Filed Pursuant to Rule 433
Issuer Free Writing Prospectus dated May 17, 2022
Relating to Prospectus dated May 17, 2022
Registration No. 333-263282
May 17, 2022
Dear Stockholder:
Great Elm Capital Corp. (“GECC”) has historically sought to raise capital when it believes doing so would be in the best interests of GECC’s stockholders. After careful consideration with
GECC’s board of directors, we announced today the launch of a non-transferable rights offering that we believe is consistent with this approach. We believe strengthening GECC’s balance sheet is a prudent course of action in the face of the current
market environment in which we are operating, and that it is in our best interests and the best interests of stockholders to raise additional capital to make opportunistic investments, in accordance with our investment objectives and policies,
including investments in specialty finance businesses, and for general corporate purposes. The capital raised in the rights offering will provide support for the following initiatives:
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Investments in Specialty Finance Companies and Other Related Investments: In December 2021, Great Elm Specialty Finance, LLC (“GESF”) a
wholly-owned subsidiary of GECC, was formed to oversee specialty finance related investments. We believe investments in specialty finance companies along the “continuum of lending” provide durable risk adjusted returns that are expected to be
largely uncorrelated to the liquid credit markets. The “continuum of lending” as seen by Great Elm Capital Management, Inc. (“GECM”), our external investment manager, is the various stages of capital that are provided to under-banked small
and medium sized businesses and includes, but is not limited to inventory and purchase order financing, receivables factoring, asset-based and asset-backed lending, and equipment financing. GECM believes that ownership interests in multiple
specialty finance companies will create a natural competitive advantage for each business and generate both revenue and cost synergies across companies. Investments in specialty finance may offer more attractive returns than can be found in
syndicated corporate credit and help to make our portfolio more proprietary.
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New Opportunistic Investments Resulting from Dislocation: In periods of market volatility, there are often undervalued investments that become
available on more attractive terms than we would otherwise be able to obtain under typical, less volatile market conditions. Having additional capital to take advantage of these opportunities can provide for compelling risk-adjusted return
opportunities. Based on the advice of GECM, we may seek to opportunistically pursue new investment opportunities to grow our net investment income by investing in assets that GECM believes offer attractive yields as well as total
risk-adjusted return profiles.
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Capital Resources to Support Existing Portfolio Companies: Given the global COVID-19 pandemic, many businesses have been adversely impacted by
a weakened economy. While our portfolio companies are diversified across multiple industries and the overall impact of the current market volatility will be dependent on the specific circumstances of each portfolio company, we believe having
capital to support existing portfolio companies can help optimize outcomes for our stockholders. We are focused on liquidity measures to position GECC to support our portfolio companies and not impact their long-term value propositions.
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It is a difficult decision to sell shares below net asset value (“NAV”). We strived to structure the rights offering to be as stockholder friendly as possible under these circumstances. For
instance:
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We purposely structured this equity raise as a rights offering to permit existing stockholders to subscribe for their pro rata rights and avoid dilution.
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We set the price per share for the offering at a level that we believe will minimize dilution to our stockholders while seeking to ensure a successful offering.
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The non-transferability of the rights will ensure that only current stockholders will be able to take part in the rights offering, thereby mitigating the concern that a non-stockholder
will benefit from an offering at a discount from NAV or market price.
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We considered the benefits of a rights offering as compared to alternative methods of raising additional capital and the limitation we face as a result of falling below our asset
coverage ratio.
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We considered that a successful offering would likely ensure that we would be above our minimum asset coverage ratio, although we can give no assurance that the offering will be fully
subscribed or that our asset coverage ratio on the date of consummation of the offering would not be negatively impacted by other factors notwithstanding the receipt of the net proceeds of the offering.
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Great Elm Group, Inc. (“GEG”) intends to subscribe for at least $12.5 million in the rights offering, and certain other affiliates of GEG (the “Participating Shareholders”) have
indicated that they intend to subscribe. Any over-subscription by the Participating Shareholders will be effected only after pro rata allocation of over-subscription shares to record date holders (other than the Participating Shareholders)
who fully exercise all rights issued to them. Accordingly, there can be no assurance that the Participating Shareholders will acquire any shares of GECC’s common stock through their exercise of over-subscription privileges.
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We strive to put stockholders first and believe that this offering positions GECC to better weather the current market volatility while simultaneously offering GECC the flexibility to be
proactive and pursue strategic new investments, including additional opportunities in specialty finance. On behalf of myself and the other members of GECC’s board of directors, we thank you for your continued support.
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Sincerely,
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/s/ Matt Kaplan
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Matt Kaplan
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Chief Executive Officer
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Investors are advised to carefully consider the investment objectives, risks and charges and expenses of GECC before investing. The prospectus, dated May 17, 2022, which has
been filed with the Securities and Exchange Commission (“SEC”), contains a description of these matters and other important information about GECC and should be read carefully before investing. A copy of the prospectus may be obtained by contacting
Oppenheimer & Co. Inc., 85 Broad Street, 26th Floor, New York, NY 10004, Attn: Syndicate Prospectus Department, telephone (212) 667-8055 or email: EquityProspectus@opco.com or Imperial Capital, LLC, Attention: Prospectus Department, 10100 Santa
Monica Blvd., Suite 2400, Los Angeles, CA 90067 or by phone: 310-246-3700.
GECC files annual, quarterly and current reports, proxy statements and other information about GECC with the SEC. You may also obtain free copies of GECC’s annual and
quarterly reports and make stockholder inquiries by contacting Great Elm Capital Corp., 800 South Street, Suite 230, Waltham, Massachusetts 02453 or by calling GECC collect at (617) 375-3006. GECC maintains a website at http://greatelmcc.com and
makes all of its annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through such website. Information on GECC’s website is not incorporated or a part of the prospectus. The
SEC also maintains a website at http://www.sec.gov where such information is available without charge.
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, the price of GECC common stock, the performance of GECC’s portfolio and investment manager and risks associated with the economic impact of the COVID-19 pandemic
on GECC and its portfolio companies. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K, GECC’s Quarterly Reports on Form 10-Q 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.