Prospect to acquire Nicholas in $326M deal

Prospect Capital (PSEC) agrees to acquire specialty finance company Nicholas Financial (NICK) for $16 per share. The purchase is expected to close in April 2014 and the Nicholas board has approved the deal.

For about $199M, Prospect will be acquiring 100% of Nicholas' common stock and any outstanding options on the common. Nicholas' debt amounts to $127M, putting the total deal value at about $326M.

After the close, Prospect will recap the business using a new $250M line of credit. This will repay Nicholas' existing debt and return a portion of Prospect's capital. Following, Prospect will have a net investment of about $139M.

After the close, Prospect expects Nicholas to pay out about all of its net income to Prospect on an ongoing basis. For the year ended September, Nicholas generated pre-tax income of $31.8M. Prospect generated about $220M.

PSEC +0.7% premarket, NICK closed at $15.28 last night.

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Comments (4)
  • westewart
    , contributor
    Comments (125) | Send Message
    +~.06/share to earnings from my (simple) calculations
    18 Dec 2013, 08:25 AM Reply Like
  • User 6830851
    , contributor
    Comments (275) | Send Message
    I'm out, sort of. Sold 90% of my PSEC this a.m. I need to sleep better.
    18 Dec 2013, 11:58 AM Reply Like
  • jfish781
    , contributor
    Comments (3) | Send Message
    This is a winner and you can sleep easier while collecting the monthly income. Better reconsider and buy back on a down day.
    18 Dec 2013, 01:56 PM Reply Like
  • User 6830851
    , contributor
    Comments (275) | Send Message
    Maybe. Or maybe add to my positions in MAIN and ARCC.
    19 Dec 2013, 09:46 AM Reply Like
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