SEC Company Response from PROSPECT CAPITAL CORP (PSEC, PSEC-PA) (CIK 0001287032) (PSEC) — Oct 20, 2017
PROSPECT CAPITAL CORP (PSEC, PSEC-PA) (CIK 0001287032)
Date: Oct. 20, 2017 · CIK: 0001287032 · Accession: 0001287032-17-000295
AI Filing Summary & Sentiment
File numbers found in text: 333-213391
Letter
VIA EDGAR United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 RE: Registration Statement (333-213391) of Prospect Capital Corporation (the “Fund”)
Dear Mr. Williamson and Ms. Stout:
We are in receipt of oral comments provided by each of you on October 13, 2017 regarding the Fund’s Post-Effective Amendment No. 39 (the “POS 8C”) to its Registration Statement on Form N-2 (the “Registration Statement”).
The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the POS 8C discussed below. These changes are reflected in Post-Effective Amendment No. 48 (the “Amendment”) to the Fund’s Registration Statement being filed today.
The Fund’s responses to the comments are set forth below. For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response. Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment.
Mr. Williamson
Ms. Stout
October 20, 2017
Page 2
Accounting Comments:
1. Please be sure to include auditor consents in the Fund’s next Registration Statement filing.
The Fund has included the necessary auditor consents in its filing.
2. In the section entitled Selected Condensed Financial Data, the weighted average yield on debt portfolio at year end excludes equity investments and non-performing loans. Please also include the weighted average yield on the entire portfolio for each period. Please also include such yield in other places in the document to be consistent. For example, see page 46.
The requested disclosure has been added.
3. In the risk factor, “Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies,” the Fund states that certain intercreditor agreements have “first out” and “last out” structures. Please supplementally discuss the portion of your loans that have such structures and the accounting for such loans, including how they are fair valued. If such loans are material, please consider including additional disclosure explaining the risk of such loans.
Several of the Fund’s outstanding loans are subject to intercreditor agreements that subordinate such loans to other debt (e.g., the Fund’s loan to a portfolio company may be subordinated to another loan issued by a third-party lender). However, with a few exceptions, the Fund does not currently have any outstanding loans that employ an intercreditor agreement to establish a “first out / last out” structure within the same loan. Instead, such “first out / last out” structure is established in the applicable credit agreement, rather than by means of an intercreditor agreement.
Each of the Fund’s loans that employ a “first out / last out” structure, if performing, will be valued using the income approach. The valuation will take into account the seniority of each tranche relative to the Fund’s capital structure, implied leverage at each tranche and other key terms as defined in the applicable credit agreement in determining the discount rate to apply to each loan’s expected cash flows.
If the Fund’s investment in such loans becomes material in the future, the Fund will review its disclosure and revise it as necessary.
Mr. Williamson
Ms. Stout
October 20, 2017
Page 3
4. In the section entitled “Senior Securities,” please supplementally explain why the disclosure regarding the total amount outstanding for the 2023 Notes does not match the disclosure in the audited financial statements.
The 2023 Notes were issued with an original issue discount. Accordingly, the Senior Securities table shows the gross amount outstanding and the Fund included footnote 8 to the Senior Securities table stating that “the notes are presented net of unamortized discount.”
5. Please supplementally discuss the reason for identifying the small business loan portfolio as a company less than 5% held as opposed to identifying it as controlled entity?
The Fund, through its consolidated, wholly-owned subsidiary Prospect Small Business Lending, LLC (“PSBL”), purchases small business whole loans on a recurring basis from online small business loan originators. These small business whole loans are debt investments only and are not serviced or controlled by the Fund or PSBL. Accordingly, the Fund believes that it is appropriate to identify the small business loan portfolio as a company less than 5% held.
6. Please confirm that the Fund has its fidelity bond and will file it as required by Rule 17g-1.
The Fund confirms that it has its fidelity bond and will file it as required by Rule 17g-1 once final documentation is received from the insurance provider.
7. Please note that debt issuance costs for liabilities should be included on the face of the consolidated statements of assets and liabilities. Please see ASU-2015-03. The ASU specifies that “issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note” and that “[a]mortization of debt issue costs shall also be reported as interest expense.”
