PROSPECT CAPITAL CORP (Form: 8-K, Received: 04/17/2020 16:34:44)

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): April 17, 2020

Prospect Capital Corporation

(Exact name of registrant as specified in its charter)




MARYLAND	814-00659	43-2048643
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

10 East 40th Street, 42nd Floor, New York, New York 10016

(Address of principal executive offices, including zip code)

(212) 448-0702

(Registrant’s 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:



o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	PSEC	NASDAQ Global Select Market
6.25% Notes due 2024, par value $25	PBB	New York Stock Exchange
6.25% Notes due 2028, par value $25	PBY	New York Stock Exchange
6.875% Notes due 2029, par value $25	PBC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 3.03. Material Modification to Rights of Security Holders.

Dividend Reinvestment and Direct Stock Purchase Plan

On April 17, 2020, Prospect Capital Corporation’s (the “Company”) board of directors (the “Board”) approved amendments to the Company’s dividend reinvestment and direct stock purchase plan (the “Plan”), which will become effective on May 21, 2020 and apply to the dividend declared on February 10, 2020 with a record date of April 30, 2020 and a payment date of May 21, 2020 (the “May Distribution”) and all subsequent dividends and distributions. These amendments principally provide for newly-issued shares of the Company’s common stock (“Common Stock”) pursuant to the Plan to be issued at a 5% discount from the market value of the Common Stock on the valuation date for the dividend or distribution, as described in further detail below.

Pursuant to the amended Plan, the Company will reinvest all dividends or distributions declared by the Board on shares of Common Stock on behalf of shareholders who do not elect to receive their distribution in cash as provided below. As a result, if the Board authorizes, and the Company declares, a cash dividend or other distribution, then shareholders who have not opted out of the Plan will have their cash distributions automatically reinvested in additional shares of Common Stock as described below, rather than receiving the cash dividend or other distribution. If you are not a current stockholder and would like to enroll in the Plan or have “opted out” and wish to rejoin, you may purchase shares directly through the Plan or opt in to the Plan by contacting the Plan administrator as described below, and, if you are not a current stockholder, making an initial investment of $250.

Under the terms of the Plan, the Company will primarily use newly-issued shares of its Common Stock to implement reinvestment of dividends and distributions under the Plan, whether its shares are trading at a premium or at a discount to net asset value. However, the Company reserves the right to purchase shares in the open market in connection with the implementation of reinvestment of dividends or distributions under the Plan. The number of newly issued shares of Common Stock to be credited to a stockholder’s account will be determined by dividing the total dollar amount of the distribution payable to such stockholder by 95% of the market price per share of Common Stock at the close of regular trading on the NASDAQ Global Select Market on the valuation date fixed by the Board for such distribution.

If the Company uses newly-issued shares of its Common Stock to implement reinvestment of dividends or distributions under the Plan, such valuation date shall be the close of business on the payment date for such dividend or other distribution. Market price per share on that date shall be the closing price for such shares on the NASDAQ Global Select Market or, if no sale is reported for such day, at the average of their reported bid and asked prices. Stockholders who do not elect to receive dividends and distributions in shares of Common Stock may experience accretion to the net asset value of their shares if the reinvestment price is a premium to the Company’s net asset value at the time the Company issues new shares of Common Stock under the Plan and dilution if the reinvestment price is a discount to the Company’s net asset value at the time the Company issues new shares of Common Stock under the Plan. The level of accretion or discount would depend on various factors, including the proportion of stockholders who participate in the Plan, the level of premium or discount represented by the reinvestment price and the amount of the dividend or other distribution payable to a stockholder.

Shares of Common Stock acquired through the direct purchase option will be purchased on the NASDAQ Global Select Market at the then current market price per share. The Company will not use newly-issued shares of Common Stock to implement such purchases.

Stockholders who wish to terminate their participation in the Plan and retain their Plan account for the May Distribution must provide notice to the Plan administrator by the record date for the May Distribution, which is April 30, 2020, and stockholders who wish to terminate their participation in the Plan and liquidate their Plan account for the May Distribution must provide notice to the Plan administrator no later than May 18, 2020. Stockholders who purchased their shares through or hold their shares in the name of a broker or financial institution should consult with a representative of their broker or financial institution with respect to their participation in the Plan.

All correspondence concerning the Plan should be directed to the Plan administrator by mail at American Stock Transfer and Trust Company LLC, 6201 15th Avenue, Brooklyn, New York 11219, or by telephone at 888-888-0313.

