Great Elm Capital Corp. (“we”, “us”, “our” or “GECC”),
(NASDAQ:GECC), today announced its financial results for the
quarter ended March 31, 2017 and filed its quarterly report on Form
10-Q with the U.S. Securities and Exchange Commission.
FINANCIAL HIGHLIGHTS
- Net investment income (“NII”) for the quarter ended March 31,
2017 was approximately $4.1 million, or $0.32 per share, which was
in excess of our declared distribution of $0.083 per share per
month for the same period (approximately 1.3x distribution
coverage).
- In May, the Board of Directors declared a monthly distribution
of $0.083 per share for the third quarter of 2017.
- Net assets on March 31, 2017 were approximately $170.4 million.
Net asset value (“NAV”) per share on March 31, 2017 was $13.59, as
compared to $13.52 per share on December 31, 2016. The increase in
NAV per share is primarily driven by our net investment income
exceeding our distribution during the quarter. We had approximately
$2.0 million of net realized gains on portfolio investments that
were monetized during the quarter ended March 31, 2017, or
approximately $0.16 per share, and net unrealized depreciation of
investments of approximately $2.7 million, or approximately ($0.21)
per share.
- During the quarter ended March 31, 2017, we purchased an
aggregate of 245,729 shares through our stock buyback program at an
average price of $11.35, utilizing $2.8 million of our $15.0
million 10b5-1 program and our overall $50 million stock repurchase
program.
- From the commencement of the stock buyback program through May
10, 2017, we have purchased an aggregate of 378,301 shares at a
weighted average price of $11.17 per share, resulting in $4.2
million of cumulative cash paid to repurchase shares.
- Additionally, through the self-tender that we conducted, we
purchased 869,565 shares, representing approximately 6.9% of our
outstanding shares, at a price of $11.50 per share on a pro rata
basis for a total cost of approximately $10 million, excluding fees
and expenses relating to the self-tender offer. The purchase
price of properly tendered shares represented approximately 85% of
our net asset value per share as of March 31, 2017.
- During the quarter ended March 31, 2017, we invested
approximately $75.9 million across eight portfolio companies (1),
including two new portfolio investments. During the quarter ended
March 31, 2017, we monetized approximately $78.8 million across 17
portfolio companies (in part or in full). (2)
“We continue to be pleased at the pace of
monetization of the legacy Full Circle portfolio, as well as with a
number of names from the MAST-contributed portfolio and more
recently acquired positions, as catalysts have resulted in a
quicker repricing of these opportunities than we had anticipated.
With that backdrop, we have a healthy amount of dry powder to
deploy as the market presents compelling total return
opportunities,” said Peter A. Reed, Chief Executive Officer of
GECC.
PORTFOLIO AND INVESTMENT ACTIVITY
As of March 31, 2017, we held 23 debt
investments across 20 companies, totaling approximately $149.6
million. Debt investments represented 98% of invested capital, as
of March 31, 2017, with 94% of invested capital allocated to first
lien and/or senior secured debt instruments and 4% of invested
capital in unsecured debt obligations. We also had equity
investments in seven companies, totaling approximately $2.6
million.
As of March 31, 2017, the weighted average
current yield on our debt portfolio was approximately 12.63% with
approximately 47% of invested debt capital in floating rate debt
instruments.
During the quarter ended March 31, 2017, we
deployed approximately $75.9 million (1) into new and existing
investments across eight companies (two new, six existing). The
weighted average price of the new debt investments was $0.98,
carrying a weighted average current yield of 12.29%. Nearly all of
these investments are first lien and / or senior secured
investments with potential catalysts to unlock value.
During the quarter ended March 31, 2017, we
monetized 17 investments, in part or in full, for approximately
$78.8 million (2), at a weighted average current yield of 13.34%,
including the complete exit of one investment acquired from Full
Circle, at a slight gain. Our weighted average realization price
was $0.99.
CONSOLIDATED RESULTS OF OPERATIONS
Total investment income for the quarter ended
March 31, 2017 was approximately $7.3 million, or $0.58 per share.
Net expenses for the period ended March 31, 2017 were approximately
$3.2 million, or $0.26 per share.
Net realized gains for the quarter ended March
31, 2017 were approximately $2.0 million, or $0.16 per share. Net
unrealized depreciation from investments for the quarter ended
March 31, 2017 was approximately $2.7 million, or ($0.21) per
share.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2017, available liquidity from
cash and cash equivalents was approximately $66.8 million,
comprised of cash and cash equivalents, including investments in
money market mutual funds.
Total debt outstanding as of March 31, 2017 was
approximately $33.7 million, comprised entirely of the 8.25% notes
due June 30, 2020 (NASDAQ:FULLL).
