Prospect Capital invests $65 million in Taos Footwear

NEW YORK - Prospect Capital (NASDAQ:PSEC) Corporation (NASDAQ: PSEC), a business development company with a market capitalization of $1.88 billion, has announced a combination of debt and equity financing totaling $65 million to Taos Footwear Holdings, LLC, a company known for its innovative and supportive lifestyle footwear. The financing includes a first lien senior secured term loan, a convertible term loan, and a preferred equity investment. According to InvestingPro data, PSEC maintains one of the highest dividend yields in its sector at 12.5%, though recent financial metrics suggest careful monitoring is warranted.

The collaboration with Taos Footwear’s founder and leadership team aims to support the brand’s continued growth and strategic development. Taos Footwear has established itself in the market over the last two decades with a unique supportive footbed design that has contributed to its expansion.

Glen Barad, Taos Footwear’s Founder and CEO, expressed the company’s need for a partner that could provide both capital and strategic expertise to further elevate the brand. Prospect Capital’s Managing Director, Robert Melman, conveyed the firm’s enthusiasm for the investment and the opportunity to assist in the company’s ongoing development.

Prospect Capital, which operates as a business development company under the Investment Company Act of 1940 and as a regulated investment company for tax purposes, focuses on generating income and long-term capital appreciation through its investments. The company has maintained dividend payments for 22 consecutive years, though InvestingPro analysis reveals current challenges, including a revenue decline of 7.23% and a concerning current ratio of 0.48. For detailed insights into PSEC’s financial health and future prospects, investors can access comprehensive Pro Research Reports, available exclusively to InvestingPro subscribers.

The press release also includes standard cautionary language regarding forward-looking statements, indicating that actual future results may differ materially from any predictions or expectations expressed. This caution appears particularly relevant given the company’s current financial metrics, with several key indicators available through InvestingPro’s extensive database of over 1,400 detailed company analyses.

This news is based on a press release statement from Prospect Capital Corporation.

In other recent news, Prospect Capital Corporation reported significant earnings for the fourth quarter of fiscal year 2024, with a net investment income of $102.9 million and a net asset value of $3.71 billion. The company has also increased its preferred stock offering to $2.25 billion, involving the reclassification of 20 million shares from common to preferred stock. This strategic move is part of the company’s initiatives to manage its capital structure.

Simultaneously, Prospect Capital has amended its Preferred Stock Distribution Reinvestment Plan (DRIP), allowing preferred stockholders to automatically reinvest dividends into additional shares of their respective series. In response to these developments, Wells Fargo (NYSE:WFC) has revised its price target for Prospect Capital from $5.00 to $4.50 and adjusted its net operating income forecasts for the company for fiscal years 2025 and 2026.

The company has also announced the re-election of two directors, M. Grier Eliasek and Andrew C. Cooper, at its Annual Meeting of Stockholders. Prospect Capital is strategically shifting its investment portfolio towards first lien debt over second lien debt, a move analysts have noted as a way to extend liability duration and reduce counterparty risk. These are recent developments that highlight Prospect Capital’s strategic decisions to maintain shareholder distributions and strengthen its investment portfolio.

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