Prospect Capital Corporation announced that Prospect has increased total commitments to its five-year $1.0 billion revolving credit facility by $45.0 million to $837.5 million in the aggregate.
The Facility includes an accordion feature that allows Prospect to accept up to an aggregate of $1.0 billion of revolving commitments, a target Prospect expects to reach with additional and existing lenders. The $45.0 million commitment comes from three new lenders, bringing the total number of lenders to 27, more lenders than any other business development company ("BDC") revolving credit facility. The Facility has an investment grade Moody's rating of Aa3.
"The addition of new lenders demonstrates a continued interest in the Facility within the bank community," said Steven Stone, Chief Credit Officer of Prospect. "These senior lenders conducted extensive due diligence, including related to the topics we discussed on our earnings call last week, before deciding to lend to us. We continue to identify potential new participants for the Facility and look forward to increasing the commitments to our $1.0 billion target."
As previously disclosed, Prospect is currently in discussions with the accounting staff at the Securities and Exchange Commission regarding the potential consolidation of certain wholly-owned holding companies that hold majority owned operating companies. The staff is not seeking consolidation of the operating companies underneath these holding companies. If these wholly-owned holding companies were to be consolidated for financial statement purposes, there would be no significant change in the leverage ratio of Prospect because there is no third party debt at any of these holding companies. Because the tax basis of these entities would not change, Prospect expects there would be no negative effects on our taxable income from consolidation. At least 90% of taxable income is required to be distributed to shareholders to maintain our Federal income tax status as a regulated investment company. As a result, we expect no negative change in our dividend paying capacity or change in our dividend policy through consolidation.
Prospect Capital Corporation is a business development company that focuses on lending to and investing in private businesses.