The foregoing summary of the Plan is qualified in its entirety by the full text of the Plan, a copy of which is attached as an exhibit hereto and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits


99.1	Dividend Reinvestment and Direct Stock Purchase Plan

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.

Prospect Capital Corporation

By: /s/ M. Grier Eliasek

Name: M. Grier Eliasek

Title: Chief Operating Officer

Date: April 17, 2020

Index to Exhibits



Exhibit Number	Description
99.1	Dividend Reinvestment and Direct Stock Purchase Plan

Exhibit 99.1

DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN

PROSPECT CAPITAL CORPORATION

May 21, 2020

Prospect Capital Corporation, a Maryland corporation (the “Corporation”), hereby adopts the following plan (the “Plan”) with respect to net investment income dividends and capital gains distributions declared by its Board of Directors on shares of its common stock (“Common Stock”) and optional cash investments to purchase Common Stock directly from the Corporation:

Unless a stockholder specifically elects to receive cash as set forth below, all net investment income dividends and all capital gains distributions hereafter declared by the Board of Directors shall be payable in shares of Common Stock, and no action shall be required on such stockholder’s part to receive a distribution in shares of Common Stock. In order to make optional cash investments under the Plan, a stockholder must submit authorization to American Stock Transfer & Trust Company, LLC, as agent for the stockholders in administering the Plan (the “Plan Administrator”).


2.	Such net investment income dividends and capital gains distributions shall be payable on such date or dates as may be fixed from time to time by the Board of Directors to stockholders of record at the close of business on the record date(s) established by the Board of Directors for the net investment income dividend and/or capital gains distribution involved.

The Corporation shall primarily use newly-issued shares of its Common Stock to implement reinvestment of dividends and distributions under the Plan, whether its shares are trading at a premium or at a discount to net asset value. However, the Corporation reserves the right to purchase shares in the open market in connection with the implementation of reinvestment of dividends or distributions under the Plan. The number of newly issued shares of Common Stock to be credited to a stockholder’s account shall be determined by dividing the total dollar amount of the distribution payable to such stockholder by 95% of the market price per share of Common Stock at the close of regular trading on the NASDAQ Global Select Market on the date fixed by the Board of Directors for such distribution. Market price per share on that date shall be the closing price for such shares on the NASDAQ Global Select Market or, if no sale is reported for such day, at the average of their reported bid and asked prices.


4.	A stockholder may, however, retain a Plan account and elect to receive his or its net investment income dividends and capital gains distributions in cash. To exercise this option, such stockholder shall notify the Plan Administrator, in

writing so that such notice is received by the Plan Administrator no later than the record date fixed by the Board of Directors for the net investment income dividend and/or capital gains distribution involved.

The Plan Administrator will set up a dividend reinvestment account for shares acquired pursuant to the Plan for each stockholder who has not so elected to receive dividends and distributions in cash or who has enrolled in the Plan pursuant to the Terms and Conditions stated herein (each a “Participant”). The Plan Administrator will hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the Plan Administrator’s name or that of its nominee. Upon request by a Participant to terminate their participation in the Plan and liquidate their Plan account, received in writing, via the internet or the Plan Administrator’s toll free number no later than three (3) business days prior to a dividend or distribution payment date (“Termination Notice Deadline”), such dividend or distribution will be paid out in cash and not be reinvested. If such request is received fewer than three (3) business days prior to a dividend or distribution payment date, such dividend or distribution will be reinvested but all subsequent dividends and distributions will be paid to the stockholder in cash on all balances. Upon such termination of the Participant’s participation in the Plan, all whole shares owned by the Participant will be issued to the Participant in certificated form and a check will be issued to the Participant for the proceeds of fractional shares less a transaction fee of $15.00 to be deducted from such proceeds.

The Corporation shall pay over promptly to the Plan Administrator all cash distributions (including income dividends, capital gains distributions and payments, if any, from capital) paid on shares of Common Stock participating in the Plan, including distributions paid on any full or fractional share interest acquired under the Plan. The Administrator, as agent for the Participants, applies such funds to the purchase of Common Stock for each Participant. Under the Economic Emergency Stabilization Act, passed by Congress in 2008, Participants must reinvest a minimum of 10% of your dividends or capital gains distributions each payment period.

