GECC Great Elm Capital Corporation

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 2, 2023

Great Elm Capital Corp.

(Exact name of Registrant as Specified in Its Charter)

Maryland	814-01211	81-2621577
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
800 South Street, Suite 230, Waltham, MA		02453
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 375-3006

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	GECC	Nasdaq Global Market
6.75% Notes due 2025	GECCM	Nasdaq Global Market
6.50% Notes due 2024	GECCN	Nasdaq Global Market
5.875% Notes due 2026	GECCO	Nasdaq Global Market

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On November 2, 2023, Great Elm Capital Corp. issued the press release furnished as exhibit 99.1 to this report.

The foregoing information (including the exhibit hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished with this report but shall not be deemed filed:

Exhibit Number		Description
99.1		Earnings Press Release, dated November 2, 2023.
104		The cover page of this Current Report on Form 8-K, formatted as inline XBRL.

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		GREAT ELM CAPITAL CORP.
Date: November 2, 2023		/s/ Keri A. Davis
		By:		Keri A. Davis
		Title:		Chief Financial Officer

 

 

 

 

 

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Exhibit 99.1

 

 

Great Elm Capital Corp. Announces THIRD Quarter 2023 Financial Results

 

Company to Host Conference Call and Webcast at 8:30 AM ET Today

 

WALTHAM, Mass., November 2, 2023 – Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC,”) (NASDAQ: GECC), a business development company, today announced its financial results for the third quarter ended September 30, 2023.

 

Third Quarter and Other Recent Highlights:

 

Management Commentary

“We generated yet another quarter of very strong total investment income, with our NII exceeding the quarterly dividend for the third straight quarter. Our NAV continued to grow through harvesting of lower-yielding investments and redeploying the capital into higher-yielding, higher-quality investments,” said Matt Kaplan, GECC’s Chief Executive Officer. “The strategic initiatives taken over the last 18 months, spearheaded by our new management team, have truly transformed Great Elm and strengthened our portfolio. In addition, during the quarter, we contributed our core specialty finance investments into a single, streamlined operating company – Great Elm Specialty Finance – which we believe will further propel the Company’s growth over the long term, creating additional value for our shareholders. In connection with the transaction, Great Elm Specialty Finance welcomed a strategic investor who contributed fresh capital, increasing the platform’s flexibility to scale its operations.”

 

 

 

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Financial Highlights – Per Share Data

	Q3/2022	Q4/2022	Q1/2023	Q2/2023	Q3/2023
Earnings Per Share (“EPS”)	$0.18	($0.96)	$1.07	$0.68	$1.02
Net Investment Income (“NII”) Per Share	$0.14	$0.30	$0.37	$0.44	$0.40
Pre-Incentive Net Investment Income Per Share	$0.14	$0.37	$0.47	$0.56	$0.50
Net Realized and Unrealized Gains / (Losses) Per Share	$0.04	($1.26)	$0.70	$0.24	$0.62
Net Asset Value Per Share at Period End	$12.56	$11.16	$11.88	$12.21	$12.88
Distributions Paid / Declared Per Share	$0.45	$0.45	$0.35	$0.35	$0.35

 

Portfolio and Investment Activity

As of September 30, 2023, GECC held total investments of $235.4 million at fair value, as follows:

 

As of September 30, 2023, the weighted average current yield on the Company’s debt portfolio was 13.4%. Floating rate instruments comprised approximately 63% of the fair market value of debt investments (comparable to the prior quarter) and the Company’s fixed rate debt investments had a weighted average maturity of 2.8 years.

 

During the quarter ended September 30, 2023, we deployed approximately $32.6 million into 20 investments(1) at a weighted average current yield of 11.4%.

 

During the quarter ended September 30, 2023, we monetized, in part or in full, 37 investments for approximately $37.0 million(2), at a weighted average current yield of 11.0%. Monetizations include $23.8 million of mandatory debt paydowns and redemptions at a weighted average current yield of 11.7%. Sales aggregated to $13.2 million at a weighted average current yield of 9.7%.

 

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Financial Review

Total investment income for the quarter ended September 30, 2023 was $9.3 million, or $1.22 per share. Net expenses for the quarter ended September 30, 2023 were approximately $6.2 million, or $0.82 per share.

 

Net realized and unrealized gains for the quarter ended September 30, 2023 were approximately $4.7 million, or $0.62 per share.