In accordance with ASU-2015-03, the Fund has presented these costs, except those incurred by the Revolving Credit Facility, as a direct deduction to the Fund’s Unsecured Notes. A reconciliation of deferred financing fees for each debt position is presented in detail in Note 8 to its audited financial statements, and reference is made to Note 8 to its audited financial statements. Lacking specific guidance to parenthetically disclose costs on the financial statements, industry practice more commonly discloses deferred financing costs in the footnotes. The Fund believes that its presentation and level of detail is sufficiently useful to the readers of the financials.
Mr. Williamson
Ms. Stout
October 20, 2017
Page 4
8. Please supplementally discuss the primary reason for the decline in “other income” from 2016 to 2017.
The decline is primarily due to the $12.9 million of advisory fee income recognized with the sale of Harbortouch Payments, LLC in May 2016, which was partially offset by an increase in other structuring and amendment fees generated by 2017 originations.
9. Please supplementally discuss the reason for a negative balance for excise tax.
The negative balance for excise tax is due to a decline in previously estimated taxable income from structured credit investments (which are treated as controlled foreign corporations for U.S. tax purposes) and the shareholder dividend payout requirements.
During portions of calendar years 2015 and 2016, the broadly syndicated loan market sold off significantly, and the independent management teams of most of the Fund’s structured credit investments took advantage of the volatility in the loan market to both sell certain loans and purchase new loans at discounted prices. While the sales and purchases of such loans at similarly discounted prices did not have an economic impact on the Fund’s net investment income for financial statement purposes, the sales of underlying loans at discounted prices resulted in the immediate recognition of taxable losses, but corresponding purchases at discounted prices do not generate immediate recognition of taxable income.
Realized gains and losses on underlying individual loans within the Fund’s structured credit investments are recognized as taxable events when calculating the Fund’s allocable portion of a structured credit investment’s taxable income, and losses on sales of such assets reduce the Fund’s taxable income. Unfortunately, the required tax reporting for these investments (PFIC Annual Information Statement or Form 5471) which are prepared and distributed by respective independent management teams can be delayed as long as nine months after the tax year end of the structured credit investment. As a result of this delay in tax reporting, the Fund’s taxable income estimates did not properly capture the magnitude of the losses within the structured credit investments and the Fund over accrued excise tax for the period.
10. For controlled investments, please supplementally discuss the primary reason for an increase in unrealized gains.
Net unrealized gains for controlled investments increased by $86.8 million during the year ended June 30, 2017. This increase was primarily the result of the following: (1) $104.2 million unrealized gains in the Fund’s REITs portfolio due to improvement operating performance at the property-level; and (2) the sale of Gulfco assets for which the Fund recognized a realized loss of $66.1 million, of which $53.1 million had been previously
Mr. Williamson
Ms. Stout
October 20, 2017
Page 5
recorded as an unrealized loss as of June 30, 2016. These increases were partially offset by declines in value related to the following: (i) USES and Arctic Energy declined in value by $30.2 million and $21.0 million, respectively, due to energy-related factors as well as a decline in operating performance; and (ii) $23.8 million of unrealized losses in the Fund’s REITs online lending portfolio due to an increase in delinquent loans.
11. In the Fund’s Consolidated Schedule of Investments, please disclose the rate on preferred stock owned by the Fund if applicable.
The Fund will disclose the rate on preferred stock owned by it if applicable going forward.
12. The statement on page F-62 of the Fund’s audited financials states that the 2016 financials were unaudited. It seems that the audited financials were in fact included. Please revise disclosure accordingly going forward.
The Fund will revise disclosure in accordance with the comment going forward.
13. It seems that First Tower triggered 4-08(g), but the Fund included 3-09 disclosure. Please discuss why the Fund included 3-09 disclosure instead of 4-08(g) disclosure.
Pursuant to Section 3-09 of Regulation S-X and Section 2405.3 of the Division of Corporate Finance Financial Reporting Manual, if First Tower meets the Section 3-09 text within the past three years, Section 3-09 disclosure is required for each year of the past three years. The Fund believes that including Section 4-08(g) disclosure in addition to the Section 3-09 disclosure would be redundant and would not assist investors in reviewing the Fund’s financial statements.
