Stockholders' equity as of June 30, 2007: $300.05 million Net asset value per share as of June 30, 2007: $15.04Fourth Fiscal Quarter Portfolio Activity:
Number of new portfolio companies invested: 5 Number of portfolio companies at end of period: 24Fourth Fiscal Quarter Operating Results:
Net investment income: $8.35 million Net investment income per share: $0.42 Net realized and unrealized depreciation: $(3.50) million Net increase in net assets resulting from operations: $4.85 million Dividends to shareholders per share: $0.39Fiscal Year Operating Results: (in $ million, except per share data)
Year Year
Ended Ended
June 30, June 30,
2007 2006
Net investment income $23.1 $ 8.6
Net investment income per weighted average share $1.47 $1.21
Net realized and unrealized (depreciation)
appreciation ($6.4) $ 4.3
Net increase in net assets resulting from
operations $16.7 $12.9
Dividends to shareholders per share $1.54 $1.12
PORTFOLIO AND INVESTMENT ACTIVITY
June 30, 2007, marked our fiscal year end and twelfth full quarter since
our initial public offering. At June 30, 2007, the fair value of our
portfolio of 24 long-term investments was approximately $328.2 million.
As of June 30, 2007, our portfolio generated a current yield of
approximately 17.1% across all our long-term debt and equity investments.
This current yield includes interest from all our long-term investments as
well as dividends and net profits interest and royalties from other
portfolio companies. Excluding such dividends and other income, our
weighted average investment yield as of June 30, 2007, was 15.9%.
During the quarter ended June 30, 2007, we completed five new investments
and follow on investments in existing portfolio companies, totaling
approximately $130.4 million. The new investments included the following:
-- On April 11, 2007, we invested $12.2 million in senior secured
financing to ESA Environmental Specialists, Inc. ("ESA"), a construction,
engineering and environmental services firm located in Charlotte, North
Carolina.
-- On June 4, 2007, we invested $10.8 million in senior secured financing
to Ken-Tex Energy Corp., an oil and gas production company in East Texas.
-- On June 26, 2007, we invested $19.5 million in second lien financing
and equity for the acquisition of R-V Industries, Inc., a diversified
engineering and manufacturing company located in Honey Brook, Pennsylvania.
-- On June 29, 2007, we invested $45.0 million in senior secured growth
financing to H&M Oil & Gas, LLC, an oil and gas production and development
company located in Dallas, Texas.
-- On June 29, 2007, we invested $25.0 million in second lien financing
to Regional Management Corp., a consumer finance installment loan company
located in Greenville, South Carolina.
Additionally, on June 6, 2007, Charlevoix Energy Trading LLC repaid its
$4.8 million loan plus an additional prepayment penalty of $0.4 million.
We continue to maintain a net profits interest in Charlevoix. Including
the prepayment premium, Prospect Capital realized a 21% internal rate of
return on this investment, representing 1.2 times cash on cash.
During the first quarter of our fiscal year ending June 2008, we have made
the following investments:
-- On July 31, 2007, we invested $15.0 million in senior secured
financing to Wind River Resources Corporation and Wind River II
Corporation, a privately held oil and gas production business based in Salt
Lake City, Utah.
-- On August 7, 2007, we invested $6.0 million in senior secured
financing to Deep Down, Inc., a deepwater drilling services and
manufacturing provider based in Houston, Texas.
-- On August 28, 2007, we invested $9.2 million in senior secured
financing to Diamondback Operating, LP, a gas production company based in
Tulsa, Oklahoma.
In addition, on August 16, 2007, Arctic Acquisition Corp. (dba Cougar
Pressure Control) repaid its $11.5 million loan in full plus a $0.4 million
prepayment premium. We continue to hold warrants in this investment.
Including the prepayment premium, Prospect Capital has to date realized a
20% internal rate of return on the Arctic Acquisition investment,
representing 1.25 times cash on cash. On August 1, 2007, ESA filed
voluntarily for reorganization under the bankruptcy code, in response to a
foreclosure action by Prospect Capital after the managers of ESA took
unauthorized personal distributions.
Currently we are reviewing several potential investment opportunities and
have executed letters of intent with eleven companies aggregating
approximately $200 million of prospective investments. We are pleased with
the volume, quality, and diversification of our transaction flow, both
within the energy industry and in additional sectors.
LIQUIDITY
On June 6, 2007, we closed on a $200.0 million three-year revolving credit
facility with Rabobank Nederland as administrative agent and sole lead
arranger (the Rabobank Facility). The interest on borrowings under the
facility is charged at Libor plus 125 basis points. At June 30, 2007,
there were no outstanding borrowings under the facility. At the present
time, our borrowings aggregate approximately $60 million under the
facility.
CONFERENCE CALL
We will host a conference call Monday, October 1, 2007, at 11:00 am Eastern
Time. The conference call dial-in number is (877) 407-0782. A recording of
the conference call will be available for approximately 30 days. To hear a
replay, call (877) 660-6853 and use Playback Access Account code 286 and
Playback Conference ID code 256553.
