Prospect Capital plans $200 million of 5.875%, six-year convertibles, up 15%

By Rebecca Melvin

New York, Dec. 17 - Prospect Capital Corp. launched an offering of $200 million of six-year convertible notes that were seen pricing ahead of the open on Tuesday and were talked to price at a 97.25 to 97.75 discount to par, according to a market source.

The Rule 144A deal, being sold via bookrunner Goldman Sachs & Co., was heard to have a 5.875% coupon, 15% initial conversion premium and a $30 million greenshoe.

The notes are non-callable. There is full one-way dividend protection in the form of a conversion rate adjustment for any dividend above $0.110025 per month, as well as takeover protection.

Proceeds are intended to be used to maintain balance sheet liquidity, including investments in high-quality short-term debt instruments, and thereafter to make long-term investments in accordance with Prospect Capital's investment objectives.

Prospect Capital last raised funds in the convertible bond market in August, when it priced $200 million of 5.75% 5.5-year convertibles in an overnight deal that was reoffered at 98.

Prospect Capital is a New York venture capital and private equity firm.

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