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 : June 9, 2022
Prospect Capital Corporation
(Exact name of registrant as specified in its charter)
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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:
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| o | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| o | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| o | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| o | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading symbol | Name of each exchange on which registered |
| Common Stock, $0.001 par value | PSEC | NASDAQ Global Select Market |
| 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 | PSEC PRA | New York Stock Exchange |
Item 1.01. Entry into a Material Definitive Agreement.
On June 9, 2022, Prospect Capital Corporation (the “Company”) entered into an amendment (the “Amendment”) to the Amended and Restated Dealer Manager Agreement, dated as of February 25, 2021, by and between the Company and Preferred Capital Securities, LLC (the “Dealer Manager” and, together with the Company, the “Parties”) (the “Dealer Manager Agreement”), pursuant to which the Dealer Manager agreed to serve as the Company’s agent, principal distributor and exclusive dealer manager for the Company’s offering of up to 60,000,000 shares, par value $0.001 per share, of preferred stock, with a $1,500,000,000 aggregate liquidation preference (the “Preferred Stock”). Pursuant to the terms of the Dealer Manager Agreement, as amended by the Amendment, the size of the offering was increased from $1,000,000,000 in aggregate liquidation preference of Preferred Stock to $1,500,000,000 in aggregate liquidation preference of Preferred Stock and the initial term of the Dealer Manager Agreement was extended until August 3, 2023.
The foregoing description of the Amendment is only a summary and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 3.03. Material Modification to Rights of Security Holders
On June 9, 2022, in connection with the Offering, the Company filed Articles Supplementary (the “Articles Supplementary”) with the State Department of Assessments and Taxation of Maryland (“SDAT”), reclassifying and designating 60,000,000 shares of the Company’s authorized and unissued shares of Common Stock into shares of Preferred Stock. The reclassification decreased the number of shares classified as Common Stock from 1,832,100,000 shares immediately prior to the reclassification to 1,772,100,000 shares immediately after the reclassification. The description of the Preferred Stock contained in the section of the Prospectus entitled “Description of the Preferred Stock” is incorporated herein by reference.
The foregoing description of the Preferred Stock is only a summary and is qualified in its entirety by reference to the full text of the Articles Supplementary, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.
Venable LLP, special Maryland counsel to the Company, has issued a legal opinion relating to the validity of the shares of Preferred Stock offered in the offering, a copy of which is attached to this Form 8-K as Exhibit 5.1.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information set forth in Item 3.03 above with respect to the Articles Supplementary is incorporated in this Item 5.03 in its entirety.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
1.1 Amendment No. 1 to Amended and Restated Dealer Manager Agreement, dated as of June 9, 2022, by and between Prospect Capital Corporation and Preferred Capital Securities, LLC
3.1 Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation
5.1 Opinion of Venable LLP as to the validity of shares of Preferred Stock
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: June 9, 2022
Index to Exhibits
PROSPECT CAPITAL CORPORATION
AMENDMENT NO. 1
TO
AMENDED AND RESTATED DEALER MANAGER AGREEMENT
This amendment (this “Amendment No. 1”) to the Amended and Restated Dealer Manager Agreement (the “A&R Dealer Manager Agreement”) dated as of February 25, 2021 is by and between Prospect Capital Corporation, a corporation organized under the laws of Maryland (the “Company”), and Preferred Capital Securities, LLC, a Georgia limited liability company (the “Dealer Manager”), and shall be effective as of June 9, 2022 (the “Effective Date”).
The Company and the Dealer Manager wish to amend the A&R Dealer Manager Agreement as follows.
1.The first paragraph located on first page of the A&R Dealer Manager Agreement, directly under the salutation “Ladies and Gentlemen:”, is hereby deleted and replaced in its entirety with the following:
Prospect Capital Corporation, a corporation organized under the laws of Maryland (the “Company”), proposes to offer up to 60,000,000 shares, par value $0.001 per share, of preferred stock, with a $1,500,000,000 aggregate liquidation preference (the “Preferred Stock”). The Preferred Stock will be issued in multiple series, including the 5.50% Series Al Preferred Stock (“Series Al 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 the Company may offer any future series of Preferred Stock, provided that the aggregate number of shares issued across all series of Preferred Stock offered pursuant to this Dealer Manager Agreement (this “Agreement”) shall not exceed 60,000,000 shares (the “Offering”). Each share of Preferred Stock will be sold at a public offering price of $25.00 per share (the “Stated Value”). The minimum investment amount is $5,000, but purchases of less than $5,000 may be permitted by the Company in the Company’s sole discretion.
2.Section 3(i) of the A&R Dealer Manager Agreement is hereby deleted and replaced in in its entirety with the following:
(i) Notwithstanding anything to the contrary in this Agreement, including this Section 3, it is expressly acknowledged and agreed between the Company and the Dealer Manager that the Company is permitted to sell up to $175,000,000 in aggregate liquidation preference of Preferred Stock in the Offering directly to investors in negotiated transactions in which neither the Dealer Manager nor any other entity is acting as an underwriter, dealer or agent. Accordingly, the Dealer Manager shall not receive any dealer manager fee or selling commission in connection with the Company’s direct sale of shares of Preferred Stock to an investor. The Dealer Manager shall not have any obligations or liabilities under this Agreement with respect to any such direct sales of shares of Preferred Stock by the Company to investors and, for the avoidance of doubt, Section 7 of this Agreement shall apply to the Company’s direct sale of shares of Preferred Stock. The gross proceeds the Company receives from any such direct sales will not be
included in the gross proceeds from the sale of the Preferred Stock for purposes of calculating FINRA’s 10% cap.