As Plan Administrator for each Participant, the Plan Administrator, after deducting such fees as specified in Item 22 below, will apply all optional cash payments of not less than $25 each up to a total of $10,000 per transaction, as the Participant may elect, received from the Participant for such purpose to the purchase of full and fractional shares of Common Stock for Participant’s account (the “Plan Account”), provided that for such person who wishes to be a Participant and is not yet a stockholder of the Corporation there shall be a minimum initial investment of $250. Purchase orders will be submitted daily. The Plan Administrator may, at its discretion, submit purchase orders less frequently but no later than thirty (30) days after receipt. The Plan Administrator shall enable Participants, at their option, to make monthly purchases of a specified dollar

amount, pursuant to the limits set forth above, by automatic withdrawal from such Participant’s bank account. Funds will be withdrawn from such bank account, via electronic funds transfer, on the tenth (10th) day of each month (or the next following day if the tenth (10th) is not a business day). Purchases pursuant to this Item 7 will be made on The NASDAQ Global Select Market, or in negotiated transactions, and will be on such terms as to price, delivery and otherwise as the Plan Administrator in its sole discretion may determine. The Corporation will not use newly-issued shares of its Common Stock to implement such purchases.

In making purchases for the Participant’s Plan Account, the Plan Administrator may commingle cash payments with those of other Participants. In the case of each purchase, the price at which the Plan Administrator shall be deemed to have acquired shares for the Participant’s Plan Account shall be the average price (including commissions and the transaction fee specified in Item 22 below) of all outstanding shares purchased by it, as Plan Administrator for Participants in the Plan, with the aggregate funds of all Participants used for such purchase. Neither the Plan Administrator nor the Corporation shall have responsibility for any change in the value of Common Stock acquired for a Participant’s Plan Account. The Plan Administrator shall make every effort to invest cash payments within 30 days of receipt except where necessary to comply with Regulation M under the Securities Exchange Act of 1934 or other applicable provisions of the federal securities laws. Pending investment, Participant’s funds held by the Plan Administrator will not bear interest. It is understood that, in any event, the Plan Administrator shall have no liability in connection with such inability to purchase shares or the timing of any purchases. Instructions sent by a Participant to the Plan Administrator in connection with such Participant’s cash payment may not be rescinded.

The Plan Administrator will deliver a statement indicating the cash distribution invested, the number of shares purchased, the price per share, and total shares accumulated in Participant’s Plan Account is mailed to each Participant as soon as practicable after completion of each investment for a Participant’s account. Although each Participant may from time to time have an undivided fractional interest (computed to three decimal places) in a share of Common Stock, no certificates for a fractional share will be issued. However, dividends and distributions on fractional shares will be credited to each Participant’s account. In the event of termination of a Participant’s account under the Plan, the Plan Administrator will adjust for any such undivided fractional interest in cash at the market value of the Corporation’s shares at the time of termination.


10.	Distributions paid on the shares accumulated in the Plan are included in the Form 1099-DIV information return sent annually to each stockholder. When applicable, proceeds received from sales transactions are included in the Form 1099-B information return sent annually to each stockholder. The automatic reinvestment

of distributions will not relieve stockholders of any U.S. federal, state or local income tax that may be payable (or required to be withheld) on such distributions.

11.

Any stock dividends or shares issued pursuant to a stock split on shares credited to a Participant’s Plan Account will be added to the Participant’s Plan Account. In a rights offering, warrants representing rights on all shares held of record by each Participant and all full shares credited to the Participant’s Plan Account, will be mailed directly to the Participant in the same manner as to stockholders who are not participating in the Plan. Transaction processing may be either curtailed or suspended until the completion of any stock dividend, stock split, or corporate action.

12.

No certificates will be issued for shares in the Participant’s Plan Account unless a request is sent to the Plan Administrator. Upon request, the Plan Administrator will send the Participant certificates for any full shares already credited to the Participant’s Plan Account. Such requests shall be handled by the Plan Administrator without charge to the Participant. No certificate for a fractional share will be issued.

13.

