Daily News: March 28, 2012

Prospect Capital Expands $650 Million Revolving Credit Facility

Prospect Capital Corporation announced that it has completed a first closing on an expanded five-year $650 million revolving credit facility for Prospect Capital Funding LLC (PCF).

The new facility, for which ten lenders have closed on $410 million to date, includes an accordion feature that allows the facility, at Prospect’s discretion, to accept up to a total of $650 million of commitments, an objective Prospect targets reaching with additional lenders. The revolving period of the facility extends through March 2015, followed by an additional two-year amortization period, with distributions allowed to Prospect after the completion of the revolving period. Pricing for the facility is one-month LIBOR plus 2.75%, with no minimum LIBOR floor — achieving an approximately 125 basis point reduction in pricing (based on current LIBOR) from the previous three-year facility pricing of LIBOR (with a minimum LIBOR floor of 1%) plus 3.25%. The new facility has an investment grade Moody’s rating of Aa3. Improvements in the facility include increases in advance rates under certain conditions, decreases in unused line fees, increases in maximum eligible loan sizes, and increases in baskets for longer-dated and quarterly pay loans.

“We are pleased to announce the upsizing of our credit facility on attractive terms, with broad support from our existing lenders, allowing us to secure longer-dated liabilities for the accretive benefit of our shareholders,” said John F. Barry III, chairman and CEO of Prospect. “Removing the LIBOR floor saves us 75 basis points, and the rate reduction another 50 basis points — both enhancing our bottom line. Because PCF is in a separate entity, Prospect continues with a capital structure attractive to both Prospect shareholders and unsecured creditors because of the significant unencumbered assets Prospect retains outside of PCF.”

Prospect Capital Corporation is a closed-end investment company that lends to and invests in private and microcap public businesses.