3.Section 9(i) of the A&R Dealer Manager Agreement is hereby deleted and replaced in in its entirety with the following:
9. Termination of this Agreement.
i. Term; Expiration.
1.This Agreement shall become effective as of February 25, 2021. This Agreement shall have an initial term expiring on August 3, 2023 and shall continue for additional one (1) year terms, in each case unless terminated pursuant to this Section 9.
2.This Agreement shall automatically terminate at the first occurrence of any of the following events: (A) the settlement of the sale of all 60,000,000 shares of Preferred Stock that are the subject of the Offering or the termination date of the Offering or (B) the date the Dealer Manager’s license or registration to act as a broker-dealer is revoked or suspended by any federal, self-regulatory or state agency and such revocation or suspension is not cured within ten (10) days from the date of such occurrence (and this Agreement shall be deemed to be suspended during such revocation or suspension period).
3.This Agreement may be terminated by either party upon 60 calendar days’ written notice to the other party.
4.The first paragraph located on the first page, directly under the salutation “Ladies and Gentlemen:”, of Exhibit A – Form of Financial Intermediary Agreement is hereby deleted and replaced in its entirety with the following:
Preferred Capital Securities, LLC (the “Dealer Manager”) entered into an amended and restated dealer manager agreement, , February 25, 2021 (the “Dealer Manager Agreement”), with Prospect Capital Corporation, a Maryland corporation (the “Company”), under which the Dealer Manager agreed to use its reasonable best efforts to solicit subscriptions in connection with the public offering (the “Offering”) for up to 60,000,000 shares, par value $0.001 per share, of preferred stock, with a $1,500,000,000 aggregate liquidation preference (the “Preferred Stock”). The Preferred Stock will be issued in multiple series, including the 5.50% Series Al Preferred Stock (“Series Al Preferred Stock”), the 5.50% Series Ml Preferred Stock (“Series M1 Preferred Stock”), and the 5.50% Series M2 Preferred Stock (“Series M2 Preferred Stock”), and the Company may offer any future series of Preferred Stock, provided that the aggregate number of shares issued across all series of Preferred Stock shall not exceed 60,000,000 shares (the “Offering”). Each share of Preferred Stock will be sold at a public offering price of $25.00 per share (the “Stated Value”). The minimum investment amount is $5,000, but purchases of less than $5,000 may be permitted by the Company in the Company’s sole discretion. The Offering will commence on the initial Effective Date (as defined below). Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings therefor as in the Dealer Manager Agreement.
5.The second paragraph located on the first page of Exhibit B – Form of Selected Investment Adviser Agreement is hereby deleted and replaced in its entirety with the following:
WHEREAS, the Dealer Manager entered into an amended and restated dealer manager agreement, dated February 25, 2021, with Prospect Capital Corporation (the “Company”), a Maryland Corporation (the “Dealer Manager Agreement”), under which the Dealer Manager agreed to act as the agent, principal distributor and exclusive dealer manager for an offering by the Company of up to 60,000,000 shares, par value $0.001 per share, of preferred stock, with a $1,500,000,000 aggregate liquidation preference (the “Preferred Stock”). The Preferred Stock will be issued in multiple series, including the 5.50% Series Al Preferred Stock (“Series Al Preferred Stock”), the 5.50% Series Ml Preferred Stock (“Series Ml Preferred Stock”), and the 5.50% Series M2 Preferred Stock (“Series M2 Preferred Stock,” and together with Series Ml Preferred Stock, “Series M Preferred Stock”), and the Company may offer any future series of Preferred Stock, provided that the aggregate number of shares issued across all series of Preferred Stock shall not exceed 60,000,000 shares, (the “Offering”). Each share of Preferred Stock will be sold at a public offering price of $25.00 per share. The minimum investment amount is $5,000, but purchases of less than $5,000 may be permitted by the Company in the Company’s sole discretion. The Offering will commence on the initial Effective Date (as defined below). Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings therefor as in the Dealer Manager Agreement.
Except as specifically set forth herein, all other terms and conditions of the A&R Dealer Manager Agreement shall remain unmodified and in full force and effect, the same being confirmed and republished hereby.
This Amendment may be executed by the parties hereto on any number of counterparts, delivery of which may occur by facsimile or as an attachment to an electronic communication, each of which shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have each duly executed this Amendment No. 1 on this 9th day of June, 2022.