 

Liquidity and Capital Resources

As of September 30, 2023, cash and money market securities totaled approximately $2.8 million, and availability on the Company’s undrawn revolving line of credit totaled $25.0 million.

As of September 30, 2023, total debt outstanding (par value) was $143.1 million, comprised of 6.75% senior notes due January 2025 (NASDAQ: GECCM), 5.875% senior notes due June 2026 (NASDAQ: GECCO), and 8.75% senior notes due September 2028 (NASDAQ: GECCZ).

 

Distributions

The Company’s Board of Directors has approved a quarterly cash distribution of $0.35 per share for the quarter ending December 31, 2023. The fourth quarter distribution will be payable on December 29, 2023 to stockholders of record as of December 15, 2023.

The distribution equates to a 15.8% annualized dividend yield on the Company’s closing market price on November 1, 2023 of $8.88 and a 10.9% annualized dividend yield on the Company’s September 30, 2023 NAV of $12.88 per share.

 

Conference Call and Webcast

GECC will discuss these results in a conference call today at 8:30 a.m. ET.

 

Conference Call Details

Date/Time: Thursday, November 2, 2023 – 8:30 a.m. ET

 

Participant Dial-In Numbers:

(United States): 877-407-0789

(International): 201-689-8562

 

To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with passcode “GECC”. An accompanying slide presentation will be available in pdf format via the “Investor Relations” section of Great Elm Capital Corp.’s website here after the issuance of the earnings release.

Webcast

The call and presentation will also be simultaneously webcast over the internet via the “News & Events” section of GECC’s website or by clicking on the conference call link here.

 

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About Great Elm Capital Corp.

GECC is an externally managed business development company that seeks to generate current income and capital appreciation by investing in debt and income generating equity securities, including investments in specialty finance businesses.

 

Cautionary Statement Regarding Forward-Looking Statements

Statements in this communication that are not historical facts are “forward-looking” statements within the meaning of the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “expect,” “anticipate,” “should,” “will,” “estimate,” “designed,” “seek,” “continue,” “upside,” “potential” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, rising interest rates, inflationary pressure, the price of GECC common stock and the performance of GECC’s portfolio and investment manager. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. GECC assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this communication or to conform prior statements to actual results or revised expectations except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

 

This press release does not constitute an offer of any securities for sale.

 

Endnotes:

(1) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and capitalized PIK income. Amounts included herein do not include investments in short-term securities, including United States Treasury Bills.

(2) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein do not include investments in short-term securities, including United States Treasury Bills.

 

 

Media & Investor Contact:

Investor Relations

investorrelations@greatelmcap.com

 

 

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GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)

Dollar amounts in thousands (except per share amounts)

		September 30, 2023				December 31, 2022
Assets
Investments
Non-affiliated, non-controlled investments, at fair value (amortized cost of $190,584 and $183,061, respectively)		$	187,670			$	171,743
Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $1,035 and $76,140, respectively)			1,035				76,127
Affiliated investments, at fair value (amortized cost of $13,425 and $13,433, respectively)			1,472				1,304
Controlled investments, at fair value (amortized cost of $46,300 and $54,684, respectively)			46,233				51,910
Total investments			236,410				301,084
Cash and cash equivalents			1,780				587
Receivable for investments sold			3,984				396
Interest receivable			2,698				3,090
Dividends receivable			1,099				1,440
Due from portfolio company			47				1
Deferred financing costs			106				226
Prepaid expenses and other assets			207				3,288
Total assets		$	246,331			$	310,112
Liabilities
Notes payable (including unamortized discount of $3,145 and $2,781, respectively)		$	139,965			$	143,152
Revolving credit facility			-				10,000
Payable for investments purchased			4,391				70,022
Interest payable			56				42
Accrued incentive fees payable			1,879				565
Due to affiliates			1,206				1,042
Accrued expenses and other liabilities			885				480
Total liabilities		$	148,382			$	225,303
Commitments and contingencies		$	-			$	-
Net Assets
Common stock, par value $0.01 per share (100,000,000 shares authorized, 7,601,958 shares issued and outstanding and 7,601,958 shares issued and outstanding, respectively)		$	76			$	76
Additional paid-in capital			284,107				284,107
Accumulated losses			(186,234	)			(199,374	)
Total net assets		$	97,949			$	84,809
Total liabilities and net assets		$	246,331			$	310,112
Net asset value per share		$	12.88			$	11.16