14. On page F-147, in the National Property REIT Corp. financials, it states that NPRC sold 21,926 unsecured loans. Please supplementally discuss the sale of these loans.
Page F-147 states the following: “On June 22, 2017, the Company sold 21,926 of our unsecured consumer loans (with a cost of $151,472,877 and accrued interest of $1,731,129) purchased from LendingClub to LendingClub Operated Aggregator Note (LOAN) NP I, LLC (“CLUB 2017-NP1”) for proceeds of $124,528,245 net of related transaction expenses, and a trust certificate with a fair value of $30,469,823 representing a 42.71% interest in the CLUB 2017-NP1. The Company realized a gain of $1,794,051 on the sale.” This sale was part of a series of transactions to securitize the near prime unsecured consumer loans purchased from Lending Club. NPRC was one of four contributors to the securitization entity.
Mr. Williamson
Ms. Stout
October 20, 2017
Page 6
15. Please supplementally discuss the collectability of First Tower’s receivables, including the percentage of loans carried over from 2016, 2015 and 2014.
First Tower is a controlled portfolio investment company and is not a consolidated entity. The Fund expects that all receivables are collectible except to the extent an allowance has been established. First Tower is audited on an annual basis by an independent third-party engaged by First Tower’s management. First Tower’s loans have an average term length in excess of two years, which contributes to the occurrence of loans carried over from year to year.
16. In the Fund’s Consolidated Schedule of Investments, we note that the First Tower PIK interest rate decreased from 12% to 7%. Please supplementally discuss refinancing and how First Tower was fair valued, including the discount rate used.
The Fund amended First Tower’s PIK interest rate downward from 12% to 7% effective January 3, 2017. The Fund uses the market multiple approach and discounted cash flow approach to value First Tower and there was no change to the valuation methodology used as a result of the change made to the PIK interest rate. The loan remained valued at par. The valuation impact of the refinancing was to the Fund’s equity investment in First Tower.
Disclosure Comments:
17. On page 3 of the prospectus, please restore prior disclosure regarding the securities being “junk.” Further, if material, please disclose that the Fund’s CLO investments are primarily in the equity tranche.
The Fund has revised disclosure in accordance with the comment.
18. Portions of your disclosure contain repeat disclosure contained elsewhere in your prospectus. Please review the prospectus and revise as necessary to eliminate unnecessarily duplicative disclosures. Specifically, please see pages 89-92.
The Fund has revised disclosure in accordance with the comment.
19. In order for investors to better understand the organizational structure of the Fund, please consider providing a graphical representation of the Fund’s corporate structure in the Prospectus Summary section.
Unlike other business development companies that use multiple subsidiaries to issue various forms of senior securities, the Fund does not have a complicated corporate structure. The Fund formed a wholly-owned subsidiary, Prospect Capital Funding LLC (“PCF”), a
Mr. Williamson
Ms. Stout
October 20, 2017
Page 7
Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of its portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly-owned subsidiary PSBL purchases small business whole loans on a recurring basis from online small business loan originators. Prospect Yield Corporation, LLC (“PYC”) holds the Fund’s investments in collateralized loan obligations. Each of these subsidiaries have been consolidated since operations commenced. Additionally, the Fund consolidates 17 wholly-owned and substantially wholly-owned holding companies formed by the Fund in order to facilitate its investment strategy. All of the Fund’s unsecured debt is held at the Fund and the Fund’s revolving credit facility is held at PCF. Accordingly, the Fund does not believe that the inclusion of such a graphical representation is necessary.
20. In the Fees and Expense table, as per the disclosure on page 128, please include $15 in the line item and the following additional information regarding the DRIP in the footnote: The expenses of the dividend reinvestment plan are included in “other expenses.” The plan administrator’s fees will be paid by us. There will be no brokerage charges or other charges to stockholders who participate in the plan except that, if a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15 transaction fee plus a $0.10 per share brokerage commissions from the proceeds. For additional information, see “Dividend Reinvestment and Direct Stock Purchase Plan.” See instruction 4 to Item 3 of Form N-2.
The Fund has revised disclosure in accordance with the comment.
