Prospect Invests $25.2m to Recapitalize Nationwide Acceptance

Prospect Capital Corporation has funded a recapitalization of Nationwide Acceptance Corporation with $25.2 million of combined debt and equity financing. Founded in 1954, Nationwide is a specialty finance business based in Chicago, Illinois.

PRESS RELEASE

Prospect Capital Corporation ( NASDAQ : PSEC ) (“Prospect”) announced today that Prospect has funded a recapitalization of Nationwide Acceptance Corporation (“Nationwide”) with $25.2 million of combined debt and equity financing.
Founded in 1954, Nationwide is a specialty finance business based in Chicago, Illinois. Nationwide operates in 22 states primarily as an indirect lender in the consumer auto loan business, where it purchases loans originated by the more than 800 active used car dealers it covers. In the past year, Nationwide has financed the purchase of more than 7,000 automobiles. In addition, Nationwide operates in Illinois a small non-auto lending business making loans directly to consumers. Nationwide employs more than 120 people and has an aggregate loan portfolio in excess of $100 million.
Led by CEO Martin Less, senior management of Nationwide invested alongside Prospect and owns, directly and through various incentive plans, approximately 6.2% of the fully-diluted economic interests in Nationwide. Prospect is the controlling shareholder of Nationwide. Wells Fargo provided a $75.0 million revolving credit facility.
Prospect expects Nationwide to pay out substantially all of its income in the form of dividends on a go-forward basis, providing for an attractive current yield to Prospect and to Nationwide’s management owners. Prospect structured the acquisition of Nationwide using tax-advantaged limited liability companies.
Nationwide has enjoyed multi-decade success due to several key factors, including a broad-based dealer origination network, a rigorous and consistent new loan underwriting process, and an intense commitment to monitoring and collecting existing loans. Because of these strengths, Nationwide has generated consistent profitability and has grown its asset base during the past several years.
“We are pleased to be partnering with the Nationwide management team and look forward to supporting continued profitable growth, including acquisitions, for the business,” said Ted Fowler, a Managing Director of Prospect Capital Management LLC.
“Prospect has worked extensively to understand the auto finance industry and Nationwide’s long-term track record,” said Martin Less, CEO of Nationwide. “Leveraging our broad footprint and the capital backing that Prospect provides, we anticipate continuing to deliver profitable growth by expanding our business in current states as well as new expansion states.”
Milestone Advisors, LLC (now part of Houlihan Lokey) served as exclusive financial advisor to Nationwide on the transaction.

ABOUT PROSPECT CAPITAL CORPORATION
Prospect Capital Corporation is a closed-end investment company that lends to and invests in private and microcap public businesses. Prospect’s investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.
Prospect has elected to be treated as a business development company under the Investment Company Act of 1940 (“1940 Act”). Prospect is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state rules and regulations. Prospect has elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Prospect could have an adverse effect on Prospect and its shareholders.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under Prospect’s control, and that Prospect may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made, and Prospect undertakes no obligation to update any such statement now or in the future.

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