THE COMPANY:
PROSPECT CAPITAL CORPORATION
By: /s/ M. Grier Eliasek
Name: M. Grier Eliasek
Title: Chief Operating Officer
THE DEALER MANAGER:
PREFERRED CAPITAL SECURITIES, LLC
By: /s/ Jeff Smith
Name: Jeff Smith
Title: Chief Executive Officer
[Signature Page to Amendment No. 1 to A&R Dealer Manager Agreement]
PROSPECT CAPITAL CORPORATION
ARTICLES SUPPLEMENTARY
CONVERTIBLE PREFERRED STOCK
Prospect Capital Corporation, a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:
1.Pursuant to the authority expressly vested in the Board of Directors of the Corporation (the “Board”) by Section 5.3 of its charter (including these Articles Supplementary, the “Charter”) and Section 2-208 of the Maryland General Corporation Law, the Board has duly adopted resolutions reclassifying (i) 20,000,000 authorized but unissued shares of common stock, par value $0.001 per share (the “Common Stock”), of the Corporation, as additional shares (the “Additional Series A1 Shares”) of Convertible Preferred Stock, Series A1, par value $0.001 per share (the “Series A1 Shares”), (ii) 20,000,000 authorized but unissued shares of Common Stock as additional shares (the “Additional Series M1 Shares”) of Convertible Preferred Stock, Series M1, par value $0.001 per share (the “Series M1 Shares”), and (iii) 20,000,000 authorized but unissued shares of Common Stock as additional shares (the “Additional Series M2 Shares” and, together with the Additional Series A1 Shares and the Additional Series M1 Shares, the “Additional Shares”) of Convertible Preferred Stock, Series M2, par value $0.001 per share (the “Series M2 Shares”), each having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms of such series as set forth in the Charter.
2.The Additional Shares have been classified and designated by the Board under the authority contained in the Charter. After giving effect to the classification of the Additional Shares set forth herein, the total number of (i) Series A1 Shares that the Corporation has authority to issue is 60,000,000, (ii) Series M1 Shares that the Corporation has authority to issue is 60,000,000 and (iii) Series M2 Shares that the Corporation has authority to issue is 60,000,000.
3.These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.
4.The undersigned officer of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of such officer’s knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary on this 9th day of June, 2022.
PROSPECT CAPITAL CORPORATION
By: /s/Grier Eliasek
Name: M. Grier Eliasek
Title: President & Chief Operating
Officer
ATTEST:
/s/ Kristin Van Dask
Name: Kristin Van Dask
Title: Chief Financial Officer, Chief
Compliance Officer & Secretary
[On Letterhead of Venable LLP]
June 9, 2022
Prospect Capital Corporation
10 East 40th Street, 44th Floor
New York, New York 10016
Re: Registration Statement on Form N-2:
1933 Act File No. 333-236415
Ladies and Gentlemen:
We have served as Maryland counsel to Prospect Capital Corporation, a Maryland corporation (the “Company”) and a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”), in connection with certain matters of Maryland law arising out of the issuance of up to 60,000,000 shares of preferred stock, par value $0.001 per share, of the Company, classified and designated as Convertible Preferred Stock, Series A1, Series M1 and Series M2 (collectively, the “Shares”), covered by the above-referenced Registration Statement, and all amendments thereto (collectively, the “Registration Statement”), filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “1933 Act”). The Shares are to be issued in a public offering (the “Offering”) pursuant to the Prospectus Supplement (as defined herein).
In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the “Documents”):
1. The Registration Statement;
2. The Prospectus, dated February 13, 2020, as supplemented by a Prospectus Supplement, dated August 3, 2020 and Supplement No. 3, dated June 9, 2022 (as supplemented, the “Prospectus Supplement”), filed with the Commission pursuant to Rule 424(b) under the 1933 Act;
3. The charter of the Company (the “Charter”), certified by the State Department of Assessments and Taxation of Maryland (the “SDAT”);
4. The Bylaws of the Company, certified as of the date hereof by an officer of the Company;
5. A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
6. Resolutions adopted by the Board of Directors of the Company (the “Resolutions”), relating to, among other matters, the sale and issuance of the Shares and the Conversion Shares (as defined herein), certified as of the date hereof by an officer of the Company;
7. A certificate executed by an officer of the Company, dated as of the date hereof; and
8. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed the following:
1. Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.
4. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.
5. Upon the issuance of any shares (the “Conversion Shares”) of common stock, $0.001 par value per share (the “Common Stock”), of the Company issuable upon the conversion of the Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter.
Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.
2. The issuance of the Shares has been duly authorized and, when issued and delivered by the Company pursuant to the Registration Statement, the Prospectus Supplement and the Resolutions against payment of the consideration set forth therein, the Shares will be validly issued, fully paid and nonassessable.
3. The issuance of the Conversion Shares has been duly authorized and, when and to the extent issued and delivered by the Company upon conversion of the Shares in accordance with the Registration Statement, the Prospectus Supplement, the Resolutions and the Charter, the Conversion Shares will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the laws of the State of Maryland and we do not express any opinion herein concerning the laws of any other jurisdiction. We express no opinion as to the 1940 Act, or other federal securities laws, or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinion expressed herein is subject to the effect of any judicial decision which may permit the introduction of parol evidence to modify the terms or the interpretation of agreements.
The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission as an exhibit to the Registration Statement. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act.
Very truly yours,
/s/ Venable LLP