrative services and facilities necessary
for us to operate.
Our investment objective is to generate both current income and long-term
capital appreciation through debt and equity investments. We invest primarily in
senior and subordinated secured debt and equity of private companies in need of
capital for acquisitions, divestitures, growth, development, recapitalizations
and other purposes. We work with the management teams or financial sponsors to
seek investments with historical cash flows, asset collateral or contracted
pro-forma cash flows.
We currently have four primary strategies that guide our origination of
investment opportunities: (1) lending to companies, including companies
controlled by private equity sponsors and not controlled by private equity
sponsors, and including both directly-originated loans and syndicated loans, (2)
lending to companies and purchasing controlling equity positions in such
companies, including both operating companies and financial services companies,
(3) purchasing controlling equity positions and lending to real estate
companies, and (4) investing in structured credit. We may also invest in other
strategies and opportunities from time to time that we view as attractive. We
continue to evaluate other origination strategies in the ordinary course of
business with no specific top-down allocation to any single origination
strategy.
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Lending to Companies - We make directly-originated, agented loans to companies,
including companies which are controlled by private equity sponsors and
companies that are not controlled by private equity sponsors (such as companies
that are controlled by the management team, the founder, a family or public
shareholders). This debt can take the form of first lien, second lien,
unitranche or unsecured loans. These loans typically have equity subordinate to
our loan position. We may also purchase selected equity co-investments in such
companies. In addition to directly-originated, agented loans, we also invest in
senior and secured loans syndicated loans and high yield bonds that have been
sold to a club or syndicate of buyers, both in the primary and secondary
markets. These investments are often purchased with a long term, buy-and-hold
outlook, and we often look to provide significant input to the transaction by
providing anchoring orders. Historically, this strategy has comprised
approximately 40%-60% of our portfolio.
Lending to Companies and Purchasing Controlling Equity Positions in Such
Companies - This strategy involves purchasing senior and secured yield-producing
debt and controlling equity positions in operating companies across various
industries. We believe this strategy provides enhanced certainty of closure to
sellers and the opportunity for management to continue on in their current
roles. These investments are often structured in tax-efficient partnerships,
enhancing returns. Historically, this strategy has comprised approximately
15%-25% of our portfolio.
Purchasing Controlling Equity Positions and Lending to Real Estate Companies -
We purchase debt and controlling equity positions in tax-efficient real estate
investment trusts ("REIT" or "REITs"). The real estate investments of National
Property REIT Corp. ("NPRC") are in various classes of developed and occupied
real estate properties that generate current yields, including multi-family
properties, and student housing. NPRC seeks to identify properties that have
historically significant occupancy rates and recurring cash flow generation.
NPRC generally co-invests with established and experienced property management
teams that manage such properties after acquisition. Additionally, NPRC makes
investments in rated secured structured notes (primarily debt of structured
credit). NPRC also purchases loans originated by certain consumer loan
facilitators. It purchases each loan in its entirety (i.e., a "whole loan"). The
borrowers are consumers, and the loans are typically serviced by the
facilitators of the loans. Historically, this overall investment strategy has
comprised approximately 10%-20% of our business.
Investing in Structured Credit - We make investments in structured credit, often
taking a significant position in subordinated structured notes (equity) and
rated secured structured notes (debt). The underlying portfolio of each
structured credit investment is diversified across approximately 100 to 200
broadly syndicated loans and does not have direct exposure to real estate,
mortgages, or consumer-based credit assets. The structured credit portfolios in
which we invest are managed by established collateral management teams with many
years of experience in the industry. Historically, this overall strategy has
comprised approximately 10%-20% of our portfolio.
We invest primarily in first and second lien secured loans and unsecured debt,
which in some cases includes an equity component. First and second lien secured
loans generally are senior debt instruments that rank ahead of unsecured debt of
a given portfolio company. These loans also have the benefit of security
interests on the assets of the portfolio company, which may rank ahead of or be
junior to other security interests. Our investments in structured credit are
subordinated to senior loans and are generally unsecured. We invest in debt and
equity positions of structured credit which are a form of securitization in
which the cash flows of a portfolio of loans are pooled and passed on to
different classes of owners in various tranches. Our structured credit
investments are derived from portfolios of corporate debt securities which are
generally risk rated from BB to B.
We hold many of our control investments in a two-tier structure consisting of a
holding company and one or more related operating companies for tax purposes.
These holding companies serve various business purposes including concentration
of management teams, optimization of third-party borrowing costs, improvement of
supplier, customer, and insurance terms, and enhancement of co-investments by
the management teams. In these cases, our investment, which is generally equity
in the holding company, the holding company's equity investment in the operating
company and any debt from us directly to the operating company structure
represents our total exposure for the investment. As of September 30, 2021, as
shown in our Consolidated Schedule of Investments, the cost basis and fair value
of our investments in controlled companies was $2,486,474 and $3,046,090,
respectively. This structure gives rise to several of the risks described in our
public documents and highlighted elsewhere in this Quarterly Report. We
consolidate all wholly owned and substantially wholly owned holding companies
formed by us for the purpose of holding our controlled investments in operating
companies. There is no significant effect of consolidating these holding
companies as they hold minimal assets other than their investments in the
controlled operating companies. Investment company accounting prohibits the
consolidation of any operating companies.
On June 11, 2021, at a special meeting of our stockholders, our stockholders
authorized us to sell shares of our common stock (during the next 12 months) at
a price or prices below our net asset value per share at the time of sale in one
or more offerings, subject to certain conditions as set forth in the proxy
statement relating to the special meeting (including that the number of shares
sold on any given date does not exceed 25% of its outstanding common stock
immediately prior to such sale).
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First Quarter Highlights
Investment Transactions
We seek to be a long-term investor with our portfolio companies. During the
three months ended September 30, 2021, we acquired $315,156 of new investments,
completed follow-on investments in existing portfolio companies totaling
approximately $86,722, funded $4,000 of revolver advances, and recorded PIK
interest of $18,790, resulting in gross investment originations of $424,668.
During the three months ended September 30, 2021, we received full repayments
totaling $269,230, received $32 of revolver paydowns, and received $54,738 in
partial prepayments, scheduled principal amortization payments, and return of
capital distributions, resulting in net repayments of $324,000.

Debt Issuances and Redemptions
During the three months ended September 30, 2021, we repaid $671 aggregate
principal amount of Prospect Capital InterNotes® at par in accordance with the
Survivor's Option, as defined in the InterNotes® Offering prospectus. In order
to replace short maturity debt with longer-term debt, we redeemed $213,533
aggregate principal amount of Prospect Capital InterNotes® at par with a
weighted average interest rate of 5.10%. As a result of these transactions, we
recorded a loss in the amount of the unamortized debt issuance costs. The net
loss on the extinguishment of Prospect Capital InterNotes® in the three months
ended September 30, 2021 was $3,719.
During the three months ended September 30, 2021, we issued $87,657 aggregate
principal amount of Prospect Capital InterNotes® with a weighted average stated
interest rate of 3.35%, to extend our borrowing base. The newly issued notes
mature between July 15, 2026 and September 15, 2051 and generated net proceeds
of $85,472.
During the three months ended September 30, 2021, we increased total commitments
to the Revolving Credit Facility by $170,000 to $1,277,500 in the aggregate.
On August 26, 2021, we commenced a tender offer to purchase for cash up to
$60,000 aggregate principal outstanding amount of the 2022 Notes at the purchase
price of $102.50, plus accrued and unpaid interest ("2022 Notes August 2021
Tender Offer"). On September 24, 2021, $50,554 aggregate principal amount of the
2022 Notes, representing 45.52% of the previously outstanding 2022 Notes, were
validly tendered and accepted. The 2022 Notes August 2021 Tender Offer resulted
in our recognizing a loss of $1,584.

On September 30, 2021, we issued $300,000 aggregate principal amount of
unsecured notes that mature on October 15, 2028 (the "3.437% 2028 Notes"). The
3.437% 2028 Notes bear interest at a rate of 3.437% per year, payable
semi-annually on April 15 and October 15 of each year, beginning on April 15,
2022. Total proceeds from the issuance of the 3.437% 2028 Notes, net of
underwriting discounts and offering costs, were $291,798.

Equity Issuances
On July 12, 2021, we entered into an underwriting agreement by and among us,
Prospect Capital Management L.P., Prospect Administration LLC, and Morgan
Stanley & Co. LLC, RBC Capital Markets, LLC and UBS Securities LLC, as
representatives of the underwriters, relating to the offer and sale of 6,000,000
shares, or $150,000 in aggregate liquidation preference, of our 5.35% Series A
Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the
"Series A Preferred Stock" or "5.35% Preferred Stock"), at a public offering
price of $25.00 per share. Pursuant to the Underwriting Agreement, we also
granted the underwriters a 30-day option to purchase up to an additional 900,000
shares of Series A Preferred Stock solely to cover over-allotments. The offering
closed on July 19, 2021.
On July 22, 2021, August 19, 2021, and September 23, 2021, we issued 339,245,
360,741, and 379,182 shares of our common stock in connection with the dividend
reinvestment plan, respectively.
At any time prior to the listing of the 5.50% Series A1 Preferred Stock ("Series
A1 Preferred Stock"), the 5.50% Series M1 Preferred Stock ("Series M1 Preferred
Stock"), the 5.50% Series M2 Preferred Stock ("Series M2 Preferred Stock"), the
5.50% Series AA1 Preferred Stock ("Series AA1 Preferred Stock") and the 5.50%
Series A2 Preferred Stock ("Series A2 Preferred Stock," and collectively, the
"5.50% Preferred Stock") on a national securities exchange, shares of the 5.50%
Preferred Stock are convertible, at the option of the holder of the 5.50%
Preferred Stock (the "Holder Optional Conversion"). During the three months
ended September 30, 2021, 2,150 shares of our Series A1 Preferred Stock were
converted to 5,972 shares of our common stock, in connection with Holder
Optional Conversions.
                                      108
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During the three months ended September 30, 2021, we issued 2,946,568 shares of
our Series A1 Preferred Stock for net proceeds of $66,614, 173,506 shares of our
Series M1 Preferred Stock for net proceeds of $4,234, and 6,000,000 shares of
our Series A Preferred Stock for net proceeds of $145,275, each excluding
offering costs and preferred stock dividend reinvestments.

Investment Holdings
At September 30, 2021, we have $6,430,707, or 163.1%, of our net assets
applicable to common shares invested in 124 long-term portfolio investments and
CLOs.
Our annualized current yield was 11.6% and 11.7% as of September 30, 2021 and
June 30, 2021, respectively, across all performing interest bearing investments,
excluding equity investments and non-accrual loans. Our annualized current yield
was 9.0% and 9.2% as of September 30, 2021 and June 30, 2021, respectively,
across all investments. Monetization of equity positions that we hold and loans
on non-accrual status are not included in this yield calculation. In many of our
portfolio companies we hold equity positions, ranging from minority interests to
majority stakes, which we expect over time to contribute to our investment
returns. Some of these equity positions include features such as contractual
minimum internal rates of returns, preferred distributions, flip structures and
other features expected to generate additional investment returns, as well as
contractual protections and preferences over junior equity, in addition to the
yield and security offered by our cash flow and collateral debt protections.
We are a non-diversified company within the meaning of the 1940 Act. As required
by the 1940 Act, we classify our investments by level of control. As defined in
the 1940 Act, "Control Investments" are those where there is the ability or
power to exercise a controlling influence over the management or policies of a
company. Control is generally deemed to exist when a company or individual
possesses or has the right to acquire within 60 days or less, a beneficial
ownership of 25% or more of the voting securities of an investee company. Under
the 1940 Act, "Affiliate Investments" are defined by a lesser degree of
influence and are deemed to exist through the possession outright or via the
right to acquire within 60 days or less, beneficial ownership of 5% or more of
the outstanding voting securities of another person. "Non-Control/Non-Affiliate
Investments" are those that are neither Control Investments nor Affiliate
Investments.
As of September 30, 2021, we own controlling interests in the following
portfolio companies: CP Energy Services Inc. ("CP Energy"); Credit Central Loan
Company, LLC ("Credit Central"); Echelon Transportation, LLC ("Echelon"); First
Tower Finance Company LLC ("First Tower Finance"); Freedom Marine Solutions, LLC
("Freedom Marine"); InterDent, Inc. ("InterDent"); Kickapoo Ranch Pet Resort
("Kickapoo"); MITY, Inc. ("MITY"); NPRC; Nationwide Loan Company LLC
("Nationwide"); NMMB, Inc. ("NMMB"); Pacific World Corporation ("Pacific
World"); R-V Industries, Inc. ("R-V"); Universal Turbine Parts, LLC ("UTP");
USES Corp. ("United States Environmental Services" or "USES"); and Valley
Electric Company, Inc. ("Valley Electric"). In June 2019, CP Energy purchased a
controlling interest of the common equity of Spartan Energy Holdings, Inc.
("Spartan Holdings"), which owns 100% of Spartan Energy Services, LLC
("Spartan"), a portfolio company of Prospect with $15,656 in senior secured term
loans (the "Spartan Term Loan A") due to us as of September 30, 2021. As a
result of CP Energy's purchase, and given Prospect's controlling interest in CP
Energy, we report our investments in Spartan as control investment. Spartan
remains the direct borrow and guarantor to Prospect for the Spartan Term Loan A.
As of September 30, 2021, we also own affiliated interests in Nixon, Inc.
("Nixon"), PGX Holdings, Inc. ("PGX"), RGIS Services, LLC, ("RGIS"), and Targus
Cayman HoldCo Limited ("Targus").
The following shows the composition of our investment portfolio by level of
control as of September 30, 2021 and June 30, 2021:
                                                                                      September 30, 2021                                                                     June 30, 2021
                    Level of Control                          Cost          % of Portfolio        Fair Value       % of Portfolio                 Cost  

% of Portfolio Fair Value % of Portfolio Control Investments

                                      $ 2,486,474                    40.4  % $ 3,046,090                    47.4  %       $ 2,482,431                    41.0  % $ 2,919,717                    47.1  %
Affiliate Investments                                        219,229                     3.6  %     379,057                     5.9  %           202,943                     3.3  %     356,734                     5.8  %
Non-Control/Non-Affiliate Investments                      3,444,630                    56.0  %   3,005,560                    46.7  %         3,372,750                    55.7  %   2,925,327                    47.1  %
Total Investments                                        $ 6,150,333                   100.0  % $ 6,430,707                   100.0  %       $ 6,058,124                   100.0  % $ 6,201,778                   100.0  %


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The following shows the composition of our investment portfolio by type of investment as of September 30, 2021 and June 30, 2021:

                                                                   September 30, 2021                                                          

June 30, 2021

          Type of Investment                 Cost         % of Portfolio       Fair Value      % of Portfolio                Cost         % of Portfolio       Fair Value      % of Portfolio
Revolving Line of Credit                $    31,490                   0.5  % $    31,479                   0.5  %       $    27,522                   0.5  % $    27,503                   0.4  %
Senior Secured Debt                       3,188,781                  51.8  %   3,145,295                  48.9  %         3,166,861                  52.2  %   3,128,845                  50.5  %
Subordinated Secured Debt                 1,151,509                  18.7  %   1,061,102                  16.5  %         1,069,767                  17.7  %     981,425                  15.8  %
Subordinated Unsecured Debt                   7,200                   0.1  %       4,114                   0.1  %             7,200                   0.1  %       3,715                   0.1  %
Subordinated Structured Notes             1,074,751                  17.6  %     750,769                  11.6  %         1,090,175                  18.0  %     756,109                  12.2  %
Preferred Stock                             308,713                   5.0  %      19,404                   0.3  %           308,713                   5.1  %      23,056                   0.4  %
Common Stock                                207,662                   3.4  %   1,010,026                  15.7  %           207,661                   3.4  %     894,819                  14.4  %
Membership Interest                         180,227                   2.9  %     366,388                   5.7  %           180,225                   3.0  %     349,942                   5.6  %
Participating Interest(1)                         -                     -  %      42,130                   0.7  %                 -                     -  %      36,364                   0.6  %

