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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 2011 (February 14, 2011)
Prospect Capital Corporation
(Exact name of registrant as specified in its charter)
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MARYLAND
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814-00659
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43-2048643 |
(State or other jurisdiction
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(Commission File Number)
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(IRS Employer |
of incorporation)
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Identification No.) |
10 East 40th Street, 44th Floor, New York, New York 10016
(Address of principal executive offices, including zip code)
(212) 448-0702
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
Purchase Agreement
On February 14, 2011, Prospect Capital Corporation (Prospect, Company, we or our) entered
into a Purchase Agreement (the Purchase Agreement) with Goldman, Sachs & Co, as representative of
the several initial purchasers named therein (collectively, the Initial Purchasers), with respect
to our issuance and sale of $150 million in aggregate principal amount of 5.50% Convertible Senior
Notes due 2016 (the Notes). Pursuant to the Purchase Agreement, the Initial Purchasers were
granted an option to purchase and additional $22.5 million aggregate principal amount of Notes,
which they exercised in full. As such, a total of $172.5 million aggregate principal amount of the
Notes were issued and sold with net proceeds to the Company of approximately $167 million. The
Purchase Agreement includes customary representations, warranties and covenants. Under the terms of
the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain
liabilities.
Indenture
On February 18, 2011, the Company issued the Notes under an indenture, dated as of February 18,
2011 (the Indenture), between the Company and American Stock Transfer & Trust Company,
as trustee (the Trustee).
The Notes will mature on August 15, 2016, unless previously converted in accordance with their
terms. The Notes will be general unsecured obligations of Prospect, will rank equally in right of
payment with Prospects existing and future senior unsecured debt (including Prospects outstanding
6.25% convertible senior notes due 2015), and will rank senior in right of payment to any potential
subordinated debt, should any be issued in the future.
The interest rate on the Notes is 5.50% per year, payable semiannually in arrears on February 15
and August 15 of each year, commencing August 15, 2011. As described in the Indenture, holders may
convert their Notes at any time on or prior to the close of business on the business day
immediately preceding the maturity date at an initial conversion rate of 78.3699 shares of common
stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of
approximately $12.76 per share). The conversion rate will be subject to adjustment in certain
events.
Upon conversion, unless a holder converts after a record date for an interest payment but prior to
the corresponding interest payment date, the holder will receive a separate cash payment with
respect to the Notes surrendered for conversion representing accrued and unpaid interest to, but
not including the conversion date. Any such payment will be made on the settlement date applicable
to the relevant conversion on the Notes.
No holder of 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 Limitation). Any purported delivery of
shares of our common stock upon conversion of Notes shall be void and have no effect to the extent
(but only to the extent) that such delivery would result in the converting holder becoming the
beneficial owner of more than the Limitation. If any delivery of shares of our common stock owed to
a holder upon conversion of Notes is not made, in whole or in part, as a result of the Limitation,
our obligation to make such delivery shall not be extinguished and we shall deliver such shares as
promptly as practicable after any such converting holder gives notice to us that such delivery
would not result in it being the beneficial owner of more than 5.0% of the shares of common stock
outstanding at such time. The Limitation shall no longer apply following the effective date of any
fundamental change (as defined in the Indenture).
Subject to certain exceptions, holders may require the Company to repurchase, for cash, all or part
of their Notes upon a fundamental change (as defined in the Indenture) at a price equal to 100%
of the principal amount of the Notes being repurchased plus any accrued and unpaid interest up to,
but excluding, the fundamental change repurchase date (as defined in the Indenture).
The Indenture contains certain events of default, the occurrence of which may lead to the Notes
being due and payable immediately. The events of default contained in the Indenture include,
without limitation, the following:
failure by the Company to pay any interest on the Notes when due and such failure continues for a
period of 30 calendar days; failure by the Company to pay principal of the Notes when due at the
maturity date, or failure by the Company to pay the repurchase price payable, in respect of any
Notes when due; failure by the Company to deliver shares of common stock upon the conversion of any
Notes and such failure continues for five calendar days following the scheduled settlement date for
such conversion; failure by the Company to issue a fundamental change company notice (as defined
in the Indenture) on a timely basis in accordance with the Indenture; a failure to pay principal
when due (whether at stated maturity or otherwise) or an uncured default that results in the
acceleration of maturity, of any indebtedness for borrowed money of the Company or any of its
significant subsidiaries (as defined in the Indenture) in an aggregate amount in excess of
$20,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such
acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written
notice of such failure or uncured default is given to the Company by the Trustee or to the Company
and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes then
outstanding; default in the performance, or breach, of any covenant or warranty of the Company in
the Indenture with respect to any Note (other than certain covenants or warranties as described in
the Indenture), and continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to the Company and
the Trustee by the holders of at least 25% in principal amount of the outstanding securities of
that series a written notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a notice of default (as defined in the Indenture); and certain events
in bankruptcy, insolvency or reorganization of the Company or its significant subsidiaries (as
defined in the Indenture).
The foregoing summary of the Purchase Agreement and Indenture set forth above is qualified in its
entirety by reference to the full text of the Purchase Agreement and Indenture, copies of which are
attached to this Current Report on Form 8-K (Form 8-K) as Exhibits 10.1 and 4.1, respectively,
and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant.
The information set forth under Item 1.01 of this Form 8-K is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Form 8-K is incorporated herein by reference.
The Company offered and sold the Notes to the Initial Purchasers in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended (the Securities
Act), for resale by the Initial Purchasers to qualified institutional buyers pursuant to the
exemption from registration provided by Rule 144A under the Securities Act. The Company relied on
these exemptions from registration based in part on representations made by the Initial Purchasers
in the Purchase Agreement.
The Notes and the underlying common stock issuable upon conversion of the Notes have not been
registered under the Securities Act and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Item 8.01. Other Events.
On February 18, 2011, Prospect issued a press release announcing the closing of the private
offering of the Notes.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
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4.1 |
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Indenture dated as of February 18, 2011, by and between Prospect Capital Corporation and
American Stock Transfer & Trust Company, as Trustee |
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4.2 |
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Form of Global Note 5.50% Convertible Senior Note Due 2015 (included as part of Exhibit
4.1) |
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10.1 |
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Purchase Agreement dated February 14, 2011, by and between Prospect Capital Corporation,
and Goldman, Sachs & Co., as representative of the Initial Purchasers |
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99.1 |
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Press Release, dated February 18, 2011 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
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Prospect Capital Corporation
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By. |
/s/ M. Grier Eliasek
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Name: |
M. Grier Eliasek |
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Title: |
Chief Operating Officer |
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Date: February 18, 2011
Index to Exhibits
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Exhibit |
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Description |
4.1
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Indenture dated as of February 18, 2011, by and between Prospect Capital Corporation and
American Stock Transfer & Trust Company, as Trustee |
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4.2
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Form of Global Note 5.50% Convertible Senior Note Due 2015 (included as part of Exhibit 4.1) |
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10.1
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Purchase Agreement dated February 14, 2011, by and between Prospect Capital Corporation,
and Goldman, Sachs & Co., as representative of the Initial Purchasers |
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99.1
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Press Release, dated February 18, 2011 |