21. Please supplementally discuss whether pre-incentive fee net investment income includes fees from con
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CORRESP 1 filename1.htm Document [Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP] October 20, 2017 VIA EDGAR Jay Williamson, Attorney Adviser Sheila Stout, Staff Accountant United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 RE: Registration Statement (333-213391) of Prospect Capital Corporation (the “Fund”) Dear Mr. Williamson and Ms. Stout: We are in receipt of oral comments provided by each of you on October 13, 2017 regarding the Fund’s Post-Effective Amendment No. 39 (the “POS 8C”) to its Registration Statement on Form N-2 (the “Registration Statement”). The Fund has considered your comments and has authorized us to make on its behalf the responses and changes to the POS 8C discussed below. These changes are reflected in Post-Effective Amendment No. 48 (the “Amendment”) to the Fund’s Registration Statement being filed today. The Fund’s responses to the comments are set forth below. For ease of reference, a summary of each comment is set forth in bold font and followed by the corresponding response. Terms that are capitalized but not defined herein shall have the same meaning assigned to them in the Amendment. Mr. Williamson Ms. Stout October 20, 2017 Page 2 Accounting Comments: 1. Please be sure to include auditor consents in the Fund’s next Registration Statement filing. The Fund has included the necessary auditor consents in its filing. 2. In the section entitled Selected Condensed Financial Data, the weighted average yield on debt portfolio at year end excludes equity investments and non-performing loans. Please also include the weighted average yield on the entire portfolio for each period. Please also include such yield in other places in the document to be consistent. For example, see page 46. The requested disclosure has been added. 3. In the risk factor, “Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies,” the Fund states that certain intercreditor agreements have “first out” and “last out” structures. Please supplementally discuss the portion of your loans that have such structures and the accounting for such loans, including how they are fair valued. If such loans are material, please consider including additional disclosure explaining the risk of such loans. Several of the Fund’s outstanding loans are subject to intercreditor agreements that subordinate such loans to other debt (e.g., the Fund’s loan to a portfolio company may be subordinated to another loan issued by a third-party lender). However, with a few exceptions, the Fund does not currently have any outstanding loans that employ an intercreditor agreement to establish a “first out / last out” structure within the same loan. Instead, such “first out / last out” structure is established in the applicable credit agreement, rather than by means of an intercreditor agreement. Each of the Fund’s loans that employ a “first out / last out” structure, if performing, will be valued using the income approach. The valuation will take into account the seniority of each tranche relative to the Fund’s capital structure, implied leverage at each tranche and other key terms as defined in the applicable credit agreement in determining the discount rate to apply to each loan’s expected cash flows. If the Fund’s investment in such loans becomes material in the future, the Fund will review its disclosure and revise it as necessary. 2 Mr. Williamson Ms. Stout October 20, 2017 Page 3 4. In the section entitled “Senior Securities,” please supplementally explain why the disclosure regarding the total amount outstanding for the 2023 Notes does not match the disclosure in the audited financial statements. The 2023 Notes were issued with an original issue discount. Accordingly, the Senior Securities table shows the gross amount outstanding and the Fund included footnote 8 to the Senior Securities table stating that “the notes are presented net of unamortized discount.” 5. Please supplementally discuss the reason for identifying the small business loan portfolio as a company less than 5% held as opposed to identifying it as controlled entity? The Fund, through its consolidated, wholly-owned subsidiary Prospect Small Business Lending, LLC (“PSBL”), purchases small business whole loans on a recurring basis from online small business loan originators. These small business whole loans are debt investments only and are not serviced or controlled by the Fund or PSBL. Accordingly, the Fund believes that it is appropriate to identify the small business loan portfolio as a company less than 5% held. 6. Please confirm that the Fund has its fidelity bond and will file it as required by Rule 17g-1. The Fund confirms that it has its fidelity bond and will file it as required by Rule 17g-1 once final documentation is received from the insurance provider. 