Total Investments                       $ 6,150,333                 100.0  % $ 6,430,707                 100.0  %       $ 6,058,124                 100.0  % $ 6,201,778                 100.0  %


(1)Participating Interest includes our participating equity investments, such as
net profits interests, net operating income interests, net revenue interests,
and overriding royalty interests.
The following shows our investments in interest bearing securities by type of
investment as of September 30, 2021 and June 30, 2021:
                                                             September 30, 2021                                                                 June 

30, 2021

       Type of Investment              Cost         % of Portfolio       Fair Value      % of Portfolio                Cost         % of Portfolio       Fair Value      % of Portfolio
First Lien                        $ 3,220,271                  59.0  % $ 3,176,774                  63.6  %       $ 3,194,383                  59.7  % $ 3,156,348                  64.4  %
1.5 Lien                                    -                     -  %           -                     -  %            18,164                   0.3  %      18,164                   0.4  %
Second Lien                         1,147,559                  21.0  %   1,057,162                  21.2  %         1,047,653                  19.5  %     959,311                  19.6  %
Third Lien                              3,950                   0.1  %       3,940                   0.1  %             3,950                   0.1  %       3,950                   0.1  %
Unsecured                               7,200                   0.1  %       4,114                   0.1  %             7,200                   0.1  %       3,715                   0.1  %
Subordinated Structured Notes       1,074,751                  19.8  %     750,769                  15.0  %         1,090,175                  20.3  %     756,109                  15.4  %
Total Interest Bearing
Investments                       $ 5,453,731                 100.0  % $ 4,992,759                 100.0  %       $ 5,361,525                 100.0  % $ 4,897,597                 100.0  %



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The following shows the composition of our investment portfolio by industry as of September 30, 2021 and June 30, 2021:

                                                                       September 30, 2021                                                                 June 30, 2021
                 Industry                        Cost         % of Portfolio       Fair Value      % of Portfolio                Cost         % of Portfolio       Fair Value      % of Portfolio
Aerospace & Defense                         $   103,248                   1.7  % $    81,621                   1.3  %       $    98,144                   1.6  % $    84,240                   1.4  %
Air Freight & Logistics                               -                     -  %           -                     -  %            12,500                   0.2  %      12,500                   0.2  %
Auto Components                                  95,231                   1.5  %      96,431                   1.5  %            75,323                   1.2  %      76,520                   1.2  %
Chemicals                                             -                     -  %           -                     -  %            28,745                   0.5  %      28,863                   0.5  %
Commercial Services & Supplies                  272,373                   4.4  %     207,684                   3.2  %           257,617                   4.3  %     196,117                   3.3  %
Communications Equipment                         59,727                   1.0  %      59,662                   0.9  %            59,709                   1.0  %      58,881                   0.9  %
Construction & Engineering                       69,935                   1.1  %     142,919                   2.2  %            69,935                   1.2  %     149,695                   2.4  %
Consumer Finance                                560,129                   9.1  %     821,494                  12.9  %           531,844                   8.8  %     771,601                  12.4  %
Distributors                                    272,194                   4.4  %     175,092                   2.7  %           272,672                   4.5  %     175,768                   2.8  %
Diversified Consumer Services                   227,488                   3.7  %     356,310                   5.5  %           211,193                   3.5  %     339,633                   5.5  %
Diversified Financial Services                   30,165                   0.5  %      30,165                   0.5  %            30,165                   0.5  %      30,165                   0.5  %
Diversified Telecommunication Services           68,245                   1.1  %      69,498                   1.1  %            66,333                   1.1  %      67,448                   1.1  %
Energy Equipment & Services                     278,499                   4.5  %      83,832                   1.3  %           277,227                   4.6  %      83,204                   1.3  %
Entertainment                                    34,578                   0.6  %      34,851                   0.5  %            40,585                   0.7  %      40,928                   0.7  %
Equity Real Estate Investment Trusts
(REITs)                                         636,801                  10.4  %   1,146,696                  17.9  %           656,911                  10.8  %   1,092,955                  17.7  %
Food Products                                    66,379                   1.1  %      66,948                   1.0  %            61,409                   1.0  %      61,948                   1.0  %
Health Care Equipment & Supplies                  7,480                   0.1  %       6,970                   0.1  %             7,478                   0.1  %       6,721                   0.1  %
Health Care Providers & Services                591,655                   9.6  %     748,991                  11.7  %           583,369                   9.6  %     714,107                  11.5  %
Hotels, Restaurants & Leisure                    24,277                   0.4  %      23,730                   0.4  %            24,502                   0.4  %      23,624                   0.4  %
Household Durables                               35,690                   0.6  %      38,511                   0.6  %            12,913                   0.2  %      15,403                   0.2  %
Household Products                               21,124                   0.3  %      21,124                   0.3  %            21,186                   0.3  %      21,186                   0.3  %
Insurance                                        21,925                   0.4  %      22,280                   0.3  %            21,911                   0.4  %      22,280                   0.4  %
Interactive Media & Services                    174,977                   2.8  %     174,977                   2.7  %           180,127                   3.0  %     180,127                   2.9  %
Internet & Direct Marketing Retail               60,295                   1.0  %      60,398                   0.9  %            54,677                   0.9  %      56,114                   0.9  %
IT Services                                     278,403                   4.5  %     279,437                   4.4  %           260,899                   4.3  %     261,718                   4.3  %
Leisure Products                                 31,702                   0.5  %      31,564                   0.5  %            20,242                   0.3  %      20,287                   0.3  %
Machinery                                       102,708                   1.7  %     120,443                   1.9  %            97,853                   1.6  %     111,682                   1.8  %
Media                                           102,043                   1.7  %     120,695                   1.9  %           105,958                   1.7  %     107,819                   1.7  %
Online Lending                                    2,700                     -  %       2,700                     -  %             6,600                   0.1  %       6,600                   0.1  %
Paper & Forest Products                          15,866                   0.3  %      15,735                   0.2  %            15,847                   0.3  %      15,815                   0.3  %
Personal Products                               251,928                   4.1  %      70,770                   1.1  %           249,245                   4.1  %      71,097                   1.1  %
Professional Services                           130,990                   2.1  %     131,120                   2.0  %           132,015                   2.2  %     132,058                   2.1  %
Real Estate Management & Development                  -                     -  %           -                     -  %                 -                     -  %           -                     -  %
Software                                         22,253                   0.4  %      22,500                   0.3  %            22,240                   0.4  %      22,500                   0.4  %
Technology Hardware, Storage & Peripherals       12,435                   0.2  %      12,500                   0.2  %            12,431                   0.2  %      12,500                   0.2  %
Textiles, Apparel & Luxury Goods                226,284                   3.7  %     253,673                   3.9  %           202,312                   3.3  %     225,359                   3.6  %
Trading Companies & Distributors                 65,240                   1.1  %      27,517                   0.4  %            65,248                   1.1  %      27,106                   0.4  %
Transportation Infrastructure                    30,415                   0.5  %      30,900                   0.5  %            30,384                   0.5  %      30,900                   0.5  %
Subtotal                                    $ 4,985,382                  81.1  % $ 5,589,738                  86.8  %       $ 4,877,749                  80.5  % $ 5,355,469                  86.4  %
Structured Finance(1)                       $ 1,164,951                  18.9  % $   840,969                  13.2  %       $ 1,180,375                  19.5  % $   846,309                  13.6  %
Total Investments                           $ 6,150,333                 100.0  % $ 6,430,707                 100.0  %       $ 6,058,124                 100.0  % $ 6,201,778                 100.0  %


(1) Our SSN investments do not have industry concentrations and as such have
been separated in the tables above. As of September 30, 2021 and June 30, 2021,
Structured Finance includes $90,200 and $90,200, respectively, of senior secured
debt investments held through our investment in NPRC and its wholly-owned
subsidiary.
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Portfolio Investment Activity
Our origination efforts are focused primarily on secured lending to non-control
investments to reduce the risk in the portfolio by investing primarily in first
lien loans, though we also continue to close select junior debt and equity
investments. For information regarding investment activity for the three months
ended September 30, 2021 and September 30, 2020 are presented below:
                                                                Three 

months ended September 30,

                                                                 2021                        2020
Investments made in new portfolio companies             $          315,156           $         101,411
Follow-on investments made in existing portfolio
companies (1)                                                       86,722                      53,389
Revolver advances                                                    4,000                       2,000
PIK interest                                                        18,790                      20,341
Total acquisitions                                      $          424,668           $         177,141

Acquisitions by portfolio composition
1st Lien Term Loan                                      $          178,026           $         128,695
Subordinated Secured Debt                                          246,642                      20,959

Subordinated Unsecured Debt                                              -                       1,294
Equity                                                                   -                      26,193
Total acquisitions by portfolio composition             $          424,668           $         177,141

Investments sold                                                         -           $               -
Partial repayments (2)                                              54,738                      47,145
Full repayments                                                    269,230                      97,488
Revolver paydowns                                                       32                         777
Total dispositions                                      $          324,000           $         145,410

Dispositions by portfolio composition
1st Lien Term Loan                                      $          156,443           $         130,346
Subordinated Secured Debt                                          167,557                      14,918
Subordinated Unsecured Debt                                              -                         145
Equity                                                                   -                           1
Total dispositions by portfolio composition             $          324,000  

$ 145,410


Weighted average interest rates for new investments by
portfolio composition (3)
1st Lien Term Loan                                                    8.10   %                    9.54  %
Subordinated Secured Debt                                            11.47   %                    8.61  %

(1) Includes follow-on investments in existing portfolio companies and refinancings, if any.

  (2) Includes partial prepayments of principal, scheduled amortization
payments, and refinancings, if any.
(3) Weighted average interest rates for new investments by portfolio composition
is calculated with the current rate at the end of the period. In addition,
Revolving Line of Credit and Delayed Draw Term Loans are excluded from the
calculation.

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Investment Valuation
Investments for which market quotations are readily available are typically
valued at such market quotations. In order to validate market quotations,
management and the independent valuation firm look at a number of factors to
determine if the quotations are representative of fair value, including the
source and nature of the quotations. In determining the range of values for debt
instruments where market quotations are not available, except CLOs and debt
investments in controlling portfolio companies, management and the independent
valuation firm estimated corporate and security credit ratings and identified
corresponding yields to maturity for each loan from relevant market data. A
discounted cash flow technique was then applied using the appropriate yield to
maturity as the discount rate, to determine a range of values. In determining
the range of values for debt investments of controlled companies and equity
investments, the enterprise value was determined by applying a market approach
such as using earnings before interest, taxes, depreciation and amortization
("EBITDA") multiples, net income and/or book value multiples for similar
guideline public companies and/or similar recent investment transactions and/or
an income approach, such as the discounted cash flow technique. The enterprise
value technique may also be used to value debt investments which are credit
impaired. For stressed debt and equity investments, asset recovery analysis was
used.
In determining the range of values for our investments in CLOs, the independent
valuation firm uses a discounted multi-path cash flow model. The valuations were
accomplished through the analysis of the CLO deal structures to identify the
risk exposures from the modeling point of view as well as to determine an
appropriate call date (i.e., expected maturity). These risk factors are
sensitized in the multi-path cash flow model using Monte Carlo simulations,
which are simulations used to model the probability of different outcomes, to
generate probability-weighted (i.e., multi-path) cash flows for the underlying
assets and liabilities. These cash flows are discounted using appropriate market
discount rates, and relevant data in the CLO market and certain benchmark credit
indices are considered, to determine the value of each CLO investment. In
addition, we generate a single-path cash flow utilizing our best estimate of
expected cash receipts, and assess the reasonableness of the implied discount
rate that would be effective for the value derived from the corresponding
multi-path cash flow model.
With respect to our online consumer and SME lending initiative, we invest
primarily in marketplace loans through marketplace lending platforms.  We do not
conduct loan origination activities ourselves. Therefore, our ability to
purchase consumer and SME loans, and our ability to grow our portfolio of
consumer and SME loans, are directly influenced by the business performance and
competitiveness of the marketplace loan origination business of the marketplace
lending platforms from which we purchase consumer and SME loans. In addition,
our ability to analyze the risk-return profile of consumer and SME loans is
significantly dependent on the marketplace platforms' ability to effectively
evaluate a borrower's credit profile and likelihood of default. If we are unable
to effectively evaluate borrowers' credit profiles or the credit decisioning and
scoring models implemented by each platform, we may incur unanticipated losses
which could adversely impact our operating results.
The Board of Directors looked at several factors in determining where within the
range to value the asset including: recent operating and financial trends for
the asset, independent ratings obtained from third parties, comparable multiples
for recent sales of companies within the industry and discounted cash flow
models for our investments in CLOs. The composite of all these various valuation
techniques, applied to each investment, was a total valuation of $6,430,707.
Our portfolio companies are generally lower middle-market companies, outside of
the financial sector, with less than $100,000 of annual EBITDA. We believe our
investment portfolio has experienced less volatility than others because we
believe there are more buy and hold investors who own these less liquid
investments.
Impact of the novel coronavirus (the "COVID-19") pandemic
As of September 30, 2021, there remains to be global uncertainty surrounding the
COVID-19 pandemic, which has caused severe disruptions in the global economy and
has negatively impacted the fair value and performance of certain investments
since the pandemic began. For the three months ended September 30, 2021, the
aggregate increases in fair value and net unrealized depreciation on investments
were driven by the expansion of comparable company trading multiples and/or
tightened credit spreads as the level of market volatility generated by the
COVID-19 pandemic declined over the three month period. For certain investments
in our portfolio, the valuations continue to reflect factors such as specific
industry concerns, uncertainty about the duration of business shutdowns and
near-term liquidity needs.
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Control Company Investments
Control investments offer increased risk and reward over straight debt
investments. Operating results and changes in market multiples can result in
dramatic changes in values from quarter to quarter. Significant downturns in
operations can further result in our looking to recoveries on sales of assets
rather than the enterprise value of the investment. Equity positions in our
portfolio are susceptible to potentially significant changes in value, both
increases as well as decreases, due to changes in operating results and market
multiples. Our controlled companies discussed below experienced such changes and
we recorded corresponding fluctuations in valuations during the three months
ended September 30, 2021.
First Tower Finance Company LLC

Prospect owns 100% of the equity of First Tower Delaware, a consolidated holding
company. First Tower Delaware owns 80.1% of First Tower Finance. First Tower
Finance owns 100% of First Tower, LLC ("First Tower"), a multiline specialty
finance company.

The fair value of our investment in First Tower increased to $611,228 as of
September 30, 2021, representing a premium of $251,905 to its amortized cost
basis compared to a fair value of $592,356 as of June 30, 2021, a premium of
$236,502 to its amortized cost. The increase in premium to amortized cost was
driven by strong financial performance.

InterDent, Inc.


During the year ended June 30, 2018, Prospect exercised its rights and remedies
under its loan documents to exercise the shareholder voting rights in respect of
the stock of InterDent and to appoint a new Board of Directors of InterDent, all
the members of which are our Investment Adviser's professionals. As a result,
Prospect's investment in InterDent is classified as a control investment.

The fair value of our investment in InterDent increased to $451,344 as of
September 30, 2021, a premium of $156,583 to its amortized cost basis compared
to a fair value of $412,339 as of June 30, 2021, a premium of $129,650 to its
amortized cost. The increase in premium to amortized cost was driven by strong
financial performance.

National Property REIT Corp.
NPRC is a Maryland corporation and a qualified REIT for federal income tax
purposes. NPRC is held for purposes of investing, operating, financing, leasing,
managing and selling a portfolio of real estate assets and engages in any and
all other activities that may be necessary, incidental, or convenient to perform
the foregoing. NPRC acquires real estate assets, including, but not limited to,
industrial, commercial, and multi-family properties, self-storage, and student
housing properties. NPRC may acquire real estate assets directly or through
joint ventures by making a majority equity investment in a property-owning
entity. Additionally, through its wholly owned subsidiaries, NPRC invests in
online consumer loans and RSSNs. As of September 30, 2021, we own 100% of the
fully-diluted common equity of NPRC.
During the three months ended September 30, 2021, we received partial repayments
of $33,900 of our loans previously outstanding with NPRC and provided $9,890 of
debt financing to NPRC to provide working capital.