RECENT DEVELOPMENTS
Distributions:
Our board of directors declared the monthly
distributions for the third quarter of 2017 at $0.083 per share.
The schedule of distribution payments is as follows:
Month |
Rate |
Record Date |
Payable Date |
July |
$ |
0.083 |
July 31, 2017 |
August 15, 2017 |
August |
$ |
0.083 |
August 31, 2017 |
September 15, 2017 |
September |
$ |
0.083 |
September 29, 2017 |
October 16, 2017 |
Our distribution policy has been designed to set
a base distribution rate that is well-covered by NII that will be
supplemented by special distributions from NII in excess of the
declared distribution and as catalyst-driven investments are
realized.
Portfolio Investments:
During April 2017, we sold our position in
Chester Downs & Marina LLC for approximately $6.3 million,
including accrued interest. We realized approximately $0.3
million of gains on the disposition of the investment.
During April and May 2017, we sold the remaining
$6.3 million of our position in Everi Payments, Inc. for
approximately $6.8 million, including accrued interest. We
realized approximately $0.6 million of gains on the disposition of
the investment.
During May 2017, we received approximately $2.8
million in proceeds from the disposition of the primary asset of
Double Deuce Lodging, LLC.
Capitalization:
The Company’s $10 million self-tender offer
expired at 5:00 p.m., New York City time, on May 5, 2017. The
Company purchased 869,565 shares, representing approximately 6.94%
of its outstanding shares, at a price of $11.50 per share on a pro
rata basis for a total cost of approximately $10 million, excluding
fees and expenses relating to the self-tender offer. The
purchase price represented approximately 85% of net asset value per
share as of March 31, 2017.
CONFERENCE CALL AND WEBCAST
Great Elm Capital Corp. will host a conference
call and webcast on Monday, May 15, 2017 at 10:00 a.m. New York
City time to discuss its first quarter financial results. All
interested parties are invited to participate in the conference
call by dialing (844) 820-8297; international
callers should dial (661) 378-9758. Participants
should enter the Conference ID 20957666 when asked. For a copy of
the slide presentation that will be referenced during the course of
our conference call, please visit http://www.greatelmcc.com/ under
Investor Relations. Additionally, the conference call with be
webcast simultaneously at
http://edge.media-server.com/m/p/quvzyvm2.
About Great Elm Capital
Corp.
Great Elm Capital Corp. is an externally
managed, specialty finance company focused on investing in debt
instruments of middle market companies. GECC elected to be
regulated as a business development company under the Investment
Company Act of 1940, as amended. GECC’s investment objective is to
generate both current income and capital appreciation, while
seeking to protect against risk of permanent capital loss. GECC
focuses on special situations and catalyst-driven investments as it
seeks to generate attractive risk-adjusted returns.
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,” “potential,” “continue,” “upside,” and “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 the
following: conditions in the credit markets, the price of GECC
common stock, performance of GECC’s portfolio and investment
manager. Information concerning these and other factors can be
found in GECC’s Form 10-K and other reports filed with the SEC.
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.
Media & Investor
Contact:
Meaghan K. Mahoney Senior Vice President +1
(617) 375-3006 investorrelations@greatelmcap.com
Endnotes:
1) This includes new deals, additional fundings
(inclusive of those on revolving credit facilities), refinancings
and payment in kind “PIK” interest.
2) This includes scheduled principal payments,
prepayments, sales and repayments (inclusive of those on revolving
credit facilities).
