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REVOLVING CREDIT FACILITIES
 6 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
REVOLVING CREDIT FACILITIES REVOLVING CREDIT FACILITIES
Senior Secured Revolving Credit Facility
On September 21, 2023, the Company entered into a senior secured revolving credit agreement (the "Senior Secured Revolving Credit Facility"), by and among the Company, as borrower, the lenders party thereto, and SMBC, as administrative agent. In conjunction with the closing of the Senior Secured Revolving Credit Facility, we terminated the previous credit facility.
The Senior Secured Revolving Credit Facility provided for borrowings in U.S. dollars and certain agreed upon foreign currencies in an initial aggregate amount of up to $20,000,000 with an option for the Company to request, at one or more times,
that existing and/or new lenders, at their election, provide up to $150,000,000 in aggregate. The Senior Secured Revolving Credit Facility provided for swingline loans in an aggregate principal amount at any time outstanding that will not exceed $5,000,000. On January 30, 2024, the Company entered into the first amendment (the "First Amendment") to the Senior Secured Revolving Credit Facility. Among other changes, the First Amendment amended the original Senior Secured Revolving Credit Facility to provide for an increase in the aggregate commitment from $20,000,000 to $65,000,000. On February 1, 2024, there was an automatic commitment increase which increased the aggregate commitment from $65,000,000 to $75,000,000. Availability under the Senior Secured Revolving Credit Facility will terminate on the earlier of the commitment termination date of September 19, 2025 ("Commitment Termination Date") or the date of termination of the revolving commitments thereunder, and the outstanding loans under the Senior Secured Revolving Credit Facility will mature on September 21, 2026. The Senior Secured Revolving Credit Facility also required mandatory prepayment of interest and principal upon certain events, including after the date of termination of the revolving commitments thereunder from asset sales, extraordinary receipts, returns of capital, equity issuances, and incurrence of indebtedness, with certain exceptions and minimum amount thresholds.
Borrowings under the Senior Secured Revolving Credit Facility were subject to compliance with a borrowing base test. Amounts drawn under the Senior Secured Revolving Credit Facility in U.S. dollars would bear interest at either term SOFR plus a credit spread adjustment of 0.10% plus 2.5%, or the prime rate plus 1.5%. The Company could elect either the term SOFR or prime rate at the time of drawdown, and loans denominated in U.S. dollars could be converted from one rate to another at any time at the Company’s option, subject to certain conditions. Amounts drawn under the Senior Secured Revolving Credit Facility in other permitted currencies bore interest at the relevant rate specified therein plus 2.5%.
During the period commencing on September 21, 2023 and ending on the earlier of the Commitment Termination Date or the date of termination of the revolving commitments under the Senior Secured Revolving Credit Facility, the Company paid a commitment fee of 0.375% per annum (based on the immediately preceding quarter’s average usage) on the daily unused amount of the commitments then available thereunder.
In connection with the Senior Secured Revolving Credit Facility, the Company had made certain representations and warranties and must comply with various covenants and reporting requirements customary for facilities of this type. In addition, the Company complied with the following financial covenants with respect to the Company and its consolidated subsidiaries: (a) the Company maintained a minimum shareholders’ equity, measured as of each fiscal quarter end; and (b) the Company must maintain at all times an asset coverage ratio not less than 150%.
The Senior Secured Revolving Credit Facility contained events of default customary for facilities of this type. Upon the occurrence of an event of default, the administrative agent, at the request of the required lenders, may terminate the commitments and declare the outstanding advances and all other obligations under the Senior Secured Revolving Credit Facility immediately due and payable.
The Company’s obligations under the Senior Secured Revolving Credit Facility were guaranteed by Prospect Flexible Funding, LLC, a subsidiary of the Company, and will be guaranteed by certain domestic subsidiaries of the Company that are formed or acquired by the Company in the future. The Company’s obligations under the Senior Secured Revolving Credit Facility were secured by a first priority security interest in substantially all of the assets of the Company and certain of the Company’s subsidiaries.
During the three months ended December 31, 2025 and 2024, we had no realized loss on the extinguishment of debt.