The online consumer loan investments held by certain of NPRC's wholly owned
subsidiaries are unsecured obligations of individual borrowers that are issued
in amounts ranging from $1 to $50, with fixed terms ranging from 36 to 84
months. As of September 30, 2021, the outstanding investment in online consumer
loans by certain of NPRC's wholly-owned subsidiaries was comprised of 1,140
individual loans and residual interest in two securitizations, and had an
aggregate fair value of $6,701. The average outstanding individual loan balance
is approximately $4 and the loans mature on dates ranging from October 1, 2021
to April 19, 2025 with a weighted-average outstanding term of 16 months as of
September 30, 2021. Fixed interest rates range from 6.0% to 36.0% with a
weighted-average current interest rate of 20.3%. As of September 30, 2021, our
investment in NPRC and its wholly-owned subsidiaries relating to online consumer
lending had a fair value of $2,700.
As of September 30, 2021, based on outstanding principal balance, 20.7% of the
portfolio was invested in super prime loans (borrowers with a Fair Isaac
Corporation ("FICO") score, of 720 or greater), 40.2% of the portfolio in prime
loans (borrowers with a FICO score of 660 to 719) and 39.1% of the portfolio in
near prime loans (borrowers with a FICO score of 580 to 659, a portion of which
are considered sub-prime).
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                               Outstanding Principal                                                                    Weighted Average
       Loan Type                      Balance                Fair Value              Interest Rate Range                 Interest Rate*
Super Prime                   $                987          $      969                   7.0% - 20.5%                        12.3%
Prime                                        1,914               1,840                   6.0% - 32.0%                        18.1%
Near Prime                                   1,863               1,872                   6.0% - 36.0%                        26.8%

*Weighted by outstanding principal balance of the online consumer loans.


The rated secured structured note investments held by certain of NPRC's wholly
owned subsidiaries are subordinated debt interests in broadly syndicated loans
managed by established collateral management teams with many years of experience
in the industry. As of September 30, 2021, the outstanding investment in rated
secured structured notes by certain of NPRC's wholly owned subsidiaries was
comprised of 37 investments with a fair value of $212,520 and face value of
$221,942. The average outstanding note is approximately $5,998 with an expected
maturity date ranging from April 2026 to April 2029 and weighted-average
expected maturity of 6 years as of September 30, 2021. Coupons range from
three-month LIBOR ("3ML") plus 5.45% to 9.45% with a weighted-average coupon of
3ML + 7.16%. As of September 30, 2021, our investment in NPRC and its
wholly-owned subsidiaries relating to rated secured structured notes had a fair
value of $90,200.
As of September 30, 2021, based on outstanding notional balance, 24% of the
portfolio was invested in Single - B rated tranches and 76% of the portfolio in
BB rated tranches.
As of September 30, 2021, our investment in NPRC and its wholly-owned
subsidiaries had an amortized cost of $729,701 and a fair value of $1,239,596,
including our investment in online consumer lending and rated secured structured
notes as discussed above. The fair value of $1,146,696 related to NPRC's real
estate portfolio was comprised of fifty-one multi-family properties, eight
student housing properties and three commercial properties. The following table
shows the location, acquisition date, purchase price, and mortgage outstanding
due to other parties for each of the properties held by NPRC as of September 30,
2021.
                                                                                                                                              Mortgage
No.          Property Name                           City                              Acquisition Date           Purchase Price            Outstanding
1            Filet of Chicken                        Forest Park, GA                            10/24/2012       $        7,400          $             -
2            Arlington Park Marietta, LLC            Marietta, GA                                 5/8/2013               14,850                   13,495
3            Cordova Regency, LLC                    Pensacola, FL                              11/15/2013               13,750                   10,925
4            Crestview at Oakleigh, LLC              Pensacola, FL                              11/15/2013               17,500                   13,297
5            Inverness Lakes, LLC                    Mobile, AL                                 11/15/2013               29,600                   23,722
6            Kings Mill Pensacola, LLC               Pensacola, FL                              11/15/2013               20,750                   16,855
7            Plantations at Pine Lake, LLC           Tallahassee, FL                            11/15/2013               18,000                   13,534
8            Verandas at Rocky Ridge, LLC            Birmingham, AL                             11/15/2013               15,600                   18,410
9            Crestview at Cordova, LLC               Pensacola, FL                               1/17/2014                8,500                   12,952
10           Taco Bell, OK                           Yukon, OK                                    6/4/2014                1,719                        -
11           Taco Bell, MO                           Marshall, MO                                 6/4/2014                1,405                        -
             Canterbury Green Apartments
12           Holdings LLC                            Fort Wayne, IN                              9/29/2014               85,500                   84,048
13           Abbie Lakes OH Partners, LLC            Canal Winchester, OH                        9/30/2014               12,600                   15,339
14           Kengary Way OH Partners, LLC            Reynoldsburg, OH                            9/30/2014               11,500                   15,505
15           Lakeview Trail OH Partners, LLC         Canal Winchester, OH                        9/30/2014               26,500                   29,581
16           Lakepoint OH Partners, LLC              Pickerington, OH                            9/30/2014               11,000                   16,831
17           Sunbury OH Partners, LLC                Columbus, OH                                9/30/2014               13,000                   17,066
18           Heatherbridge OH Partners, LLC          Blacklick, OH                               9/30/2014               18,416                   24,411
19           Jefferson Chase OH Partners, LLC        Blacklick, OH                               9/30/2014               13,551                   18,984
20           Goldenstrand OH Partners, LLC           Hilliard, OH                               10/29/2014                7,810                   11,577
21           SSIL I, LLC                             Aurora, IL                                  11/5/2015               34,500                   25,821
22           Vesper Tuscaloosa, LLC                  Tuscaloosa, AL                              9/28/2016               54,500                   43,052
23           Vesper Iowa City, LLC                   Iowa City, IA                               9/28/2016               32,750                   24,825
24           Vesper Corpus Christi, LLC              Corpus Christi, TX                          9/28/2016               14,250                   10,800
25           Vesper Campus Quarters, LLC             Corpus Christi, TX                          9/28/2016               18,350                   14,175
26           Vesper College Station, LLC             College Station, TX                         9/28/2016               41,500                   32,058
27           Vesper Kennesaw, LLC                    Kennesaw, GA                                9/28/2016               57,900                   51,087
28           Vesper Statesboro, LLC                  Statesboro, GA                              9/28/2016                7,500                    7,480
29           Vesper Manhattan KS, LLC                Manhattan, KS                               9/28/2016               23,250                   14,679


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No.          Property Name                          City                              Acquisition Date            Purchase Price            Mortgage Outstanding
30           9220 Old Lantern Way, LLC              Laurel, MD                                  1/30/2017            187,250                      153,580
             7915 Baymeadows Circle Owner,
31           LLC                                    Jacksonville, FL                           10/31/2017             95,700                       76,560
             8025 Baymeadows Circle Owner,
32           LLC                                    Jacksonville, FL                           10/31/2017             15,300                       12,240
33           23275 Riverside Drive Owner, LLC       Southfield, MI                              11/8/2017             52,000                       54,722
34           23741 Pond Road Owner, LLC             Southfield, MI                              11/8/2017             16,500                       18,993
35           150 Steeplechase Way Owner, LLC        Largo, MD                                   1/10/2018             44,500                       36,668
36           Laurel Pointe Holdings, LLC            Forest Park, GA                              5/9/2018             33,005                       26,400
37           Bradford Ridge Holdings, LLC           Forest Park, GA                              5/9/2018             12,500                       10,000
38           Olentangy Commons Owner LLC            Columbus, OH                                 6/1/2018            113,000                       92,876
             Villages of Wildwood Holdings
39           LLC                                    Fairfield, OH                               7/20/2018             46,500                       39,525
40           Falling Creek Holdings LLC             Richmond, VA                                 8/8/2018             25,000                       19,335
41           Crown Pointe Passthrough LLC           Danbury, CT                                 8/30/2018            108,500                       89,400
42           Ashwood Ridge Holdings LLC             Jonesboro, GA                               9/21/2018              9,600                        7,300
43           Lorring Owner LLC                      Forestville, MD                            10/30/2018             58,521                       47,680
44           Hamptons Apartments Owner, LLC         Beachwood, OH                                1/9/2019             96,500                       79,520
45           5224 Long Road Holdings, LLC           Orlando, FL                                 6/28/2019             26,500                       21,200
46           Druid Hills Holdings LLC               Atlanta, GA                                 7/30/2019             96,000                       79,104
47           Bel Canto NPRC Parcstone LLC           Fayetteville, NC                           10/15/2019             45,000                       30,127
48           Bel Canto NPRC Stone Ridge LLC         Fayetteville, NC                           10/15/2019             21,900                       14,662
49           Sterling Place Holdings LLC            Columbus, OH                               10/28/2019             41,500                       34,196
50           SPCP Hampton LLC                       Dallas, TX                                  11/2/2020             36,000                       27,590
51           Palmetto Creek Holdings LLC            North Charleston, SC                       11/10/2020             33,182                       25,865
52           Valora at Homewood Holdings LLC        Homewood, AL                               11/19/2020             81,250                       63,844
53           NPRC Fairburn LLC                      Fairburn, GA                               12/14/2020             52,140                       39,105
54           NPRC Grayson LLC                       Grayson, GA                                12/14/2020             47,860                       35,895
55           NPRC Taylors LLC                       Taylors, SC                                 1/27/2021             18,762                       14,075
             Parkside at Laurel West Owner
56           LLC                                    Spartanburg, SC                             2/26/2021             57,005                       42,025
57           Willows at North End Owner LLC         Spartanburg, SC                             2/26/2021             23,255                       19,000
58           SPCP Edge CL Owner LLC                 Webster, TX                                 3/12/2021             34,000                       25,496
59           Jackson Pear Orchard LLC               Ridgeland, MS                               6/28/2021             50,900                       38,175
60           Jackson Lakeshore Landing LLC          Ridgeland, MS                               6/28/2021             22,600                       16,950
61           Jackson Reflection Pointe LLC          Flowood, MS                                 6/28/2021             45,100                       31,050
62           Jackson Crosswinds LLC                 Pearl, MS                                   6/28/2021             41,400                       33,825
                                                                                                                   2,322,181                    1,937,492


The fair value of our investment in NPRC increased to $1,239,596 as of September
30, 2021, a premium of $509,895 from its amortized cost basis compared to a fair
value of $1,189,755 as of June 30, 2021, representing a premium of $436,044. The
increase in premium is primarily driven by compression of capitalization rates
and, to a lesser extent, growth in net operating income in our real estate
portfolio.

NMMB, Inc.


Prospect owns 100% of the equity of NMMB Holdings, Inc. ("NMMB Holdings"), a
Consolidated Holding Company. NMMB Holdings owns 95.17% and 94.82% of the
fully-diluted equity of NMMB, Inc. (f/k/a NMMB Acquisition, Inc.) ("NMMB") as of
September 30, 2021 and June 30, 2021, respectively, with NMMB management owning
the remaining equity. NMMB owns 100% of Refuel Agency, Inc. ("Refuel Agency").
Refuel Agency owns 100% of Armed Forces Communications, Inc. ("Armed Forces").
NMMB is an advertising media buying business.

The fair value of our investment in NMMB increased to $63,726 as of September
30, 2021, representing a premium of $46,021 to its amortized cost basis,
compared to a fair value of $46,888 as of June 30, 2021, representing a premium
of $29,145 to its amortized cost basis. The increase to the premium was driven
by strong financial performance.

Our controlled investments, including those discussed above, are valued at $559,616 above their amortized cost as of September 30, 2021.

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Affiliate and Non-Control Company Investments


We hold three affiliate investments at September 30, 2021 with a total fair
value of $379,057, a premium of $159,828 from their combined amortized cost,
compared to a fair value of $356,734 as of June 30, 2020, representing a
$153,791 premium to its amortized cost. The increase in premium is primarily
driven by our investment in Targus Cayman HoldCo Limited ("Targus"), which is
valued at a premium of $28,493 as of September 30, 2021 compared to a premium of
$23,400 as of June 30, 2021. The increase in Targus's premium to amortized cost
was driven by strong financial performance.

With the non-control/non-affiliate investments, generally, there is less
volatility related to our total investments because our equity positions tend to
be smaller than with our control/affiliate investments, and debt investments are
generally not as susceptible to large swings in value as equity investments. For
debt investments, the fair value is generally limited on the high side to each
loan's par value, plus any prepayment premium that could be imposed. However, as
of September 30, 2021, two of our non-control/ non-affiliate investments, Engine
Group, Inc. ("Engine") and USC are valued at discounts to amortized cost of
$27,369 and $96,818, respectively. As of September 30, 2021, our CLO investment
portfolio is valued at a $323,982 discount to amortized cost. Excluding Engine,
USC, and the CLO investment portfolio, the fair value of our
non-control/non-affiliate investments at September 30, 2021 are valued at $9,099
above their amortized cost and did not experience significant changes in
operating performance or value.

Capitalization

Our investment activities are capital intensive and the availability and cost of
capital is a critical component of our business. We capitalize our business with
a combination of debt and equity. Our debt as of September 30, 2021 consists of:
a Revolving Credit Facility availing us of the ability to borrow debt subject to
borrowing base determinations; Convertible Notes which we issued in April 2017
(with a follow-on issuance in May 2018) and March 2019; Public Notes which we
issued in March 2013, October 2018, December 2018 (and from time to time through
our 2029 Notes Follow-on Program), January 2021, May 2021 and September 2021;
and Prospect Capital InterNotes® which we issue from time to time. As of
September 30, 2021, our equity capital is comprised of common and preferred
equity.
The following table shows our outstanding debt as of September 30, 2021.
                                                         Unamortized
                                  Principal            Discount & Debt          Net Carrying                                     Effective Interest
                                 Outstanding           Issuance Costs               Value                Fair Value(1)                  Rate
Revolving Credit Facility(2)   $     84,537          $         10,945          $     84,537      (3)   $       84,537                      1ML+2.05%   (6)

2022 Notes                           60,501                       324                60,177                    62,014      (4)               5.64  %   (7)
2025 Notes                          156,168                     3,092               153,076                   170,759      (4)               6.63  %   (7)
Convertible Notes                   216,669                                         213,253                   232,773

6.375% 2024 Notes                    81,389                       426                80,963                    88,238      (4)               6.57  %   (7)
2023 Notes                          284,219                     1,202               283,017                   301,778      (4)               6.07  %   (7)
2026 Notes                          400,000                     8,469               391,531                   412,060      (4)               3.98  %   (7)
3.364% 2026 Notes                   300,000                     6,969               293,031                   305,097      (4)               3.60  %   (7)
3.437% 2028 Notes                   300,000                     8,202               291,798                   291,852      (4)               3.60  %   (7)
2029 Notes                           69,170                     2,100                67,070                    70,346      (4)               7.38  %   (7)
Public Notes                      1,434,778                                       1,407,410                 1,469,371

Prospect Capital InterNotes®        382,164                     8,814               373,350                   445,191      (5)               6.17  %   (8)
Total                          $  2,118,148                                    $  2,078,550            $    2,231,872


(1)As permitted by ASC 825-10-25, we have not elected to value our Revolving
Credit Facility, Convertible Notes, Public Notes and Prospect Capital
InterNotes® at fair value. The fair value of these debt obligations are
categorized as Level 2 under ASC 820 as of September 30, 2021.
(2)The maximum draw amount of the Revolving Credit facility as of September 30,
2021 is $1,277,500.
(3)Net Carrying Value excludes deferred financing costs associated with the
Revolving Credit Facility. See Critical Accounting Policies and Estimates for
accounting policy details.
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(4)We use available market quotes to estimate the fair value of the Convertible
Notes and Public Notes.
(5)The fair value of Prospect Capital InterNotes® is estimated by discounting
remaining payments using current Treasury rates plus spread based on observable
market inputs.
(6)Represents the rate on drawn down and outstanding balances. Deferred debt
issuance costs are amortized on a straight-line method over the stated life of
the obligation.
(7)The effective interest rate is equal to the effect of the stated interest,
the accretion of original issue discount and amortization of debt issuance
costs. For the 2029 Notes, the rate presented is a combined effective interest
rate of their respective original Note issuances and Note Follow-on Programs.
(8)For the Prospect Capital InterNotes®, the rate presented is the weighted
average effective interest rate. Interest expense and deferred debt issuance
costs, which are amortized on a straight-line method over the stated life of the
obligation which approximates level yield, are weighted against the average
year-to-date principal balance.
The following table shows the contractual maturities of our Revolving Credit
Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of
September 30, 2021.
                                                                            

