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Prospect Capital prices $225M convertible debt offering

Prospect Capital Corp. has priced its $225 million in aggregate principal amount of senior unsecured 4.95% convertible notes due 2022.

Holders of the notes will be able to convert the debt into equity based on an initial conversion rate of 100.2305 common shares per $1,000 principal amount of notes. The initial conversion price of approximately $9.98 per common share marks a 10% premium over the April 5 closing price of $9.07 per share. Monthly cash dividends paid to common shares at or below the rate of 8.33 cents per share will not cut the conversion price, subject to anti-dilution and other adjustments.

The notes will mature July 15, 2022, unless previously converted, repurchased or redeemed. Interest on the notes will be paid on Jan. 15 and July 15 of each year, starting July 15.

Prospect expects to use a portion of the net proceeds to repurchase a portion of its 5.375% convertible senior notes due 2017 and its 5.75% convertible senior notes due 2018.

Goldman Sachs & Co. served as the sole underwriter for the offering.