 

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GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Dollar amounts in thousands (except per share amounts)

 

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Investment Income:
Interest income from:
Non-affiliated, non-controlled investments		$	6,357			$	4,221			$	17,669			$	10,496
Non-affiliated, non-controlled investments (PIK)			552				259				1,591				728
Affiliated investments			33				25				95				68
Affiliated investments (PIK)			-				-				-				58
Controlled investments			650				485				1,715				1,415
Controlled investments (PIK)			-				-				233				-
Total interest income			7,592				4,990				21,303				12,765
Dividend income from:
Non-affiliated, non-controlled investments			254				340				899				1,297
Controlled investments			525				400				1,841				2,099
Total dividend income			779				740				2,740				3,396
Other income from:
Non-affiliated, non-controlled investments			905				303				2,620				943
Total other income			905				303				2,620				943
Total investment income		$	9,276			$	6,033			$	26,663			$	17,104
Expenses:
Management fees		$	899			$	804			$	2,652			$	2,355
Incentive fees			763				-				2,315				-
Administration fees			420				221				1,056				704
Custody fees			19				13				62				41
Directors’ fees			51				49				156				156
Professional services			422				878				1,392				1,669
Interest expense			3,344				2,671				8,934				8,008
Other expenses			267				313				770				698
Total expenses		$	6,185			$	4,949			$	17,337			$	13,631
Incentive fee waiver			-				-				-				(4,854	)
Net expenses			6,185				4,949			$	17,337			$	8,777
Net investment income before taxes		$	3,091			$	1,084			$	9,326			$	8,327
Excise tax		$	39			$	22			$	67			$	123
Net investment income		$	3,052			$	1,062			$	9,259			$	8,204
Net realized and unrealized gains (losses):
Net realized gain (loss) on investment transactions from:
Non-affiliated, non-controlled investments		$	1,637			$	1,171			$	4,024			$	(17,729	)
Affiliated investments			-				-				-				(110,784	)
Controlled investments			(3,461	)			-				(3,461	)			-
Total net realized gain (loss)			(1,824	)			1,171				563				(128,513	)
Net change in unrealized appreciation (depreciation) on investment transactions from:
Non-affiliated, non-controlled investments			2,581				163				8,416				5,274
Affiliated investments			25				5				177				108,325
Controlled investments			3,926				(1,070	)			2,707				(1,586	)
Total net change in unrealized appreciation (depreciation)			6,532				(902	)			11,300				112,013
Net realized and unrealized gains (losses)		$	4,708			$	269			$	11,863			$	(16,500	)
Net increase (decrease) in net assets resulting from operations		$	7,760			$	1,331			$	21,122			$	(8,296	)
Net investment income per share (basic and diluted):	(1)	$	0.40			$	0.14			$	1.22			$	1.42
Earnings per share (basic and diluted):	(1)	$	1.02			$	0.18			$	2.77			$	(1.43	)
Weighted average shares outstanding (basic and diluted):	(1)		7,601,958				7,601,958				7,601,958				5,796,255

 

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v3.23.3

Document and Entity Information	Nov. 02, 2023
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 02, 2023
Entity Registrant Name	Great Elm Capital Corp.
Entity Central Index Key	0001675033
Entity Incorporation, State or Country Code	MD
Securities Act File Number	814-01211
Entity Tax Identification Number	81-2621577
Entity Address, Address Line One	800 South Street
Entity Address, Address Line Two	Suite 230
Entity Address, City or Town	Waltham
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02453
City Area Code	617
Local Phone Number	375-3006
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common stock, $0.01 par value
Trading Symbol	GECC
Security Exchange Name	NASDAQ
6.75% Notes due 2025 [Member]
Document Information [Line Items]
Title of 12(b) Security	6.75% Notes due 2025
Trading Symbol	GECCM
Security Exchange Name	NASDAQ
6.50% Notes due 2024 [Member]
Document Information [Line Items]
Title of 12(b) Security	6.50% Notes due 2024
Trading Symbol	GECCN
Security Exchange Name	NASDAQ
5.875% Notes due 2026 [Member]
Document Information [Line Items]
Title of 12(b) Security	5.875% Notes due 2026
Trading Symbol	GECCO
Security Exchange Name	NASDAQ

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