7. Please note that debt issuance costs for liabilities should be included on the face of the consolidated statements of assets and liabilities. Please see ASU-2015-03. The ASU specifies that “issue costs shall be reported in the balance sheet as a direct deduction from the face amount of the note” and that “[a]mortization of debt issue costs shall also be reported as interest expense.” In accordance with ASU-2015-03, the Fund has presented these costs, except those incurred by the Revolving Credit Facility, as a direct deduction to the Fund’s Unsecured Notes. A reconciliation of deferred financing fees for each debt position is presented in detail in Note 8 to its audited financial statements, and reference is made to Note 8 to its audited financial statements. Lacking specific guidance to parenthetically disclose costs on the financial statements, industry practice more commonly discloses deferred financing costs in the footnotes. The Fund believes that its presentation and level of detail is sufficiently useful to the readers of the financials. 3 Mr. Williamson Ms. Stout October 20, 2017 Page 4 8. Please supplementally discuss the primary reason for the decline in “other income” from 2016 to 2017. The decline is primarily due to the $12.9 million of advisory fee income recognized with the sale of Harbortouch Payments, LLC in May 2016, which was partially offset by an increase in other structuring and amendment fees generated by 2017 originations. 9. Please supplementally discuss the reason for a negative balance for excise tax. The negative balance for excise tax is due to a decline in previously estimated taxable income from structured credit investments (which are treated as controlled foreign corporations for U.S. tax purposes) and the shareholder dividend payout requirements. During portions of calendar years 2015 and 2016, the broadly syndicated loan market sold off significantly, and the independent management teams of most of the Fund’s structured credit investments took advantage of the volatility in the loan market to both sell certain loans and purchase new loans at discounted prices. While the sales and purchases of such loans at similarly discounted prices did not have an economic impact on the Fund’s net investment income for financial statement purposes, the sales of underlying loans at discounted prices resulted in the immediate recognition of taxable losses, but corresponding purchases at discounted prices do not generate immediate recognition of taxable income. Realized gains and losses on underlying individual loans within the Fund’s structured credit investments are recognized as taxable events when calculating the Fund’s allocable portion of a structured credit investment’s taxable income, and losses on sales of such assets reduce the Fund’s taxable income. Unfortunately, the required tax reporting for these investments (PFIC Annual Information Statement or Form 5471) which are prepared and distributed by respective independent management teams can be delayed as long as nine months after the tax year end of the structured credit investment. As a result of this delay in tax reporting, the Fund’s taxable income estimates did not properly capture the magnitude of the losses within the structured credit investments and the Fund over accrued excise tax for the period. 10. For controlled investments, please supplementally discuss the primary reason for an increase in unrealized gains. Net unrealized gains for controlled investments increased by $86.8 million during the year ended June 30, 2017. This increase was primarily the result of the following: (1) $104.2 million unrealized gains in the Fund’s REITs portfolio due to improvement operating performance at the property-level; and (2) the sale of Gulfco assets for which the Fund recognized a realized loss of $66.1 million, of which $53.1 million had been previously 4 Mr. Williamson Ms. Stout October 20, 2017 Page 5 recorded as an unrealized loss as of June 30, 2016. These increases were partially offset by declines in value related to the following: (i) USES and Arctic Energy declined in value by $30.2 million and $21.0 million, respectively, due to energy-related factors as well as a decline in operating performance; and (ii) $23.8 million of unrealized losses in the Fund’s REITs online lending portfolio due to an increase in delinquent loans. 11. In the Fund’s Consolidated Schedule of Investments, please disclose the rate on preferred stock owned by the Fund if applicable. The Fund will disclose the rate on preferred stock owned by it if applicable going forward. 12. The statement on page F-62 of the Fund’s audited financials states that the 2016 financials were unaudited. It seems that the audited financials were in fact included. Please revise disclosure accordingly going forward. The Fund will revise disclosure in accordance with the comment going forward. 13. It seems that First Tower triggered 4-08(g), but the Fund included 3-09 disclosure. Please discuss why the Fund included 3-09 disclosure instead of 4-08(g) disclosure. Pursuant to Section 3-09 of Regulation S-X and Section 2405.3 of the Division of Corporate Finance Financial Reporting Manual, if First Tower meets the Section 3-09 text within the past three years, Section 3-09 disclosure is required for each year of the past three years. The Fund believes that including Section 4-08(g) disclosure in addition to the Section 3-09 disclosure would be redundant and would not assist investors in reviewing the Fund’s financial statements. 