|
|
GREAT ELM CAPITAL CORP. |
|
CONSOLIDATED STATEMENT OF ASSETS AND
LIABILITIES |
|
MARCH 31, 2017 |
|
Dollar amounts in thousands (except per share
amounts) |
|
|
|
|
|
March 31,
2017 |
|
|
December 31,
2016 |
|
Assets |
|
(unaudited) |
|
|
|
|
|
Investments, at fair
value (amortized cost of $168,384 and $168,132,
respectively) |
|
$ |
152,234 |
|
|
$ |
154,677 |
|
Cash and cash
equivalents |
|
|
66,763 |
|
|
|
66,782 |
|
Receivable for
investments sold |
|
|
1,764 |
|
|
|
9,406 |
|
Interest
receivable |
|
|
4,261 |
|
|
|
4,338 |
|
Dividends
receivable |
|
|
12 |
|
|
|
— |
|
Principal
receivable |
|
|
— |
|
|
|
786 |
|
Due from portfolio
company |
|
|
188 |
|
|
|
312 |
|
Deposit at broker |
|
|
63 |
|
|
|
56 |
|
Due from
affiliates |
|
|
75 |
|
|
|
80 |
|
Prepaid expenses and
other assets |
|
|
88 |
|
|
|
107 |
|
Total
assets |
|
$ |
225,448 |
|
|
$ |
236,544 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Notes payable 8.25% due
June 30, 2020 (including unamortized premium of $826 and $888
at March 31, 2017 and December 31, 2016; respectively) |
|
$ |
34,471 |
|
|
$ |
34,534 |
|
Payable for investments
purchased |
|
|
14,973 |
|
|
|
21,817 |
|
Distributions
payable |
|
|
1,041 |
|
|
|
2,123 |
|
Due to affiliates |
|
|
3,749 |
|
|
|
3,423 |
|
Accrued expenses and
other liabilities |
|
|
777 |
|
|
|
1,663 |
|
Total
liabilities |
|
$ |
55,011 |
|
|
$ |
63,560 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 6) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Net
Assets |
|
|
|
|
|
|
|
|
Common stock, par value
$0.01 per share (100,000,000 shares authorized, 12,545,151
and 12,790,880 shares issued and outstanding at March
31, 2017 and December 31, 2016; respectively) |
|
$ |
125 |
|
|
$ |
128 |
|
Additional paid-in
capital |
|
|
216,531 |
|
|
|
219,317 |
|
Accumulated net
realized losses |
|
|
(32,361 |
) |
|
|
(34,341 |
) |
Undistributed net
investment income |
|
|
2,292 |
|
|
|
1,335 |
|
Net unrealized
depreciation on investments |
|
|
(16,150 |
) |
|
|
(13,455 |
) |
Total net
assets |
|
$ |
170,437 |
|
|
$ |
172,984 |
|
Total
liabilities and net assets |
|
$ |
225,448 |
|
|
$ |
236,544 |
|
Net asset value
per share |
|
$ |
13.59 |
|
|
$ |
13.52 |
|
|
|
|
|
GREAT ELM CAPITAL CORP. |
|
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited) |
|
THREE MONTHS ENDED MARCH 31, 2017 |
|
Dollar amounts in thousands (except per share
amounts) |
|
|
|
Investment
Income: |
|
|
|
|
Interest income |
|
$ |
6,826 |
|
Dividend income |
|
|
46 |
|
Other income |
|
|
443 |
|
Total investment income |
|
|
7,315 |
|
|
|
|
|
|
Expenses: |
|
|
|
|
Management fees |
|
|
593 |
|
Incentive fees |
|
|
1,023 |
|
Administration
fees |
|
|
495 |
|
Custody fees |
|
|
13 |
|
Directors’ fees |
|
|
27 |
|
Professional
services |
|
|
331 |
|
Interest and credit
facility expenses |
|
|
631 |
|
Other expenses |
|
|
113 |
|
Total
expenses |
|
|
3,226 |
|
Accrued
administration fees waiver |
|
|
(5 |
) |
Net expenses |
|
|
3,221 |
|
Net investment
income |
|
|
4,094 |
|
|
|
|
|
|
Net realized
and unrealized gains (losses) on investment transactions:
|
|
|
|
|
Net realized
gain/(loss) from: |
|
|
|
|
Investments |
|
|
1,980 |
|
Net change in
unrealized appreciation (depreciation) from: |
|
|
|
|
Investments |
|
|
(2,695 |
) |
Net realized and
unrealized gains (losses) |
|
|
(715 |
) |
Net increase in
net assets resulting from operations |
|
$ |
3,379 |
|
|
|
|
|
|
Net investment income
per share (basic and diluted): |
|
$ |
0.32 |
|
Earnings per share
(basic and diluted): |
|
$ |
0.27 |
|
Weighted average shares
outstanding: |
|
|
12,636,477 |
|
|
|
|
|
GREAT ELM CAPITAL CORP. |
|
PER SHARE DATA |
|
|
|
|
|
For the Three Months Ended
March 31, |
|
|
|
2017 |
|
Per Share
Data:(1) |
|
|
|
|
Net asset value,
beginning of period |
|
$ |
13.52 |
|
Net investment
income |
|
|
0.32 |
|
Net realized gains |
|
|
0.16 |
|
Net unrealized
losses |
|
|
(0.21 |
) |
Net decrease in net
assets resulting from operations |
|
|
0.27 |
|
Accretion from share
buybacks |
|
|
0.05 |
|
Distributions declared
from net investment income(2) |
|
|
(0.25 |
) |
Distributions declared
from net realized gains(2) |
|
|
0.00 |
|
Net decrease resulting
from distributions to common stockholders |
|
|
(0.25 |
) |
Net asset value, end of
period |
|
$ |
13.59 |
|
(1) The per share data was derived by using
the weighted average shares outstanding during the period.
(2) The per share data for distributions
declared reflects the actual amount of distributions of record per
share for the period.
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