Payments Due by Period

                                               Total             Less than 1 Year           1 - 3 Years           3 - 5 Years           After 5 Years
Revolving Credit Facility                  $    84,537          $              -          $          -          $     84,537          $            -
Convertible Notes                              216,669                    60,501                     -               156,168                       -
Public Notes                                 1,434,778                         -               365,608               400,000                 669,170
Prospect Capital InterNotes®                   382,164                         -                   662                48,454                 333,048
Total Contractual Obligations              $ 2,118,148          $         

60,501 $ 366,270 $ 689,159 $ 1,002,218



The following table shows the contractual maturities of our Revolving Credit
Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of
June 30, 2021:
                                                                            

Payments Due by Period

                                               Total              Less than 1 Year           1 - 3 Years           3 - 5 Years           After 5 Years
Revolving Credit Facility                  $   356,937          $               -          $          -          $    356,937          $            -
Convertible Notes                              267,223                          -               111,055               156,168                       -
Public Notes                                 1,134,778                          -               365,608               400,000                 369,170
Prospect Capital InterNotes®                   508,711                          -                11,744                51,822                 445,145
Total Contractual Obligations              $ 2,267,649          $           

- $ 488,407 $ 964,927 $ 814,315



We may from time to time seek to cancel or purchase our outstanding debt through
cash purchases and/or exchanges, in open market purchases, privately negotiated
transactions or otherwise. The amounts involved may be material. In addition, we
may from time to time enter into additional debt facilities, increase the size
of existing facilities or issue additional debt securities, including secured
debt, unsecured debt and/or debt securities convertible into common stock. Any
such purchases or exchanges of outstanding debt would be subject to prevailing
market conditions, our liquidity requirements, contractual and regulatory
restrictions and other factors.
Historically, we have funded a portion of our cash needs through borrowings from
banks, issuances of senior securities, including secured, unsecured and
convertible debt securities, or issuances of common equity. For flexibility, we
maintain a universal shelf registration statement that allows for the public
offering and sale of our debt securities, common stock, preferred stock,
subscription rights, and warrants and units to purchase such securities up to an
indeterminate amount. We may from time to time issue securities pursuant to the
shelf registration statement or otherwise pursuant to private offerings. The
issuance of debt or equity securities will depend on future market conditions,
funding needs and other factors and there can be no assurance that any such
issuance will occur or be successful.

Each of our Convertible Notes, Public Notes and Prospect Capital
InterNotes® (collectively, our "Unsecured Notes") are our general, unsecured
obligations and rank equal in right of payment with all of our existing and
future unsecured indebtedness and will be senior in right of payment to any of
our subordinated indebtedness that may be issued in the future. The Unsecured
Notes are effectively subordinated to our existing secured indebtedness, such as
our credit facility, and future secured
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indebtedness to the extent of the value of the assets securing such indebtedness
and structurally subordinated to any existing and future liabilities and other
indebtedness of any of our subsidiaries.
Revolving Credit Facility
On August 29, 2014, we renegotiated our previous credit facility and closed an
expanded five and a half year revolving credit facility (the "2014 Facility").
The lenders had extended commitments of $885,000 under the 2014 Facility as of
June 30, 2018. The 2014 Facility included an accordion feature which allowed
commitments to be increased up to $1,500,000 in the aggregate. Interest on
borrowings under the 2014 Facility was one-month LIBOR plus 225 basis points.
Additionally, the lenders charged a fee on the unused portion of the 2014
Facility equal to either 50 basis points if at least 35% of the credit facility
was drawn or 100 basis points otherwise.
On August 1, 2018, we renegotiated the 2014 Facility and closed an expanded five
and a half year revolving credit facility (the "2018 Facility"). The lenders
have extended commitments of $1,132,500 as of June 30, 2019. The 2018 Facility
included an accordion feature which allowed commitments to be increased up to
$1,500,000 in the aggregate.

On September 9, 2019, we amended the 2018 Facility and closed an expanded
revolving credit facility (the "2019 Facility"). The lenders had extended
commitments of $1,077,500 as of March 31, 2021. The 2019 Facility included an
accordion feature which allowed commitments to be increased up to $1,500,000 in
the aggregate.

On April 28, 2021, we amended the 2019 Facility and closed an expanded five year
revolving credit facility (the "2021 Facility" and collectively with the 2014
Facility, the 2018 Facility, and the 2019 Facility, the "Revolving Credit
Facility"). The lenders had extended commitments of $1,277,500 as of September
30, 2021. The 2021 Facility includes an accordion feature which allows
commitments to be increased up to $1,500,000 in the aggregate. The Revolving
Credit Facility matures on April 27, 2026. It includes a revolving period that
extends through April 27, 2025, followed by an additional one-year amortization
period, with distributions allowed to Prospect after the completion of the
revolving period. During such one-year amortization period, all principal
payments on the pledged assets will be applied to reduce the balance. At the end
of the one-year amortization period, the remaining balance will become due, if
required by the lenders.

The Revolving Credit Facility contains restrictions pertaining to the geographic
and industry concentrations of funded loans, maximum size of funded loans,
interest rate payment frequency of funded loans, maturity dates of funded loans
and minimum equity requirements. The Revolving Credit Facility also contains
certain requirements relating to portfolio performance, including required
minimum portfolio yield and limitations on delinquencies and charge-offs,
violation of which could result in the early termination of the Revolving Credit
Facility. The Revolving Credit Facility also requires the maintenance of a
minimum liquidity requirement. As of September 30, 2021, we were in compliance
with the applicable covenants.
Interest on borrowings under the 2021 Facility is one-month LIBOR plus 205 basis
points. 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. The 2021
Facility requires us to pledge assets as collateral in order to borrow under the
credit facility.
For the three months ended September 30, 2021 and September 30, 2020, the
average stated interest rate (i.e., rate in effect plus the spread) and average
outstanding borrowings for the Revolving Credit Facility were as follows:
                                             Three Months Ended September 

30,

                                                    2021                    

2020

     Average stated interest rate                               2.14  %    

2.37 %

     Average outstanding balance                               $436,780    

$377,113




As of September 30, 2021 and June 30, 2021, we had $1,021,769 and $640,853,
respectively, available to us for borrowing under the Revolving Credit Facility,
net of $84,537 and $356,937 outstanding borrowings as of the respective balance
sheet dates. As of September 30, 2021, the investments, including cash and cash
equivalents, used as collateral for the Revolving Credit Facility had an
aggregate fair value of $1,871,007, which represents 28.9% of our total
investments, including cash and cash equivalents. These assets are held and
owned by PCF, a bankruptcy remote special purpose entity, and, as such, these
investments are not available to our general creditors. As additional eligible
investments are transferred to PCF and pledged under the Revolving Credit
Facility, PCF will generate additional availability up to the current commitment
amount of $1,277,500. The release of any assets from PCF requires the approval
of the facility agent.
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In connection with the origination and amendments of the Revolving Credit
Facility, we incurred $15,978 of new fees and $7,509 were carried over from the
previous facilities, all of which are being amortized over the term of the
facility in accordance with ASC 470-50. As of September 30, 2021, $10,945
remains to be amortized and is reflected as deferred financing costs on the
Consolidated Statements of Assets and Liabilities.
During the three months ended September 30, 2021 and September 30, 2020, we
recorded $4,569 and $4,633, respectively, of interest costs, unused fees and
amortization of financing costs on the Revolving Credit Facility as interest
expense.
Convertible Notes
On April 11, 2017, we issued $225,000 aggregate principal amount of convertible
notes that mature on July 15, 2022 (the "Original 2022 Notes"), unless
previously converted or repurchased in accordance with their terms. The Original
2022 Notes bear interest at a rate of 4.95% per year, payable semi-annually on
January 15 and July 15 each year, beginning July 15, 2017. Total proceeds from
the issuance of the Original 2022 Notes, net of underwriting discounts and
offering costs, were $218,010. On May 18, 2018, we issued an additional $103,500
aggregate principal amount of convertible notes that mature on July 15, 2022
(the "Additional 2022 Notes," and together with the Original 2022 Notes, the
"2022 Notes"), unless previously converted or repurchased in accordance with
their terms. The Additional 2022 Notes were a further issuance of, and are fully
fungible and rank equally in right of payment with, the Original 2022 Notes and
bear interest at a rate of 4.95% per year, payable semi-annually on January 15
and July 15 each year, beginning July 15, 2018. Total proceeds from the issuance
of the Additional 2022 Notes, net of underwriting discounts and offering costs,
were $100,749.
On October 18, 2019, we repurchased $22,941 aggregate principal amount of the
2022 Notes at a price of $102.8 including commissions. As a result of this
transaction, we recorded a loss of $1,072 in the amount of the difference
between the reacquisition price and the net carrying amount of the 2022 Notes,
net of the proportionate amount of unamortized debt issuance costs. On November
7, 2019, we commenced a tender offer to purchase for cash up to $50,000
aggregate principal amount of the 2022 Notes ("2022 Notes November Tender
Offer"). On December 7, 2019, $13,432 aggregate principal amount of the 2022
Notes, representing 4.4% of the previously outstanding 2022 Notes, were validly
tendered and accepted. The 2022 Notes November Tender Offer resulted in our
recognizing a loss of $599, in the amount of the difference between the
reacquisition price and the net carrying amount of the 2022 Notes, net of the
proportionate amount of unamortized debt issuance costs.
On December 23, 2019, we commenced a tender offer to purchase for cash up to
$25,000 aggregate principal amount of the 2022 Notes ("2022 Notes December
Tender Offer"). On January 22, 2020, $1,302 aggregate principal amount of the
2022 Notes, representing 0.5% of the previously outstanding 2022 Notes, were
validly tendered and accepted. The 2022 Notes December Tender Offer resulted in
our recognizing a loss of $51 during the three months ended March 31, 2020.
During the three months ended March 31, 2020, we repurchased an additional
$32,585 aggregate principal amount of the 2022 Notes at a weighted average price
of 89.1 including commissions. As a result of this transaction, we recorded a
gain of $3,045, in the amount of the difference between the reacquisition price
and the net carrying amount of the 2022 Notes, net of the proportionate amount
of unamortized debt issuance costs.
On July 23, 2020, we commenced a tender offer to purchase for cash up to
$100,000 aggregate principal amount of the 2022 Notes ("2022 Notes July Tender
Offer"). On August 19, 2020, $29,420 aggregate principal amount of the 2022
Notes, representing 11.4% of the previously outstanding 2022 Notes, were validly
tendered and accepted. The 2022 Notes July Tender Offer resulted in our
recognizing a loss of $396 during the three months ended September 30, 2020.
On September 3, 2020, we commenced a tender offer to purchase for cash up to
$228,820 aggregate principal amount of the 2022 Notes at the purchase price of
$101.00, plus accrued and unpaid interest ("2022 Notes September Tender Offer").
On October 1, 2020, $6,035 aggregate principal amount of the 2022 Notes,
representing 2.64% of the previously outstanding 2022 Notes, were validly
tendered and accepted. On October 19, 2020, we commenced a tender offer to
purchase for cash any and all of the $222,785 aggregate principal amount
outstanding of the 2022 Notes at the purchase price of $102.625, plus accrued
and unpaid interest ("2022 Notes October Tender Offer"). On November 16, 2020,
$59,863 aggregate principal amount of the 2022 Notes, representing 26.87% of the
previously outstanding 2022 Notes, were validly tendered and accepted. The 2022
Notes September Tender Offer and the 2022 Notes October Tender Offer resulted in
our recognizing a loss of $2,433 during the three months ended December 31,
2020.
On December 16, 2020, we commenced a tender offer to purchase for cash any and
all of the $162,922 aggregate principal outstanding amount of the 2022 Notes at
the purchase price of $103.50, plus accrued and unpaid interest ("2022 Notes
December 2020 Tender Offer"). On January 15, 2021, $26,694 aggregate principal
amount of the 2022 Notes, representing 16.38% of the previously outstanding 2022
Notes, were validly tendered and accepted. On February 1, 2021, we commenced a
tender offer to purchase for cash up to $30,000 aggregate principal outstanding
amount of the 2022 Notes at the purchase price
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of $103.00, plus accrued and unpaid interest ("2022 Notes February 2021 Tender
Offer"). On March 2, 2021, $25,123 aggregate principal amount of the 2022 Notes,
representing 18.44% of the previously outstanding 2022 Notes, were validly
tendered and accepted. The 2022 Notes December 2020 Tender Offer and the 2022
Notes February 2021 Tender Offer resulted in our recognizing a loss of $2,225
during the three months ended March 31, 2021.
On March 16, 2021, we commenced a tender offer to purchase for cash up to
$30,000 aggregate principal outstanding amount of the 2022 Notes at the purchase
price of $102.00, plus accrued and unpaid interest ("2022 Notes March 2021
Tender Offer"). On April 13, 2021, $50 aggregate principal amount of the 2022
Notes, representing 0.05% of the previously outstanding 2022 Notes, were validly
tendered and accepted. The 2022 Notes March 2021 Tender Offer resulted in our
recognizing a loss of $1.
On August 26, 2021, we commenced a tender offer to purchase for cash up to
$60,000 aggregate principal outstanding amount of the 2022 Notes at the purchase
price of $102.50, plus accrued and unpaid interest ("2022 Notes August 2021
Tender Offer"). On September 24, 2021, $50,554 aggregate principal amount of the
2022 Notes, representing 45.52% of the previously outstanding 2022 Notes, were
validly tendered and accepted. The 2022 Notes August 2021 Tender Offer resulted
in our recognizing a loss of $1,584. As of September 30, 2021, the outstanding
aggregate principal amount of the 2022 Notes is $60,501.
On March 1, 2019, we issued $175,000 aggregate principal amount of senior
convertible notes that mature on March 1, 2025 (the "2025 Notes"), unless
previously converted or repurchased in accordance with their terms. We granted
the underwriters a 13-day over-allotment option to purchase up to an additional
$26,250 aggregate principal amount of the 2025 Notes. The underwriters fully
exercised the over-allotment option on March 11, 2019 and we issued $26,250
aggregate principal amount of 2025 Notes at settlement on March 13, 2019. The
2025 Notes bear interest at a rate of 6.375% per year, payable semi-annually on
March 1 and September 1 each year, beginning September 1, 2019. Total proceeds
from the issuance of the 2025 Notes, net of underwriting discounts and offering
costs, were $198,674.

On December 28, 2020, we commenced a tender offer to purchase for cash up to
$20,000 aggregate principal amount of the 2025 Notes at the purchase price of
$111.00, plus accrued and unpaid interest ("2025 Notes December 2020 Tender
Offer"). On January 27, 2021, $20,000 aggregate principal amount of the 2025
Notes, representing 9.94% of the previously outstanding 2025 Notes, were validly
tendered and accepted. The 2025 Notes December 2020 Tender Offer resulted in our
recognizing a loss of $2,676 during the three months ended March 31, 2021. On
February 16, 2021, we repurchased an additional $25,082 aggregate principal
amount of the 2025 Notes, representing 13.84% of the previously outstanding 2025
Notes, at a price of $107.50, including commissions. As a result of this
transaction, we recorded a loss of $2,466, in the amount of the difference
between the reacquisition price and the net carrying amount of the 2025 Notes,
net of the proportionate amount of unamortized debt issuance costs. As of
September 30, 2021, the outstanding aggregate principal amount of the 2025 Notes
is $156,168.

Certain key terms related to the convertible features for the 2022 Notes, and the 2025 Notes (collectively, the "Convertible Notes") are listed below.