14. On page F-147, in the National Property REIT Corp. financials, it states that NPRC sold 21,926 unsecured loans. Please supplementally discuss the sale of these loans. Page F-147 states the following: “On June 22, 2017, the Company sold 21,926 of our unsecured consumer loans (with a cost of $151,472,877 and accrued interest of $1,731,129) purchased from LendingClub to LendingClub Operated Aggregator Note (LOAN) NP I, LLC (“CLUB 2017-NP1”) for proceeds of $124,528,245 net of related transaction expenses, and a trust certificate with a fair value of $30,469,823 representing a 42.71% interest in the CLUB 2017-NP1. The Company realized a gain of $1,794,051 on the sale.” This sale was part of a series of transactions to securitize the near prime unsecured consumer loans purchased from Lending Club. NPRC was one of four contributors to the securitization entity. 5 Mr. Williamson Ms. Stout October 20, 2017 Page 6 15. Please supplementally discuss the collectability of First Tower’s receivables, including the percentage of loans carried over from 2016, 2015 and 2014. First Tower is a controlled portfolio investment company and is not a consolidated entity. The Fund expects that all receivables are collectible except to the extent an allowance has been established. First Tower is audited on an annual basis by an independent third-party engaged by First Tower’s management. First Tower’s loans have an average term length in excess of two years, which contributes to the occurrence of loans carried over from year to year. 16. In the Fund’s Consolidated Schedule of Investments, we note that the First Tower PIK interest rate decreased from 12% to 7%. Please supplementally discuss refinancing and how First Tower was fair valued, including the discount rate used. The Fund amended First Tower’s PIK interest rate downward from 12% to 7% effective January 3, 2017. The Fund uses the market multiple approach and discounted cash flow approach to value First Tower and there was no change to the valuation methodology used as a result of the change made to the PIK interest rate. The loan remained valued at par. The valuation impact of the refinancing was to the Fund’s equity investment in First Tower. Disclosure Comments: 17. On page 3 of the prospectus, please restore prior disclosure regarding the securities being “junk.” Further, if material, please disclose that the Fund’s CLO investments are primarily in the equity tranche. The Fund has revised disclosure in accordance with the comment. 18. Portions of your disclosure contain repeat disclosure contained elsewhere in your prospectus. Please review the prospectus and revise as necessary to eliminate unnecessarily duplicative disclosures. Specifically, please see pages 89-92. The Fund has revised disclosure in accordance with the comment. 19. In order for investors to better understand the organizational structure of the Fund, please consider providing a graphical representation of the Fund’s corporate structure in the Prospectus Summary section. Unlike other business development companies that use multiple subsidiaries to issue various forms of senior securities, the Fund does not have a complicated corporate structure. The Fund formed a wholly-owned subsidiary, Prospect Capital Funding LLC (“PCF”), a 6 Mr. Williamson Ms. Stout October 20, 2017 Page 7 Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of its portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly-owned subsidiary PSBL purchases small business whole loans on a recurring basis from online small business loan originators. Prospect Yield Corporation, LLC (“PYC”) holds the Fund’s investments in collateralized loan obligations. Each of these subsidiaries have been consolidated since operations commenced. Additionally, the Fund consolidates 17 wholly-owned and substantially wholly-owned holding companies formed by the Fund in order to facilitate its investment strategy. All of the Fund’s unsecured debt is held at the Fund and the Fund’s revolving credit facility is held at PCF. Accordingly, the Fund does not believe that the inclusion of such a graphical representation is necessary. 20. In the Fees and Expense table, as per the disclosure on page 128, please include $15 in the line item and the following additional information regarding the DRIP in the footnote: The expenses of the dividend reinvestment plan are included in “other expenses.” The plan administrator’s fees will be paid by us. There will be no brokerage charges or other charges to stockholders who participate in the plan except that, if a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15 transaction fee plus a $0.10 per share brokerage commissions from the proceeds. For additional information, see “Dividend Reinvestment and Direct Stock Purchase Plan.” See instruction 4 to Item 3 of Form N-2. The Fund has revised disclosure in accordance with the comment. 21. Please supplementally discuss whether pre-incentive fee net investment income includes fees from con