During the six months ended December 31, 2025 and 2024, we realized a loss on the extinguishment of debt in the amount of $495,849 and $0, respectively related to the Senior Secured Revolving Credit Facility.
OZK Credit Facility
On August 12, 2025, the Company, as servicer, entered into a $75 million senior secured revolving credit facility (the “OZK Credit Facility”) with Bank OZK acting as facility agent. In connection with the OZK Credit Facility, the Company’s wholly-owned financing subsidiary, Prospect Flexible Funding, LLC (the “Borrower”), as borrower, and each of the other parties thereto entered into a Loan and Servicing Agreement, dated as of August 12, 2025 (the “Loan Agreement”). In conjunction with the closing of the OZK Credit Facility, we terminated and fully paid down the Senior Secured Revolving Credit Facility.
The OZK Credit Facility is scheduled to mature on August 10, 2029 and generally bears interest at a rate of one-month SOFR + 2.50%. The OZK Credit Facility is secured by assets of the Borrower. Under the Loan Agreement, the Borrower has made certain customary representations and warranties and is required to comply with various covenants, including borrowing restrictions, reporting requirements and other customary requirements for similar credit facilities. The Loan Agreement includes usual and customary events of default for credit facilities of this nature.
The OZK Credit Facility requires the Borrower to pledge assets as collateral in order to borrow under the OZK Credit Facility. The OZK Credit Facility contains restrictions pertaining to the geographic and industry concentrations of funded loans,
maximum size of funded loans, interest rate payment frequency of funded loans, maturity dates of funded loans and minimum equity requirements, among other items. The OZK Credit Facility also contains certain requirements relating to portfolio performance, including limitations on delinquencies and charge-offs, a violation of which could result in the early termination of the OZK Credit Facility. As of December 31, 2025, we were in compliance with the applicable covenants of the OZK Credit Facility.
As of December 31, 2025, we had $37,040,732 outstanding on our OZK Credit Facility. As of December 31, 2025, the investments used as collateral for the OZK Credit Facility had an aggregate fair value of $53,869,571, which represents 84% of our total investments for the period. As of December 31, 2025, cash balances of $8,165,849 were used as collateral for the OZK Credit Facility. The fair value of the OZK Credit Facility was $37,040,732 and is categorized as Level 3 under ASC 820 as of December 31, 2025. The fair value of the OZK Credit Facility approximates its carrying value as the OZK Credit Facility is repriced to a market rate of interest frequently.
In connection with the origination of the OZK Credit Facility, we incurred $959,106 in fees, all of which are being amortized over the term of the OZK Credit Facility. As of December 31, 2025, $866,543 remains to be amortized and is reflected as deferred financing costs on the Consolidated Statements of Assets and Liabilities.
During the three months ended December 31, 2025 and 2024, we recorded $717,929 and $0, respectively, of interest costs and amortization of financing costs on the OZK Credit Facility as interest expense.
During the six months ended December 31, 2025 and 2024, we recorded $1,562,879 and $0, respectively, of interest costs and amortization of financing costs on the OZK Credit Facility as interest expense.
For the three months ended December 31, 2025, the average stated interest rate (i.e., rate in effect plus the spread) was 6.48% under the OZK Credit Facility.
For the three months ended December 31, 2024, the average stated interest rate (i.e., rate in effect plus the spread) was 7.33% under the Senior Secured Revolving Credit Facility.
For the six months ended December 31, 2025, the average stated interest rate (i.e., rate in effect plus the spread) was 6.67% under the OZK Credit Facility and the Senior Secured Revolving Credit Facility.
For the six months ended December 31, 2024, the average stated interest rate (i.e., rate in effect plus the spread) was 7.65% under the Senior Secured Revolving Credit Facility.
For the three months ended December 31, 2025, average outstanding borrowings under the OZK Credit Facility was 37,848,806.
For the three months ended December 31, 2024, average outstanding borrowings under the Senior Secured Revolving Credit Facility was $46,311,957.
For the six months ended December 31, 2025, average outstanding borrowings under the OZK Credit Facility and Senior Secured Revolving Credit Facility were $39,620,704.
For the six months ended December 31, 2024, average outstanding borrowings under the Senior Secured Revolving Credit Facility was $38,936,957.