                                                               2022 Notes   

2025 Notes

        Initial conversion rate(1)                             100.2305     

110.7420

        Initial conversion price                             $     9.98     

$ 9.03

        Conversion rate at September 30, 2021(1)(2)            100.2305     

110.7420

        Conversion price at September 30, 2021(2)(3)         $     9.98      $     9.03
        Last conversion price calculation date                  4/11/2021        3/1/2021
        Dividend threshold amount (per share)(4)             $ 0.083330    

$ 0.060000



(1)Conversion rates denominated in shares of common stock per $1 principal
amount of the Convertible Notes converted.
(2)Represents conversion rate and conversion price, as applicable, taking into
account certain de minimis adjustments that will be made on the conversion date.
(3)The conversion price will increase only if the current monthly dividends (per
share) exceed the dividend threshold amount (per share).
(4)The conversion rate is increased if monthly cash dividends paid to common
shares exceed the monthly dividend threshold amount, subject to adjustment.
Current dividend rates are at or below the minimum dividend threshold amount for
further conversion rate adjustments for all bonds.
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Interest accrues from the date of the original issuance of the Convertible Notes
or from the most recent date to which interest has been paid or duly provided.
Upon conversion, the holder will receive a separate cash payment with respect to
the notes surrendered for conversion representing accrued and unpaid interest
to, but not including, the conversion date. Any such payment will be made on the
settlement date applicable to the relevant conversion on the Convertible Notes.
If a holder converts the Convertible Notes after a record date for an interest
payment but prior to the corresponding interest payment date, the holder will
receive shares of our common stock based on the conversion formula described
above, a cash payment representing accrued and unpaid interest through the
record date in the normal course and a separate cash payment representing
accrued and unpaid interest from the record date to the conversion date.
No holder of Convertible Notes will be entitled to receive shares of our common
stock upon conversion to the extent (but only to the extent) that such receipt
would cause such converting holder to become, directly or indirectly, a
beneficial owner (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of more than
5.0% of the shares of our common stock outstanding at such time. The 5.0%
limitation shall no longer apply following the effective date of any fundamental
change. We will not issue any shares in connection with the conversion or
redemption of the Convertible Notes which would equal or exceed 20% of the
shares outstanding at the time of the transaction in accordance with NASDAQ
rules.
Subject to certain exceptions, holders may require us to repurchase, for cash,
all or part of their Convertible Notes upon a fundamental change at a price
equal to 100% of the principal amount of the Convertible Notes being repurchased
plus any accrued and unpaid interest up to, but excluding, the fundamental
change repurchase date. In addition, upon a fundamental change that constitutes
a non-stock change of control we will also pay holders an amount in cash equal
to the present value of all remaining interest payments (without duplication of
the foregoing amounts) on such Convertible Notes through and including the
maturity date.
In connection with the issuance of the Convertible Notes, we recorded a discount
of $3,369 and debt issuance costs of $9,035 which are being amortized over the
terms of the Convertible Notes. As of September 30, 2021, $1,905 of the original
issue discount and $1,511 of the debt issuance costs remain to be amortized and
is included as a reduction within Convertible Notes on the Consolidated
Statement of Assets and Liabilities.
During the three months ended September 30, 2021 and September 30, 2020, we
recorded $4,235 and $6,865, respectively, of interest costs and amortization of
financing costs on the Convertible Notes as interest expense.

Public Notes
On March 15, 2013, we issued $250,000 aggregate principal amount of unsecured
notes that mature on March 15, 2023 (the "Original 2023 Notes"). The Original
2023 Notes bear interest at a rate of 5.875% per year, payable semi-annually on
March 15 and September 15 of each year, beginning September 15, 2013. Total
proceeds from the issuance of the Original 2023 Notes, net of underwriting
discounts and offering costs, were $243,641. On June 20, 2018, we issued an
additional $70,000 aggregate principal amount of unsecured notes that mature on
March 15, 2023 (the "Additional 2023 Notes", and together with the Original 2023
Notes, the "2023 Notes"). The Additional 2023 Notes were a further issuance of,
and are fully fungible and rank equally in right of payment with, the Original
2023 Notes and bear interest at a rate of 5.875% per year, payable semi-annually
on March 15 and September 15 of each year, beginning September 15, 2018. Total
proceeds from the issuance of the Additional 2023 Notes, net of underwriting
discounts, were $69,403.
On November 17, 2020, we commenced a tender offer to purchase for cash up to
$30,000 aggregate principal amount of the 2023 Notes at the purchase price of
$105.00, plus accrued and unpaid interest ("2023 Notes November Tender Offer").
On December 15, 2020, $36,644 aggregate principal amount of the 2023 Notes were
tendered, of which, $30,000 aggregate principal amount, representing 9.38% of
the previously outstanding 2023 Notes, were validly accepted pursuant to the
applicable 2023 Notes November Tender Offer (applying a proration factor of
approximately 82.27%). The 2023 Notes November Tender Offer resulted in our
recognizing a loss of $1,694 during the three months ended December 31, 2020.
On March 9, 2021, we commenced a tender offer to purchase for cash any and all
of the $290,000 aggregate principal amount of the 2023 Notes at the purchase
price of $104.25, plus accrued and unpaid interest ("2023 Notes March 9, 2021
Tender Offer"). On March 15, 2021, $4,219 aggregate principal amount of the 2023
Notes were tendered, representing 1.45% of the previously outstanding 2023
Notes. On March 23, 2021, we commenced a tender offer to purchase for cash any
and all of the $285,781 aggregate principal amount of the 2023 Notes at the
purchase price of $104.20, plus accrued and unpaid interest ("2023 Notes March
23, 2021 Tender Offer"). On March 29, 2021, $726 aggregate principal amount of
the 2023 Notes were tendered, representing 0.25% of the previously outstanding
2023 Notes. The 2023 Notes March 9, 2021 Tender Offer and the 2023 Notes March
23, 2021 Tender Offer resulted in our recognizing a loss of $234 during the
three months ended March 31, 2021.
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On April 7, 2021, we commenced a tender offer to purchase for cash up to $30,000
aggregate principal amount of the 2023 Notes at the purchase price of $104.15,
plus accrued and unpaid interest ("2023 Notes April 2021 Tender Offer"). On May
4, 2021, $836 aggregate principal amount of the 2023 Notes were tendered,
representing 0.29% of the previously outstanding 2023 Notes. The 2023 Notes
April 2021 Tender Offer resulted in our recognizing a loss of $43 during the
three months ended June 30, 2021. As of September 30, 2021, the outstanding
aggregate principal amount of the 2023 Notes is $284,219.
On December 10, 2015, we issued $160,000 aggregate principal amount of unsecured
notes that mature on June 15, 2024 (the "2024 Notes"). The 2024 Notes bore
interest at a rate of 6.25% per year, payable quarterly on March 15, June 15,
September 15 and December 15 of each year, beginning March 15, 2016. Total
proceeds from the issuance of the 2024 Notes, net of underwriting discounts and
offering costs, were $155,043. On June 16, 2016, we entered into an
at-the-market ("ATM") program with FBR Capital Markets & Co., through which we
could sell, by means of ATM offerings, from time to time, up to $100,000 in
aggregate principal amount of our existing 2024 Notes ("Initial 2024 Notes
ATM"). Following the Initial 2024 Notes ATM, the aggregate principal amount of
the 2024 Notes issued was $199,281 for net proceeds of $193,253, after
commissions and offering costs. On July 2, 2018, we entered into a second ATM
program with B. Riley FBR, Inc. and BB&T Capital Markets, and on August 31, 2018
with Comerica Securities, Inc., through which we could sell, by means of ATM
offerings, up to $100,000 in aggregate principal amount of the 2024 Notes
("Second 2024 Notes ATM"). Prior to the February 2021 full redemption discussed
below, the 2024 Notes were listed on the New York Stock Exchange ("NYSE") and
traded thereon under the ticker "PBB".
During the year ended June 30, 2019, we issued an additional $35,162 aggregate
principal amount under the Second 2024 Notes ATM, for net proceeds of $34,855,
after commissions and offering costs. On March 20, 2020, we commenced a tender
offer to purchase for cash any and all of the $234,443 aggregate principal
amount of the 2024 Notes ("2024 Notes March Tender Offer"). On March 31, 2020,
$655 aggregate principal amount of the 2024 Notes, representing 0.3% of the
previously outstanding 2024 Notes, were validly tendered and accepted. The 2024
Notes March Tender Offer resulted in our recognizing a gain of $203 during the
three months ended March 31, 2020.

On February 16, 2021, we redeemed $233,788 of the aggregate principal amount of
the 2024 Notes. The transaction resulted in our recognizing a loss of $3,391
during the three months ended March 31, 2021. Following the redemption, none of
the 2024 Notes remained outstanding.
On June 7, 2018, we issued $55,000 aggregate principal amount of unsecured notes
that mature on June 15, 2028 (the "2028 Notes"). The 2028 Notes bear interest at
a rate of 6.25% per year, payable quarterly on March 15, June 15, September 15,
and December 15 of each year, beginning September 15, 2018. Total proceeds from
the issuance of the 2028 Notes, net of underwriting discounts and offering costs
were $53,119. On July 2, 2018, we entered into an ATM program with B. Riley FBR,
Inc. and BB&T Capital Markets, and on August 31, 2018 with Comerica Securities,
Inc., through which we could sell, by means of ATM offerings, up to $100,000 in
aggregate principal amount of our existing 2028 Notes ("2028 Notes ATM" or "2028
Notes Follow-on Program"). The 2028 Notes are listed on the NYSE and trade
thereon under the ticker "PBY." During the year ended June 30, 2019, we issued
an additional $15,761 aggregate principal amount under the 2028 Notes ATM, for
net proceeds of $15,530, after commissions and offering costs.
On June 15, 2021, we redeemed $70,761 of the aggregate principal amount of the
2028 Notes. The transaction resulted in our recognizing a loss of $1,934 during
the three months ended June 30, 2021. Following the redemption, none of the 2028
Notes remained outstanding.
On October 1, 2018, we issued $100,000 aggregate principal amount of unsecured
notes that mature on January 15, 2024 (the "6.375% 2024 Notes"). The 6.375% 2024
Notes bear interest at a rate of 6.375% per year, payable semi-annually on
January 15 and July 15 of each year, beginning January 15, 2019. Total proceeds
from the issuance of the 6.375% 2024 Notes, net of underwriting discounts and
offering costs, were $98,985.
On November 17, 2020, we commenced a tender offer to purchase for cash up to
$10,000 aggregate principal amount of the 6.375% 2024 Notes at the purchase
price of $108.00, plus accrued and unpaid interest ("6.375% 2024 Notes November
Tender Offer"). On December 15, 2020, $11,848 aggregate principal amount of the
6.375% 2024 Notes were tendered, of which, $10,000 aggregate principal amount,
representing 10% of the previously outstanding 6.375% 2024 Notes, were validly
accepted pursuant to the applicable 6.375% 2024 Notes Tender Offer (applying a
proration factor of approximately 84.56%). The 6.375% 2024 Notes November Tender
Offer resulted in our recognizing a loss of $866 during the three months ended
December 31, 2020.
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On March 2, 2021, we commenced a tender offer to purchase for cash any and all
of the $90,000 aggregate principal amount of the 6.375% 2024 Notes at the
purchase price of $109.00, plus accrued and unpaid interest ("6.375% 2024 Notes
March 2, 2021 Tender Offer"). On March 8, 2021, $7,738 aggregate principal
amount of the 6.375% 2024 Notes, representing 8.60% of the previously
outstanding 6.375% 2024 Notes, were validly tendered and accepted. On March 16,
2021, we commenced a tender offer to purchase for cash any and all of the
$82,262 aggregate principal amount of the 6.375% 2024 Notes at the purchase
price of $108.75, plus accrued and unpaid interest ("6.375% 2024 Notes March 16,
2021 Tender Offer"). On March 22, 2021, $647 aggregate principal amount of the
6.375% 2024 Notes, representing 0.79% of the previously outstanding 6.375% 2024
Notes, were validly tendered and accepted. The 6.375% 2024 Notes March 2, 2021
Tender Offer and the 6.375% 2024 Notes March 16, 2021 Tender Offer resulted in
our recognizing a loss of $806 during the three months ended March 31, 2021.
On April 7, 2021, we commenced a tender offer to purchase for cash up to $30,000
aggregate principal amount of the 6.375% 2024 Notes at the purchase price of
$107.50, plus accrued and unpaid interest ("6.375% 2024 Notes April 2021 Tender
Offer"). On May 4, 2021, $226 aggregate principal amount of the 6.375% 2024
notes, representing 0.28% of the previously outstanding 6.375% 2024 Notes, were
validly tendered and accepted. The 6.375% 2024 Notes April 2021 Tender Offer
resulted in our recognizing a loss of $18 during the three months ended June 30,
2021. As of September 30, 2021, the outstanding aggregate principal amount of
the 6.375% 2024 Notes is $81,389.
On December 5, 2018, we issued $50,000 aggregate principal amount of unsecured
notes that mature on June 15, 2029 (the "2029 Notes"). The 2029 Notes bear
interest at a rate of 6.875% per year, payable quarterly on March 15, June 15,
September 15, and December 15 of each year, beginning March 15, 2019. Total
proceeds from the issuance of the 2029 Notes, net of underwriting discounts and
offering costs, were $48,057. On February 9, 2019, we entered into an ATM
program with B. Riley FBR, Inc., BB&T Capital Markets, and Comerica Securities,
Inc., through which we could sell, by means of ATM offerings, up to $100,000 in
aggregate principal amount of our existing 2029 Notes ("2029 Notes ATM" or "2029
Notes Follow-on Program"). The 2029 Notes are listed on the NYSE and trade
thereon under the ticker "PBC." During the year ended June 30, 2019, we issued
an additional $19,170 aggregate principal amount under the 2029 Notes ATM, for
net proceeds of $18,523, after commissions and offering costs. As of September
30, 2021, the outstanding aggregate principal amount of the 2029 Notes is
$69,170.

On January 22, 2021, we issued $325,000 aggregate principal amount of unsecured
notes that mature on January 22, 2026 (the "Original 2026 Notes"). The Original
2026 Notes bear interest at a rate of 3.706% per year, payable semi-annually on
July 22, and January 22 of each year, beginning on July 22, 2021. Total proceeds
from the issuance of the 2026 Notes, net of underwriting discounts and offering
costs, were $317,720. On February 19, 2021, we issued an additional $75,000
aggregate principal amount of unsecured notes that mature on January 22, 2026
(the "Additional 2026 Notes", and together with the Original 2026 Notes, the
"2026 Notes"). The Additional 2026 Notes were a further issuance of, and are
fully fungible and rank equally in right of payment with, the Original 2026
Notes and bear interest at a rate of 3.706% per year, payable semi-annually on
July 22 and January 22 of each year, beginning July 22, 2021. Total proceeds
from the issuance of the Additional 2026 Notes, net of underwriting discounts
and offering costs, were $74,061. As of September 30, 2021, the outstanding
aggregate principal amount of the 2026 Notes is $400,000.

On May 27, 2021, we issued $300,000 aggregate principal amount of unsecured
notes that mature on November 15, 2026 (the "3.364% 2026 Notes"). The 3.364%
2026 Notes bear interest at a rate of 3.364% per year, payable semi-annually on
November 15, and May 15 of each year, beginning on November 15, 2021. Total
proceeds from the issuance of the 3.364% 2026 Notes, net of underwriting
discounts and offering costs, were $293,283. As of September 30, 2021, the
outstanding aggregate principal amount of the 3.364% 2026 Notes is $300,000.
On September 30, 2021, we issued $300,000 aggregate principal amount of
unsecured notes that mature on October 15, 2028 (the "3.437% 2028 Notes"). The
3.437% 2028 Notes bear interest at a rate of 3.437% per year, payable
semi-annually on April 15 and October 15 of each year, beginning on April 15,
2022. Total proceeds from the issuance of the 3.437% 2028 Notes, net of
underwriting discounts and offering costs, were $291,798. As of September 30,
2021, the outstanding aggregate principal amount of the 3.437% 2028 Notes is
$300,000.