CONSOLIDATED STATEMENTS OF NET ASSETS
(in thousands)
As of As of
June 30, June 30,
2007 2006
Assets
Cash and cash equivalents $ 41,760 $ 1,608
Investments in controlled entities at fair value
(cost - $124,664 and $39,759, respectively) 139,292 49,585
Investments in affiliated entities at fair value
(cost - $14,821 and $25,329, respectively) 14,625 25,329
Investments in non-controlled and non-affiliated
entities, at fair value (cost - $186,712 and
$58,505, respectively) 174,305 59,055
Interest receivable 2,139 1,639
Dividends receivable 263 13
Loan principal receivable - 385
Due from broker - 369
Structuring fees receivable 1,625 -
Other receivables 271 -
Due from Prospect Capital Management, LLC - 5
Due from Prospect Administration, LLC - 28
Prepaid expenses 471 77
Deferred financing fees 1,751 355
Deferred offering costs - 32
Total assets 376,502 138,480
Liabilities
Credit facility payable - 28,500
Payable for securities purchased 70,000 -
Accrued expenses 1,312 843
Due to Prospect Administration, LLC 330 -
Due to Prospect Capital Management, LLC 4,508 745
Other current liabilities 304 122
Total liabilities 76,454 30,210
Net Assets $ 300,048 $ 108,270
Components of Net Assets
Common stock, par value $.001 per share, (100,000,000
and 100,000,000 common shares authorized,
respectively; 19,949,065 and 7,069,873 issued and
outstanding, respectively) $ 20 $ 7
Paid-in capital in excess of par 299,845 97,266
Undistributed (distributions in excess of) net
investment income (4,092) 319
Realized gain 2,250 301
Net unrealized appreciation 2,025 10,377
Net Assets $ 300,048 $ 108,270
Net Asset Value Per Share $ 15.04 $ 15.31
CONSOLIDATED STATEMENTS OF OPERATIONS Year Year
(in thousands) Ended Ended
June 30, June 30,
2007 2006
Investment Income
Interest income, controlled entities (net of foreign
tax withholding of $178 and $-, respectively) $ 13,275 $ 4,838
Interest income, affiliated entities (net of foreign
tax withholding of $237 and $-, respectively) 3,489 612
Interest income, non controlled and non-affiliated
entities 13,320 7,357
Interest income, cash equivalents - 461
Total interest income 30,084 13,268
Dividend income, controlled entities 3,400 3,099
Dividend income, non-controlled and non-affiliated
entities - 289
Dividend income, money market funds 2,753 213
Total dividend income 6,153 3,601
Other income, controlled entities 227 -
Other income, affiliate investments 3 -
Other income, non-controlled and non-affiliated
entities 4,214 -
Total other income 4,444 -
Total investment income 40,681 16,869
Operating Expenses
Investment advisory fees
Base management fee 5,445 2,082
Income incentive fee 5,781 1,786
Total investment advisory fees 11,226 3,868
Interest expense and credit facility costs 1,903 642
Chief Compliance Officer and Sub-administration fees 549 325
Legal fees 1,365 1,835
Valuation services 395 193
Other professional fees 507 365
Sarbanes-Oxley compliance expenses 101 120
Insurance expense 291 365
Directors fees 230 220
Other general and administrative expenses 983 378
Total operating expenses 17,550 8,311
Net investment income 23,131 8,558
Net realized gain 1,949 303
Net unrealized (depreciation) appreciation (8,352) 4,035
Net increase in net assets resulting from operations $ 16,728 $ 12,896
Net increase in net assets per weighted average
shares of common stock resulting from operations $ 1.06 $ 1.83
Year Year
ended ended
June 30, June 30,
PER SHARE DATA 2007 2006
Net asset value, beginning of period $ 15.31 $ 14.59
Costs related to the initial public offering - 0.01
Costs related to the secondary public offering (0.06) -
Share issuances related to dividend reinvestment - -
Net investment income 1.44 1.21
Realized gain 0.14 0.04
Net unrealized (depreciation) appreciation (0.51) 0.58
Net increase in net assets as a result of secondary
public offering 0.26 -
Dividend declared and paid (1.54) (1.12)
Net asset value at end of period $ 15.04 $ 15.31
ABOUT PROSPECT CAPITAL CORPORATION
Prospect Capital Corporation (www.prospectstreet.com) is a closed-end
investment company that lends to and invests in private and microcap public
businesses. Prospect Capital's investment objective is to generate both
current income and long-term capital appreciation through debt and equity
investments.
Prospect Capital has elected to be treated as a business development
company under the Investment Company Act of 1940 ("1940 Act"). We are
required to comply with a series of regulatory requirements under the 1940
Act as well as applicable NASDAQ, federal and state rules and regulations.
We have elected to be treated as a regulated investment company under the
Internal Revenue Code of 1986. Failure to comply with any of the laws and
regulations that apply to Prospect Capital could have an adverse effect on
Prospect Capital and its shareholders.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any such
statements, other than statements of historical fact, are highly likely to
be affected by other unknowable future events and conditions, including
elements of the future that are or are not under the Company's control, and
that the Company may or may not have considered; accordingly, such
statements cannot be guarantees or assurances of any aspect of future
performance. Actual developments and results are highly likely to vary
materially from these estimates and projections of the future. Such
statements speak only as of the time when made, and the Company undertakes
no obligation to update any such statement now or in the future.
Contact Information: Please send investment proposals to: Grier Eliasek President and Chief Operating Officer grier@prospectstreet.com Telephone (212) 448-0702