Participation in the Plan may be terminated and a Plan Account liquidated by a Participant at any time by notice to that effect to the Plan Administrator. To be effective for any given distribution, the notice to terminate and liquidate must be received by the Plan Administrator, in writing, via the internet or the Plan Administrator’s toll free number, no later than by the applicable Termination Notice Deadline. If the notice to terminate and liquidate is received less than three (3) business days prior to the payment date then that distribution will be reinvested; however, all subsequent dividends will be paid out in cash on all balances. The Plan may be terminated by the Corporation upon notice in writing mailed to each Participant at least thirty (30) days prior to any record date for the payment of any dividend or distribution by the Corporation. Upon any termination, the Plan Administrator will cause a certificate or certificates to be issued for the full shares held for the Participant under the Plan and a cash adjustment for any fractional share to be delivered to the Participant without charge to the Participant. If a Participant elects by his or its written notice to the Plan Administrator in advance of termination to have the Plan Administrator sell part or all of his or its shares and remit the proceeds to the Participant, the Plan Administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds. If for any reason a Participant’s account balance falls below one full share, the Plan Administrator reserves the right to terminate the individual Participant’s participation in the Plan.


14.	The Plan Administrator will forward to each Participant any Corporation related proxy solicitation materials and each Corporation report or other communication to stockholders, and will vote any shares held by it under the Plan in accordance

with the instructions set forth on proxies returned by Participants to the Corporation.


15.	In the event that the Corporation makes available to its stockholders rights to purchase additional shares or other securities, the shares held by the Plan Administrator for each Participant under the Plan will be added to any other shares held by the Participant in certificated form in calculating the number of rights to be issued to the Participant.


16.	Recordkeeping functions under the Plan are provided by American Stock Transfer & Trust Company, LLC, which also acts as transfer agent for shares of Common Stock.

17.

Neither the Plan Administrator, nor the Corporation, nor the Transfer Agent shall be liable hereunder for any act done in good faith, or for any omission to act, including, without limitation, any claims of liability (1) arising out of failure to terminate the Participant’s account upon such Participant’s death prior to receipt of notice in writing of such death and (2) with respect to the prices at which shares are purchased or sold for the Participant’s account and the times such purchases or sales are made.


18.	The Participant shall have no right to draw checks or drafts against the Participant’s Plan Account or to give instructions to the Plan Administrator in respect to any shares held therein or any cash held in the Plan except as expressly provided herein.

19.

If the Participant’s funds submitted for optional cash purchase, whether by check or by direct debit via the Internet, are returned as unpaid, any funds pending investment will be removed from the Participant’s account. If the Participant’s funds have already been invested, then the shares purchased will be sold to satisfy the return of unpaid funds. If the proceeds from the sale are not sufficient to cover the return of unpaid funds, then additional shares will be sold from the Participant’s account. In addition, there is a $25.00 fee for the return of unpaid funds. Shares will be sold from the Participant’s account sufficient to cover the return fee.


20.	The Participant agrees to notify the Plan Administrator promptly of any change of address. Notices to the Participant may be given by letter addressed to the Participant at the last address of record with the Plan Administrator.


21.	These Terms and Conditions may be amended or supplemented by the Corporation at any time but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing an appropriate notice at least thirty (30) days prior to the effective date thereof to the Participant’s last address

of record. The amendment or supplement shall conclusively be deemed to be accepted by the Participant unless prior to the effective date thereof the Plan Administrator receives written notice of the termination or participation in the Plan. Any such amendment may include the appointment by the Plan Administrator in its stead and place a successor plan administrator under these Terms and Conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Administrator under these Terms and Conditions. Upon any such appointment of any agent for the purpose of receiving dividends and distributions, the Corporation will be authorized to pay to such successor agent, for each Participant’s account, all dividends and distributions payable on shares of the Corporation held in the Participant’s name or under the Plan for retention or application by such successor agent as provided in these Terms and Conditions.


22.	The costs of administering the dividend reinvestment portion of the Plan and expenses for administering the Plan are borne by the Corporation. However, the Corporation reserves the right to amend the Plan to institute a service charge after advance notice to Participants.

The fee for the Plan Administrator’s service under the Plan will be $2.50 transaction fee plus a $0.10 per share brokerage commission for each optional cash purchase of shares for a Plan Account, which shall be deducted as specified in Item 7.

23.

The Plan Administrator will at all times act in good faith and use its best efforts within reasonable limits to ensure its full and timely performance of all services to be performed by it under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Administrator’s negligence, bad faith, or willful misconduct or that of its employees or agents.


24.	These Terms and Conditions shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflicts of law principles and applicable rules and regulations of the Securities and Exchange Commission. These Terms and Conditions cannot be changed orally.