The 2023 Notes, the 6.375% 2024 Notes, the 2029 Notes, the 2026 Notes, the
3.364% 2026 Notes, and the 3.437% 2028 Notes (collectively, the "Public Notes")
are direct unsecured obligations and rank equally with all of our unsecured
indebtedness from time to time outstanding.
In connection with the issuance of the Public Notes we recorded a discount of
$16,318 and debt issuance costs of $19,008, which are being amortized over the
term of the notes. As of September 30, 2021, $13,486 of the original issue
discount and
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$13,882 of the debt issuance costs remain to be amortized and are included as a
reduction within Public Notes on the Consolidated Statement of Assets and
Liabilities.
During the three months ended September 30, 2021 and September 30, 2020, we
recorded $13,932 and $12,843, respectively, of interest costs and amortization
of financing costs on the Public Notes as interest expense.
Prospect Capital InterNotes®
On February 16, 2012, we entered into a selling agent agreement (the "Original
Selling Agent Agreement") with InspereX LLC (formerly known as "Incapital LLC"),
as purchasing agent for our issuance and sale from time to time of up to
$500,000 of Prospect Capital InterNotes®, which was increased to $1,500,000 in
May 2014. On May 10, 2019, the Original Selling Agent Agreement was terminated,
and we entered into a new selling agent agreement with InspereX LLC (the "May
2019 Selling Agent Agreement"), authorizing the issuance and sale from time to
time of up to $1,000,000 of Prospect Capital InterNotes®.
On September 16, 2019, the May 2019 Selling Agent Agreement was terminated, and
we entered into a new selling agent agreement with InspereX LLC (the "September
2019 Selling Agent Agreement"), authorizing the issuance and sale from time to
time of up to $500,000 of Prospect Capital InterNotes®. We sold approximately
$1,700,000 in aggregate principal amount of Prospect Capital InterNotes® under
the Original Selling Agent Agreement, May 2019 Selling Agent Agreement, and
September 2019 Selling Agent Agreement (collectively the "Previous Selling Agent
Agreements").
On February 13, 2020, the September 2019 Selling Agent Agreement was terminated,
and we entered into a new selling agent agreement with InspereX LLC (the
"Selling Agent Agreement"), authorizing the issuance and sale from time to time
of up to $1,000,000 of Prospect Capital InterNotes® (collectively with the
previously authorized selling agent agreements, the "InterNotes® Offerings").
Additional agents may be appointed by us from time to time in connection with
the InterNotes® Offering and become parties to the Selling Agent Agreement. We
have, from time to time, repurchased certain notes issued through the
InterNotes® Offerings and, therefore, as of September 30, 2021, $382,164
aggregate principal amount of Prospect Capital InterNotes® were outstanding.
These notes are direct unsecured obligations and rank equally with all of our
unsecured indebtedness from time to time outstanding. Each series of notes will
be issued by a separate trust. These notes bear interest at fixed interest rates
and offer a variety of maturities no less than twelve months from the original
date of issuance.
During the three months ended September 30, 2021, we issued $87,657 aggregate
principal amount of Prospect Capital InterNotes® for net proceeds of $85,472.
These notes were issued with stated interest rates ranging from 2.25% to 4.00%
with a weighted average interest rate of 3.35%. These notes mature between
July 15, 2026 and September 15, 2051.

The following table summarizes the Prospect Capital InterNotes® issued during the three months ended September 30, 2021:

     Tenor at                                                                         Weighted
    Origination             Principal               Interest Rate                     Average
    (in years)                Amount                    Range                      Interest Rate                    Maturity Date Range
         5                $    15,681                     2.25% - 2.50%                        2.42  %       July 15, 2026 - September 15, 2026
         7                     17,016                     2.75% - 3.00%                        2.96  %       July 15, 2028 - September 15, 2028
        10                     17,027                     3.15% - 3.40%                        3.29  %       July 15, 2031 - September 15, 2031
        12                      2,422                           3.70  %                        3.70  %                            July 15, 2033
        15                     12,317                     3.50% - 4.00%                        3.82  %       July 15, 2036 - September 15, 2036
        30                     23,194                           4.00  %                        4.00  %       July 15, 2051 - September 15, 2051
                          $    87,657


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During the three months ended September 30, 2020, we issued $38,657 aggregate
principal amount of our Prospect Capital InterNotes® for net proceeds of
$38,070. These notes were issued with stated interest rates ranging from 4.75%
to 6.00% with a weighted average interest rate of 5.42%. These notes mature
between July 15, 2025 and October 15, 2030 .

The following table summarizes the Prospect Capital InterNotes® issued during the three months ended September 30, 2020:

     Tenor at                                                                      Weighted
    Origination             Principal              Interest Rate                   Average
    (in years)                Amount                   Range                    Interest Rate                    Maturity Date Range
         5                $    24,906                  4.75% - 5.50%                        5.31  %         July 15, 2025 - October 15, 2025
         7                      5,884                  5.00% - 5.75%                       5.490  %         July 15, 2027 - October 15, 2027
        10                      7,867                  5.25% - 6.00%                        5.75  %         July 15, 2030 - October 15, 2030
                          $    38,657


During the three months ended September 30, 2021, we repaid $671 aggregate
principal amount of Prospect Capital InterNotes® at par in accordance with the
Survivor's Option, as defined in the InterNotes® Offering prospectus. In order
to replace short maturity debt with longer-term debt, we redeemed $213,533
aggregate principal amount of Prospect Capital InterNotes® at par with a
weighted average interest rate of 5.09%. As a result of these transactions, we
recorded a loss in the amount of the unamortized debt issuance costs. The net
loss on the extinguishment of Prospect Capital InterNotes® in the three months
ended September 30, 2021 was $3,719.

The following table summarizes the Prospect Capital InterNotes® outstanding as
of September 30, 2021:
     Tenor at                                                                        Weighted
    Origination             Principal              Interest Rate                     Average
    (in years)               Amount                    Range                      Interest Rate                    Maturity Date Range
         3                $      662                           1.50  %                        1.50  %                         January 15, 2024
                                                                                                              January 15, 2026 - September 15,
         5                    45,974                     2.25% - 3.00%                        2.80  %                                     2026
         6                    15,107                           3.00  %                        3.00  %            June 15, 2027 - July 15, 2027
                                                                                                              January 15, 2028 - September 15,
         7                    25,339                     2.75% - 4.00%                        3.15  %                                     2028
         8                     3,511                     3.40% - 3.50%                        3.45  %            June 15, 2029 - July 15, 2029
                                                                                                             November 15, 2025 - September 15,
        10                    72,600                     3.15% - 6.00%                        3.88  %                                     2031
        12                    16,854                     3.70% - 6.00%                        4.17  %        November 15, 2025 - July 15, 2033
        15                    29,118                     3.50% - 6.00%                        4.96  %        May 15, 2028 - September 15, 2036
                                                                                                                December 15, 2030 - August 15,
        18                    18,467                     4.50% - 6.25%                        5.59  %                                     2031
                                                                                                               November 15, 2032 - October 15,
        20                     3,777                     5.75% - 6.00%                        5.89  %                                     2033
        25                    30,209                     6.25% - 6.50%                        6.39  %           August 15, 2038 - May 15, 2039
                                                                                                             November 15, 2042 - September 15,
        30                   120,546                     4.00% - 6.75%                        5.82  %                                     2051
                          $  382,164


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During the three months ended September 30, 2020, we repaid $565 aggregate
principal amount of Prospect Capital InterNotes® at par in accordance with the
Survivor's Option, as defined in the InterNotes® Offering prospectus. As a
result of these transactions, we recorded a loss in the amount of the
unamortized debt issuance costs. The net loss on the extinguishment of Prospect
Capital InterNotes® in the three months ended September 30, 2020 was $14.

The following table summarizes the Prospect Capital InterNotes® outstanding as
of June 30, 2021:
     Tenor at                                                                     Weighted
    Origination             Principal             Interest Rate                   Average
    (in years)               Amount                   Range                    Interest Rate                    Maturity Date Range
                                                                                                           September 15, 2023 - October 15,
         5                $  243,146                  3.75% - 5.75%                        4.86  %                                     2025
         7                   110,348                  4.00% - 6.00%                        5.13  %         July 15, 2024 - October 15, 2027
         8                    24,325                  4.50% - 5.75%                        4.67  %          August 15, 2025 - July 15, 2026
                                                                                                             January 15, 2024 - October 15,
        10                   167,479                  3.75% - 6.25%                        5.34  %                                     2030
                                                                                                           November 15, 2025 - December 15,
        12                     2,978                          6.00%                        6.00  %                                     2025
        15                    16,851                  5.75% - 6.00%                        5.79  %         May 15, 2028 - November 15, 2028
                                                                                                             December 15, 2030 - August 15,
        18                    18,721                  4.50% - 6.25%                        5.58  %                                     2031
                                                                                                            November 15, 2032 - October 15,
        20                     3,812                  5.75% - 6.00%                        5.89  %                                     2033
        25                    30,710                  6.25% - 6.50%                        6.39  %           August 15, 2038 - May 15, 2039
                                                                                                            November 15, 2042 - October 15,
        30                    99,951                  5.50% - 6.75%                        6.25  %                                     2043
                          $  718,321


In connection with the issuance of Prospect Capital InterNotes®, we incurred
$26,776 of fees which are being amortized over the term of the notes, of which
$8,814 remains to be amortized and is included as a reduction within Prospect
Capital InterNotes® on the Consolidated Statement of Assets and Liabilities as
of September 30, 2021.
During the three months ended September 30, 2021 and September 30, 2020, we
recorded $5,302 and $9,708, respectively, of interest costs and amortization of
financing costs on the Prospect Capital InterNotes® as interest expense.
Net Asset Value Attributable to Common Stockholders
During the three months ended September 30, 2021, our net asset value
attributable to common shares increased by $134,786 $0.31 per common share. The
increase was primarily attributable to an increase in net realized and net
change in unrealized gains of $130,762, or $0.33 per basic weighted average
common share. During the three months ended September 30, 2021, net investment
income of $81,369, or $0.21 per basic weighted average common share, also
exceeded distributions to common and preferred stockholders of $72,450
(including distributions classified as return of capital distributions to common
stockholders), or $0.19 per basic weighted average common share, resulting in a
net increase of $0.02 per basic weighted average common share. The increase was
primarily offset by $0.01 of dilution per common share related to common stock
issuances through our common stock and dividend reinvestment program and by
$0.03 of dilution per common share related to the preferred stock issuances for
the three months ended September 30, 2021. The following table shows the
calculation of net asset value per common share as of September 30, 2021 and
June 30, 2021.
                                                     September 30, 2021       June 30, 2021
 Net assets                                         $         3,943,263      $    3,945,517
 Less: Preferred Stock                                                -            (137,040)

Net assets available to common stockholders $ 3,943,263

$ 3,808,477

 Shares of common stock issued and outstanding              389,504,713     

388,419,573

 Net asset value per common share                   $             10.12      $         9.81



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Results of Operations
Operating results for the three months ended September 30, 2021 and September
30, 2020 were as follows:
                                                                    Three Months Ended September 30,
                                                                        2021                    2020
Investment income                                               $         169,474          $   142,880
Operating expenses                                                        (88,105)             (85,335)
Net investment income                                                      81,369               57,545
Net realized gains (losses) from investments                                 (601)               2,843
Net change in unrealized gains from investments                           136,720              107,844
Net realized losses on extinguishment of debt                              (5,357)                (486)
Net increase in net assets resulting from operations                      212,131              167,746
Preferred stock dividend                                                   (2,407)                   -

Net Increase in Net Assets Resulting from Operations attributable to Common Stockholders

                             $         

209,724 $ 167,746



While we seek to maximize gains and minimize losses, our investments in
portfolio companies can expose our capital to risks greater than those we may
anticipate. These companies typically do not issue securities rated investment
grade, and have limited resources, limited operating history, and concentrated
product lines or customers. These are generally private companies with limited
operating information available and are likely to depend on a small core of
management talents. Changes in any of these factors can have a significant
impact on the value of the portfolio company. These changes, along with those
discussed in Investment Valuation above, can cause significant fluctuations in
our net change in unrealized gains (losses) from investments, and therefore our
net increase (decrease) in net assets resulting from operations attributable to
common stockholders, quarter over quarter.

Investment Income
We generate revenue in the form of interest income on the debt securities that
we own, dividend income on any common or preferred stock that we own, and fees
generated from the structuring of new deals. Our investments, if in the form of
debt securities, will typically have a term of one to ten years and bear
interest at a fixed or floating rate. To the extent achievable, we will seek to
collateralize our investments by obtaining security interests in our portfolio
companies' assets. We also may acquire minority or majority equity interests in
our portfolio companies, which may pay cash or in-kind dividends on a recurring
or otherwise negotiated basis. In addition, we may generate revenue in other
forms including prepayment penalties and possibly consulting fees. Any such fees
generated in connection with our investments are recognized as earned.
Investment income consists of interest income, including accretion of loan
origination fees and prepayment penalty fees, dividend income and other income,
including settlement of net profits interests, overriding royalty interests and
structuring fees.
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The following table describes the various components of investment income and the related levels of debt investments:

                                                                     Three Months Ended September 30,
                                                                       2021                     2020
Interest income                                                $        146,271           $      132,239
Dividend income                                                           1,267                       25
Other income                                                             21,936                   10,616
Total investment income                                        $        169,474           $      142,880

Average debt principal of performing interest bearing investments(1)

                                                 $      5,777,799           $    5,395,867

Weighted average interest rate earned on performing interest bearing investments(1)

                                                     9.91  %                  9.59  %

Average debt principal of all interest bearing investments(2) $ 6,056,587

           $    5,825,885

Weighted average interest rate earned on all interest bearing investments(2)

                                                             9.45  %                  8.88  %


(1) Excludes equity investments and non-accrual loans. (2) Excludes equity investments.


The average interest earned on interest bearing performing assets increased from
9.59% for the three months ended September 30, 2020 to 9.91% for the three
months ended September 30, 2021. The increase is primarily driven by an increase
in interest income from early repayments causing an increase in accelerated
income and prepayment premium income, and an increase due to originations in
higher yielding investments, offset by a decrease in income from our structured
credit investments due to lower future expected cash flows. The average interest
earned on all interest bearing performing assets increased from 8.88% for the
three months ended September 30, 2020 to 9.45% for the three months ended
September 30, 2021. The increase is primarily due to decreases in non-accrual
loans.
Investment income is also generated from dividends and other income which is
less predictable than interest income. The following table describes dividend
income earned for the three and three months ended September 30, 2021 and
September 30, 2020, respectively:
                                            Three Months Ended September 30,
                                                     2021                         2020
   Dividend income

   Nationwide Loan Company LLC   $               1,250                           $  -

   Other, net                                       17                             25
   Total dividend income         $               1,267                           $ 25



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Other income is comprised of structuring fees, advisory fees, amendment fees,
royalty interests, settlement of net profits interests, settlement of residual
profits interests, administrative agent fees and structured credit rebate
income. The following table describes other income earned for the three months
ended September 30, 2021 and September 30, 2020, respectively:
                                                                          

Three Months Ended September 30,

                                                                    2021                                     2020
Structuring, advisory and amendment fees
First Tower Finance Company LLC                                    $7,234                                     $-
PGX Holdings, Inc.                                                 3,779                                      -
Eze Castle Integration, Inc.                                         -                                      1,250
Other, net                                                          810                                      176
Total structuring, advisory and amendment fees                    $11,823                                   $1,426
Royalty and net revenue interests
National Property REIT Corp.                                       $9,625                                   $8,898
Other, net                                                          181                                      168
Total royalty and net revenue interests                            $9,806                                   $9,066
Administrative agent fees
Other, net                                                          $168                                     $124
Total administrative agent fees                                     168                                      124
Structured Credit rebate income
Other, net                                                          $139                                      $-
Total structured credit rebate income                               139                                       -
Total other income                                                $21,936                                  $10,616






Operating Expenses
Our primary operating expenses consist of investment advisory fees (base
management and income incentive fees), borrowing costs, legal and professional
fees, overhead-related expenses and other operating expenses. These expenses
include our allocable portion of overhead under the Administration Agreement
with Prospect Administration under which Prospect Administration provides
administrative services and facilities for us. Our investment advisory fees
compensate the Investment Adviser for its work in identifying, evaluating,
negotiating, closing and monitoring our investments. We bear all other costs and
expenses of our operations and transactions.
The following table describes the various components of our operating expenses:
                                                            Three Months Ended September 30,
                                                             2021                      2020
Base management fee                                  $          32,203          $         26,850
Income incentive fee                                            19,740                    14,386
Interest and credit facility expenses                           28,038                    34,049
Allocation of overhead from Prospect Administration              4,526                     4,657
Audit, compliance and tax related fees                             617                       938
Directors' fees                                                    116                       113
Other general and administrative expenses                        2,865                     4,342
Total operating expenses                             $          88,105          $         85,335


Total gross and net base management fee was $32,203 and $26,850 for the three
months ended September 30, 2021 and September 30, 2020, respectively. The
increase in total gross base management fee is directly related to an increase
in average total assets.
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For the three months ended September 30, 2021 and September 30, 2020, we
incurred $19,740 and $14,386 of income incentive fees, respectively. This
increase was driven by a corresponding increase in pre-incentive fee net
investment income from $71,931 for the three months ended September 30, 2020 to
$101,109 for the three months ended September 30, 2021. No capital gains
incentive fee has yet been incurred pursuant to the Investment Advisory
Agreement.
During the three months ended September 30, 2021 and September 30, 2020, we
incurred $28,038 and $34,049 respectively, of interest and credit facility
expenses related to our Revolving Credit Facility, Convertible Notes, Public
Notes and Prospect Capital InterNotes® (collectively, our "Notes"). These
expenses are related directly to the leveraging capacity put into place for each
of those periods and the levels of indebtedness actually undertaken in those
periods.
The table below describes the various expenses of our Notes and the related
indicators of leveraging capacity and indebtedness during these years:
                                                                       

Three Months Ended September 30,

                                                                           2021                    2020
Interest on borrowings                                             $         24,245           $    30,058
Amortization of deferred financing costs                                      1,915                 1,921
Accretion of discount on unsecured debt                                         573                   269
Facility commitment fees                                                      1,305                 1,801
Total interest and credit facility expenses                        $         28,038           $    34,049

Average principal debt outstanding                                 $      2,278,761           $ 2,314,135

Annualized weighted average stated interest rate on borrowings(1)

    4.26   %              5.20  %
Annualized weighted average interest rate on borrowings(2)                     4.92   %              5.89  %


(1)Includes only the stated interest expense.
(2)Includes the stated interest expense, amortization of deferred financing
costs, accretion of discount on Public Notes and commitment fees on the undrawn
portion of our Revolving Credit Facility.
Interest expense decreased from $34,049 for the three months ended September 30,
2020 to $28,038 for the three months ended September 30, 2021. The weighted
average stated interest rate on borrowings (excluding amortization, accretion
and undrawn facility fees) decreased from 5.20% for the three months ended
September 30, 2020 to 4.26% for the three months ended September 30, 2021,
primarily due to redemptions of our Prospect Capital InterNotes®, as well as
repurchases of our Convertible Notes, June 2024 Baby Bond and June 2028 Baby
Bond. In addition to Prospect Capital InterNotes®, the 2026 Notes and 3.364%
2026 Notes were issued this quarter at lower rates.
The allocation of net overhead expense from Prospect Administration was $4,526
and $4,657 for the three months ended September 30, 2021 and September 30, 2020,
respectively. Prospect Administration received estimated payments of $2,298 and
$66 directly from our portfolio companies, and certain funds managed by the
Investment Adviser for legal services during the three months ended September
30, 2021 and September 30, 2020, respectively. We were given a credit for these
payments as a reduction of the administrative services cost payable by us to
Prospect Administration. Had Prospect Administration not received these
payments, Prospect Administration's charges for its administrative services
would have increased by this amount.
Total operating expenses, excluding investment advisory fees, interest and
credit facility expenses, and allocation of overhead from Prospect
Administration ("Other Operating Expenses"), net of any expense reimbursements,
were $3,598 and $5,393 for the three months ended September 30, 2021 and
September 30, 2020, respectively. The decrease was primarily attributable to a
decrease in general and administrative expenses and legal fees.
Net Realized Gains (Losses)
The following table details net realized gains (losses) from investments for the
three months ended September 30, 2021 and September 30, 2020:
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                                                                 Three Months Ended September 30,
Portfolio Company                                                   2021                    2020

Spartan Energy Services, LLC - Term Loan B                                  -                2,832

Other, net                                                               (601)                  11
Net realized gains (losses)                                  $           

(601) $ 2,843



Net Realized Loss from Extinguishment of Debt
During the three months ended September 30, 2021 and September 30, 2020, we
recorded a net realized loss from the extinguishment of debt of $5,357 and $486,
respectively. Refer to Capitalization for additional discussion.
Change in Unrealized Gains (Losses)
The following table details net change in unrealized (losses) gains for our
portfolio for the three months ended September 30, 2021 and September 30, 2020,
respectively:
                                                  Three Months Ended September 30,
                                                        2021                      2020
Control investments                       $         122,330                    $  13,535
Affiliate investments                                 6,037                       66,473
Non-control/non-affiliate investments                 8,353                 

27,836

Net change in unrealized gains (losses)   $         136,720                 

$ 107,844

The following table details reflects net change in unrealized gains (losses) on investments for the three months ended September 30, 2021:

                                          Net Change in Unrealized Gains (Losses)
National Property REIT Corp.             $                                 73,851
InterDent, Inc.                                                            26,932
NMMB, Inc.                                                                 16,876
First Tower Finance Company LLC                                            

15,403

Subordinated Structured Notes                                              

10,084

Credit Central Loan Company, LLC                                            

8,554

Targus Cayman HoldCo Limited                                                5,093
Other, net                                                                 (1,193)
USES Corp.                                                                 (4,381)
Valley Electric Company, Inc.                                              

(6,776)

Echelon Transportation, LLC                                                

(7,723)

Net change in unrealized gains           $                                

136,720

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The following table reflects net change in unrealized gains (losses) on investments for the three months ended September 30, 2020:

                                         Net Change in Unrealized Gains (Losses)
PGX Holdings, Inc.                      $                                 57,771
Other, net                                                                22,428
National Property REIT Corp.                                              11,430
Subordinated Structured Notes                                              9,689
First Tower Finance Company LLC                                            6,546
Pacific World Corporation                                                  6,433
USES Corp.                                                                 5,137
Edmentum Ultimate Holdings, LLC                                            

4,924

Valley Electric Company, Inc.                                              

4,328

Engine Group, Inc.                                                         

4,076

Targus Cayman HoldCo Limited                                               3,778
MITY, Inc.                                                                (3,632)
NMMB, Inc.                                                                (5,530)
CP Energy Services Inc.                                                  (19,534)
Net change in unrealized gains          $                                

107,844




Financial Condition, Liquidity and Capital Resources
On July 27, 2017, the Financial Conduct Authority ("FCA") announced that it will
no longer persuade or compel banks to submit rates for the calculation of the
LIBOR rates after 2021 (the "FCA Announcement"). Furthermore, in the United
States, efforts to identify a set of alternative U.S. dollar reference interest
rates include proposals by the Alternative Reference Rates Committee of the
Federal Reserve Board ("ARRC") and the Federal Reserve Bank of New York. On
August 24, 2017, the Federal Reserve Board requested public comment on a
proposal by the Federal Reserve Bank of New York, in cooperation with the Office
of Financial Research, to produce three new reference rates intended to serve as
alternatives to LIBOR. These alternative rates are based on overnight repurchase
agreement transactions secured by U.S. Treasury Securities. On December 12,
2017, following consideration of public comments, the Federal Reserve Board
concluded that the public would benefit if the Federal Reserve Bank of New York
published the three proposed reference rates as alternatives to LIBOR (the
"Federal Reserve Board Notice"). In April 2018, the Federal Reserve System, in
conjunction with the ARRC, announced the replacement of LIBOR with a new index,
calculated by short term repurchase agreements collateralized by U.S. Treasury
securities, called the Secured Overnight Financing Rate ("SOFR"). On June 12,
2019, the Staff from the SEC's Division of Corporate Finance, Division of
Investment Management, Division of Trading and Markets, and Office of the Chief
Accountant issued a statement about the potentially significant effects on
financial markets and market participants when LIBOR is discontinued in 2021 and
no longer available as a reference benchmark rate. The Staff encouraged all
market participants to identify contracts that reference LIBOR and begin
transitions to alternative rates. Although SOFR appears to be the preferred
replacement rate for U.S. dollar LIBOR, at this time, it is not possible to
predict the effect of any such changes, any establishment of alternative
reference rates or other reforms to LIBOR that may be enacted in the United
States, United Kingdom or elsewhere or, whether the COVID-19 will have further
effect on LIBOR transition plans. The elimination of LIBOR or any other changes
or reforms to the determination or supervision of LIBOR could have an adverse
impact on the market for or value of any LIBOR-linked securities, loans, and
other financial obligations or extensions of credit held by or due to us or on
our overall financial condition or results of operations.

At this time, it is not possible to predict the effect of the FCA Announcement
or other regulatory changes or announcements, any establishment of any
alternative reference rates, including SOFR and its market acceptance, or any
other reforms to LIBOR that may be enacted in the United Kingdom, the United
States or elsewhere. As such, the potential effect of any such event on our net
investment income cannot yet be determined. The CLOs in which the Company is
invested generally contemplate a scenario where LIBOR is no longer available by
requiring the CLO administrator to calculate a replacement rate primarily
through dealer polling on the applicable measurement date. However, there is
uncertainty regarding the effectiveness of the dealer polling processes,
including the willingness of banks to provide such quotations, which could
adversely impact our net investment income. Recently, the CLOs we are invested
in have included, or have been amended to include, language permitting the CLO
investment manager to implement a market replacement rate (like SOFR) upon the
occurrence of certain material disruption events. However, we cannot ensure that
all CLOs in which we are invested will have such provisions, nor
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can we ensure the CLO investment managers will undertake the suggested
amendments when able. In addition, the effect of a phase out of LIBOR on U.S.
senior secured loans, the underlying assets of the CLOs in which we invest, is
currently unclear. To the extent that any replacement rate utilized for senior
secured loans differs from that utilized for a CLO that holds those loans, the
CLO would experience an interest rate mismatch between its assets and
liabilities which could have an adverse impact on the Company's net investment
income and portfolio returns.

For the three months ended September 30, 2021 and September 30, 2020, our
operating activities used $10,115 and provided $4,567 of cash, respectively. The
change is primarily driven by net originations for the current quarter, which
out-paced the cash components of net investment income. There were no investing
activities for the three months ended September 30, 2021 and September 30, 2020.
Financing activities used $11,339 and $20,825 of cash during the three months
ended September 30, 2021 and September 30, 2020, respectively, which included
dividend payments of $64,034 and $42,265, respectively.

Our primary uses of funds have been to continue to invest in portfolio companies, through both debt and equity investments, repay outstanding borrowings and to make cash distributions to our stockholders.


Our primary sources of funds have historically been issuances of debt and
equity. More recently, we have and may continue to fund a portion of our cash
needs through repayments and opportunistic sales of our existing investment
portfolio. We may also securitize a portion of our investments in unsecured or
senior secured loans or other assets. Our objective is to put in place such
borrowings in order to enable us to expand our portfolio. During the three
months ended September 30, 2021, we borrowed $417,618 and we made repayments
totaling $690,018 under the Revolving Credit Facility. As of September 30, 2021,
our outstanding balance on the Revolving Credit Facility was $84,537. As of
September 30, 2021, we had, net of unamortized discount and debt issuance costs,
$213,253 outstanding on the Convertible Notes, $1,407,410 outstanding on the
Public Notes and $373,350 outstanding on the Prospect Capital InterNotes® (See
"Capitalization" above).
Undrawn committed revolvers and delayed draw term loans to our portfolio
companies incur commitment and unused fees ranging from 0.00% to 7.25%. As of
September 30, 2021 and June 30, 2021, we had $41,564 and $67,385, respectively,
of undrawn revolver and delayed draw term loan commitments to our portfolio
companies. The fair value of our undrawn committed revolvers and delayed draw
term loans was zero as of September 30, 2021 and June 30, 2021.
We have guaranteed $2,737 in standby letters of credit issued through a
financial intermediary and $2,152 of equipment lease obligations on behalf of
InterDent, Inc. ("InterDent") as of September 30, 2021. Under these
arrangements, we would be required to make payments to the financial
intermediary or equipment lease provider, respectively, if InterDent was to
default on their related payment obligations. As of September 30, 2021, we have
not recorded a liability on the statement of assets and liabilities for these
guarantees as the likelihood of default on the standby letters of credit or
equipment lease is deemed to be remote.
On February 13, 2020, we filed a registration statement on Form N-2 (File No.
333-236415) that was effective upon filing pursuant to Rule 462(e) under the
Securities Act as permitted under the Small Business Credit Availability Act.
The registration statement permits us to issue, through one or more
transactions, an indeterminate amount of securities, consisting of common stock,
preferred stock, debt securities, subscription rights to purchase our
securities, warrants representing rights to purchase our securities or
separately tradeable units combining two or more of our securities.
Preferred Stock
On August 3, 2020, we entered into a Dealer Manager Agreement with Preferred
Capital Securities, LLC ("PCS"), pursuant to which PCS has agreed to serve as
the Company's agent, principal distributor and dealer manager for the Company's
offering of up to 40,000,000 shares, par value $0.001 per share, of preferred
stock, with a liquidation preference of $25.00 per share. Such preferred stock
will initially be issued in multiple series, including the 5.50% Series A1
Preferred Stock ("Series A1 Preferred Stock"), the 5.50% Series M1 Preferred
Stock ("Series M1 Preferred Stock"), and the 5.50% Series M2 Preferred Stock
("Series M2 Preferred Stock", and together with the Series M1 Preferred Stock,
the "Series M Preferred Stock"). In connection with such offering, on August 3,
2020, we filed Articles Supplementary with the State Department of Assessments
and Taxation of Maryland ("SDAT"), reclassifying and designating 120,000,000
shares of the Company's authorized and unissued shares of common stock into
shares of preferred stock as "Convertible Preferred Stock." On October 30, 2020,
we entered into a Dealer Manager Agreement with InspereX LLC, pursuant to which
InspereX LLC has agreed to serve as the Company's agent and dealer manager for
the Company's offering of up to 10,000,000 shares, par value $0.001 per share,
of 5.50% Series AA1 Preferred Stock, with a liquidation preference of $25.00 per
share (the "Series AA1 Preferred Stock"). In connection with such offering, on
October 30, 2020, we filed Articles Supplementary with the SDAT, reclassifying
and designating an additional 20,000,000 shares of the Company's authorized and
unissued shares of common stock into shares of preferred stock as Convertible
Preferred Stock. On May 19, 2021, we entered into an Underwriting Agreement with
UBS Securities LLC, relating to the offer and sale of 187,000 shares, par value
$0.001 per share, of 5.50% Series A2 Preferred Stock, with a liquidation
preference of $25.00 per share (the "Series A2 Preferred Stock", and together
with the Series A1 Preferred Stock,
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Series M1 Preferred Stock, Series M2 Preferred Stock and Series AA1 Preferred
Stock, the "5.50% Preferred Stock"). The issuance of the Series A2 Preferred
Stock settled on May 26, 2021. In connection with such offering, on May 19,
2021, we filed Articles Supplementary with the SDAT, reclassifying and
designating an additional 1,000,000 shares of the Company's authorized and
unissued shares of common stock into shares of preferred stock as Convertible
Preferred Stock.

In connection with the offerings of the 5.50% Preferred Stock, we adopted and
amended, respectively, a preferred stock dividend reinvestment plan (the
"Preferred Stock Plan" or the "Preferred Stock DRIP"), pursuant to which holders
of the 5.50% Preferred Stock will have dividends on their 5.50% Preferred Stock
automatically reinvested in additional shares of such 5.50% Preferred Stock at a
price per share of $25.00, if they elect.

Each series of 5.50% Preferred Stock ranks (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,
and (c) junior to our existing and future secured and unsecured indebtedness.
See Note 8, Fair Value and Maturity of Debt Outstanding for further discussion
on our senior securities.
At any time prior to the listing of the 5.50% Preferred Stock on a national
securities exchange, shares of the 5.50% Preferred Stock are convertible, at the
option of the holder of the 5.50% 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 (such arithmetic average, the "5-day
VWAP"). For the Series A1 Preferred Stock, the Series AA1 Preferred Stock, and
the Series A2 Preferred Stock, "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 applicable 5.50% Holder
Optional Conversion Fee for the respective Holder Conversion Deadline. For the
Series M Preferred Stock, "Settlement Amount" means (A) the Stated Value, plus
(B) unpaid dividends accrued to, but not including, the Holder Conversion
Exercise Date, minus (C) the applicable Series M Clawback, if any. "Series M
Clawback", if applicable, means an amount equal to the aggregate amount of all
dividends, whether paid or accrued, on such share of Series M Stock 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 5.50% Preferred Stock has
been issued. Beginning on the five year anniversary of the date on which a share
of 5.50% Preferred Stock 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 5.50% Preferred Stock will terminate upon
the listing of such share on a national securities exchange.
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 5.50%
Preferred Stock has been issued, or, for listed shares of 5.50% Preferred Stock,
five years from the earliest date on which any series that has been listed was
first issued (the earlier of such dates, the "Redemption Eligibility Date"),
such share of 5.50% Preferred Stock may be redeemed at any time or from time to
time at our option (the "Issuer Optional Redemption"), at a redemption price of
100% of the Stated Value of the shares of 5.50% Preferred Stock to be redeemed
plus unpaid dividends accrued to, but not including, the date fixed for
redemption.
Subject to certain limitations, each share of 5.50% Preferred Stock may be
converted at our option (the "Issuer Optional Conversion"). 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. For the 5.50% Preferred Stock, "IOC Settlement Amount"
means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not
including, the date fixed for conversion. 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 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 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. 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
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Conversion with respect to any shares of 5.50% Preferred Stock, the holder of
such 5.50% Preferred Stock may instead elect a Holder Optional Conversion with
respect to such 5.50% Preferred Stock provided that the date of conversion for
such Holder Optional Conversion would occur prior to the date of conversion for
an Issuer Optional Conversion.
On July 12, 2021, we entered into an underwriting agreement by and among us,
Prospect Capital Management L.P., Prospect Administration LLC, and Morgan
Stanley & Co. LLC, RBC Capital Markets, LLC and UBS Securities LLC, as
representatives of the underwriters, relating to the offer and sale of 6,000,000
shares, or $150,000 in aggregate liquidation preference, of our 5.35% Series A
Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the
"Series A Preferred Stock" or "5.35% Preferred Stock"), at a public offering
price of $25.00 per share. Pursuant to the Underwriting Agreement, we also
granted the underwriters a 30-day option to purchase up to an additional 900,000
shares of Series A Preferred Stock solely to cover over-allotments. The offer
settled on July 19, 2021, and no additional shares of Series A Preferred Stock
were issued pursuant to the option. In connection with such offering, on July
15, 2021, we filed Articles Supplementary with SDAT, reclassifying and
designating 6,900,000 shares of the Company's authorized and unissued shares of
Common Stock into shares of Series A Preferred Stock.
The Series A Preferred Stock ranks (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, and (c)
junior to our existing and future secured and unsecured indebtedness. See Note
8, Fair Value and Maturity of Debt Outstanding for further discussion on our
senior securities.
Subject to certain limited exceptions allowing earlier redemption, at any time
after the close of business on July 19, 2026 (any such date, an "Optional
Redemption Date"), at our sole option, we may redeem the Series A Preferred
Stock in whole or, from time to time, in part, out of funds legally available
for such redemption, at a price per share equal to the liquidation preference of
$25.00 per share, plus an amount equal to all unpaid dividends on such shares
(whether or not earned or declared, but excluding interest thereon) accumulated
up to, but excluding, the date fixed for redemption. We may also redeem the
Series A Preferred Stock at any time, in whole or, from time to time, in part,
including prior to the Optional Redemption Date, pro rata, based on liquidation
preference, with all other series of our then outstanding preferred stock, in
the event that our Board determines to redeem any series of our preferred stock,
in whole or, from time to time, in part, because such redemption is deemed
necessary by the Board to comply with the asset coverage requirements of the
1940 Act or for us to maintain RIC status.
In the event of a Change of Control Triggering Event (as defined below), we may,
at our option, exercise our special optional redemption right to redeem the
Series A Preferred Stock, in whole or in part, within 120 days after the first
date on which such Change of Control Triggering Event has occurred by paying the
liquidation preference, plus an amount equal to all unpaid dividends on such
shares (whether or not earned or declared, but excluding interest thereon)
accumulated up to, but excluding, the date fixed for such redemption. To the
extent that we exercise our optional redemption right or our special optional
redemption right relating to the Series A Preferred Stock, the holders of Series
A Preferred Stock will not be permitted to exercise the conversion right
described below in respect of their shares called for redemption.
Except to the extent that we have elected to exercise our optional redemption
right or our special optional redemption right by providing notice of redemption
prior to the Change of Control Conversion Date (as defined below), upon the
occurrence of a Change of Control Triggering Event, each holder of Series A
Preferred Stock will have the right to convert some or all of the Series A
Preferred Stock held by such holder on the Change of Control Conversion Date
into a number of our shares of common stock per Series A Preferred Stock to be
converted equal to the lesser of:
•the quotient obtained by dividing (i) the sum of the Liquidation Preference per
share plus an amount equal to all unpaid dividends thereon (whether or not
earned or declared, but excluding interest thereon) accumulated up to, but
excluding, the Change of Control Conversion Date (unless the Change of Control
Conversion Date is after a Record Date for a Series A Preferred Stock dividend
payment and prior to the corresponding Series A Preferred Stock dividend payment
date, in which case no additional amount for such accrued and unpaid dividends
will be included in this sum) by (ii) the Common Stock Price (as defined below);
and
•6.03865, subject to certain adjustments,
subject, in each case, to provisions for the receipt of alternative
consideration upon conversion as described in the applicable prospectus
supplement.
If we have provided or provide a redemption notice with respect to some or all
of the Series A Preferred Stock, holders of any Series A Preferred Stock that we
have called for redemption will not be permitted to exercise their Change of
Control Conversion Right in respect of any of their Series A Preferred Stock
that have been called for redemption, and any Series A Preferred Stock
subsequently called for redemption that have been tendered for conversion will
be redeemed on the applicable date of redemption instead of converted on the
Change of Control Conversion Date.
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For purposes of the foregoing discussion of a redemption upon the occurrence of
a Change of Control Triggering Event, the following definitions are applicable:
"Change of Control Triggering Event" means the occurrence of any of the
following:
•the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation and other than an Excluded
Transaction) in one or a series of related transactions, of all or substantially
all of the assets of the Company and its Controlled Subsidiaries taken as a
whole to any "person" or "group" (as those terms are used in Section 13(d)(3) of
the Exchange Act) (other than to any Permitted Holders); provided that, for the
avoidance of doubt, a pledge of assets pursuant to any of our secured debt
instruments or the secured debt instruments of our Controlled Subsidiaries shall
not be deemed to be any such sale, lease, transfer, conveyance or disposition;
or
•the consummation of any transaction (including, without limitation, any merger
or consolidation and other than an Excluded Transaction) the result of which is
that any "person" or "group" (as those terms are used in Section 13(d)(3) of the
Exchange Act) (other than any Permitted Holders) becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of our outstanding Voting Stock, measured by voting
power rather than number of shares.
Notwithstanding the foregoing, the consummation of any of the transactions
referred to in the bullet points above will not be deemed a Change of Control
Triggering Event if we or the acquiring or surviving consolidated entity has or
continues to have a class of common securities (or ADRs representing such
securities) listed on the NYSE, the NYSE American or NASDAQ, or listed or quoted
on an exchange or quotation system that is a successor to the NYSE, the NYSE
American or NASDAQ, or is otherwise listed or quoted on a national securities
exchange.
The "Change of Control Conversion Date" is the date the shares of Series A
Preferred Stock are to be converted, which will be a business day selected by us
that is no fewer than 20 days nor more than 35 days after the date on which we
provide the notice described above to the holders of Series A Preferred Stock.
The "Common Stock Price" will be (i) if the consideration to be received in the
Change of Control Triggering Event by the holders of our common stock is solely
cash, the amount of cash consideration per share of our common stock or (ii) if
the consideration to be received in the Change of Control Triggering Event by
holders of our common stock is other than solely cash (x) the average of the
closing sale prices per share of our common stock (or, if no closing sale price
is reported, the average of the closing bid and ask prices or, if more than one
in either case, the average of the average closing bid and the average closing
ask prices) for the ten consecutive trading days immediately preceding, but not
including, the effective date of the Change of Control Triggering Event as
reported on the principal U.S. securities exchange on which our common stock is
then traded, or (y) the average of the last quoted bid prices for our common
stock in the over-the-counter market as reported by OTC Markets Group Inc. or
similar organization for the ten consecutive trading days immediately preceding,
but not including, the effective date of the Change of Control Triggering Event,
if our common stock is not then listed for trading on a U.S. securities
exchange.
"Controlled Subsidiary" means any of our subsidiaries, 50% or more of the
outstanding equity interests of which are owned by us and our direct or indirect
subsidiaries and of which we possess, directly or indirectly, the power to
direct or cause the direction of the management or policies, whether through the
ownership of voting equity interests, by agreement or otherwise.
"Excluded Transaction" means (i) any transaction that does not result in any
reclassification, conversion, exchange or cancellation of all or substantially
all of the outstanding shares of our Voting Stock; (ii) any changes resulting
from a subdivision or combination or a change solely in par value; (iii) any
transaction where the shares of our Voting Stock outstanding immediately prior
to such transaction constitute, or are converted into or exchanged for, a
majority of the Voting Stock of the surviving "person" (as that term is used in
Section 13(d)(3) of the Exchange Act) or any direct or indirect parent company
of the surviving "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) immediately after giving effect to such transaction; (iv) any
transaction if (A) we become a direct or indirect wholly-owned subsidiary of a
holding company and (B)(1) the direct or indirect holders of the Voting Stock of
such holding company immediately following that transaction are substantially
the same as the holders of our Voting Stock immediately prior to that
transaction or (2) immediately following that transaction no "person" (as that
term is used in Section 13(d)(3) of the Exchange Act) is the beneficial owner,
directly or indirectly, of more than 50% of the Voting Stock of such holding
company; or (v) any transaction primarily for the purpose of changing our
jurisdiction of incorporation or form of organization.
"Permitted Holders" means (i) us, (ii) one or more of our Controlled
Subsidiaries and (iii) Prospect Capital Management or any affiliate of Prospect
Capital Management that is organized under the laws of a jurisdiction located in
the United States of America and in the business of managing or advising
clients.
"Voting Stock" as applied to stock of any person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such person having ordinary voting power for the election of the directors
(or the equivalent) of such person, other than shares, interests, participations
or other equivalents having such power only by reason of the occurrence of a
contingency.
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Except as provided above in connection with a Change of Control Triggering
Event, the Series A Preferred Stock is not convertible into or exchangeable for
any other securities or property.
For so long as the Series A Preferred Stock is outstanding, we will not exercise
any option we have to convert any other series of our outstanding preferred
stock to common stock, including the Issuer Optional Conversion, or any other
security ranking junior to such preferred stock. As a result, and in accordance
with ASC 480, we have presented both our 5.50% Preferred Stock and Series A
Preferred Stock within temporary equity on our Consolidated Statement of Assets
and Liabilities as of September 30, 2021.
We determined the estimated value as of September 30, 2021 of our Preferred
Stock, with a $25.00 stated value per share. We engaged a third-party valuation
service to assist in our determination based on the calculation resulting from
the total equity on our Consolidated Statements of Assets and Liabilities in our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (the
"Form 10-Q"), which was prepared in accordance with U.S. generally accepted
accounting principles in the United States of America, adjusted for the fair
value of our investments (i.e. from our Consolidated Schedule of Investments)
and total liabilities, divided by the number of shares of our Preferred Stock
outstanding. Based on this methodology and because the result from the
calculation above is greater than the $25.00 per share stated value of our
Preferred Stock, the estimated value of our Preferred Stock as of September 30,
2021 is $25.00 per share.
Common Stock
Our common stockholders' equity accounts as of September 30, 2021 and June 30,
2021 reflect cumulative shares issued, net of shares repurchased, as of those
respective dates. Our common stock has been issued through public offerings, a
registered direct offering, the exercise of over-allotment options on the part
of the underwriters, our dividend reinvestment plan and in connection with the
acquisition of certain controlled portfolio companies. When our common stock is
issued, the related offering expenses have been charged against paid-in capital
in excess of par. All underwriting fees and offering expenses were borne by us.
We did not repurchase any shares of our common stock for the three months ended
September 30, 2021 or September 30, 2020.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any off-balance sheet liabilities or
other contractual obligations that are reasonably likely to have a current or
future material effect on our financial condition, other than those which
originate from 1) the investment advisory and management agreement and the
administration agreement and 2) the portfolio companies.
Recent Developments
On October 8, 2021, we commenced a tender offer to purchase for cash any and all
of the $81,389 aggregate principal amount of our outstanding 6.375% 2024 Notes
at a purchase price of $107.750, plus accrued and unpaid interest (the "6.375%
2024 Notes October Tender Offer"). The 6.375% 2024 Notes October Tender Offer
expired at 5:00 p.m., New York City time, on October 15, 2021. As of the
settlement date, $149 aggregate principal amount of the 6.375% 2024 Notes were
validly tendered and accepted. Following settlement of the 6.375% 2024 Notes
October Tender Offer on October 20, 2021, approximately $81,240 aggregate
principal amount of the 6.375% 2024 Notes remains outstanding.
On October 18, 2021, we provided a new $65,000 First Lien Term Loan investment,
a new $22,609 Delayed Draw Term Loan commitment, and a new $4,239 Revolving Line
of Credit commitment to BCPE Osprey Buyer, Inc., a provider of marketplace and
software solutions to hospitals and health systems. The Delayed Draw Term Loan
and Revolving Line of Credit were unfunded at close.
On October 21, 2021, we amended our investment in PeopleConnect Intermediate,
LLC whereby we provided an incremental $60,775 Senior Secured Term Loan
investment, purchased an additional $21,230 Senior Secured Term Loan investment
from a third party, and eliminated our $8,918 unfunded revolving line of credit
commitment.
During the period from October 21, 2021 through October 27, 2021, we received
partial repayments of $83,581 of our Senior Secured Term Loan A outstanding with
NPRC and its wholly-owned subsidiaries.
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On November 8, 2021, 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 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 Amount ($ per share),

 Monthly Cash 5.50% Preferred Shareholder                                   

before pro ration for partial

               Distribution                    Record Date        Payment Date                 periods
              December 2021                    12/15/2021           1/3/2022                  $0.114583
               January 2022                     1/19/2022           2/1/2022                  $0.114583
              February 2022                     2/16/2022           3/1/2022                  $0.114583


On November 8, 2021, 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 $25.00 per share as set forth
in the Articles Supplementary for the 5.35% Preferred Stock, from the date of
issuance or, if later from the most recent dividend payment date, as follows:
Quarterly Cash 5.35% Preferred Shareholder
               Distribution                    Record Date        Payment Date              Amount ($ per share)
       November 2021 - January 2022             1/19/2022           2/1/2022                      $0.334375


On November 8, 2021, we announced the declaration of monthly dividends on our common stock as follows:

Monthly Cash Common Shareholder

               Distribution                       Record Date            Payment Date           Amount ($ per share)
               November 2021                      11/26/2021              12/23/2021                   $0.0600
               December 2021                      12/29/2021              1/20/2022                    $0.0600
               January 2022                        1/27/2022              2/17/2022                    $0.0600



Critical Accounting Policies and Estimates
For discussion of critical accounting policies and estimates, refer to our
Annual Report on Form 10-K for the year ended June 30, 2021.
Recent Accounting Pronouncements
For discussion of recent accounting pronouncements, refer to Note 2 within the
accompanying notes to the consolidated financial statements.

© Edgar Online, source Glimpses

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