0001675033false0001675033gecc:SixPointSevenFivePercentageNotesDueTwoThousandTwentyFiveMember2023-11-022023-11-0200016750332023-11-022023-11-020001675033gecc:FivePointEightSevenFivePercentageNotesDueTwoThousandTwentySixMember2023-11-022023-11-020001675033us-gaap:CommonStockMember2023-11-022023-11-020001675033gecc:SixPointFiveZeroPercentageNotesDueTwoThousandTwentyFourMember2023-11-022023-11-02

 

 

 

 

 

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. 

 

 

 

 


 

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.

 

 


 

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

 

 

 

 

 


Exhibit 99.1

img78866663_0.jpg 

 

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:

Net investment income (“NII”) for the quarter ended September 30, 2023 was $3.1 million, or $0.40 per share, as compared to $3.4 million, or $0.44 per share, for the quarter ended June 30, 2023.
NII was impacted by $0.05 per share of net expenses in the quarter related to the refinancing of the Company’s 6.50% Notes due 2024.
Third consecutive quarter of NII more than covering the dividend, even after refinancing items.
Highest cash income quarter in the Company’s history, with only 12% of GECC’s $9.3 million Total Investment Income attributable to PIK and accretion income.
Net assets increased to $97.9 million, or $12.88 per share, on September 30, 2023, as compared to $92.9 million, or $12.21 per share, on June 30, 2023.
GECC’s asset coverage ratio improved to 168.4% as of September 30, 2023, as compared to 161.5% as of June 30, 2023, and 165.5% as of September 30, 2022.
Successfully refinanced all $42.8 million of the Company’s 6.50% Notes due June 30, 2024 with $40.0 million of new 8.75% Notes due September 30, 2028 and cash on hand.
The Board of Directors approved a quarterly dividend of $0.35 per share for the fourth quarter of 2023, equating to a 15.8% annualized yield on the Company’s closing market price on November 1, 2023 of $8.88.

 

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.”

 

 

 


 

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:

40 debt investments in corporate credit, totaling approximately $168.5 million and representing 71.6% of the fair market value of the Company’s total investments. Secured debt investments comprised a substantial majority of the fair market value of the Company’s debt investments.
2 debt investments in specialty finance, totaling approximately $34.6 million and representing 14.7% of the fair market value of the Company’s total investments.
1 equity investment in a specialty finance company, totaling approximately $17.5 million, representing 7.4% of the fair market value of the Company’s total investments.
2 dividend paying equity investments, totaling approximately $7.2 million, representing 3.1% of the fair market value of the Company’s total investments.
Other equity investments, totaling approximately $7.6 million, representing 3.2% of the fair market value of the Company’s total investments.

 

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%.

 

-2-


 

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.

 

-3-


 

 

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

 

 

-4-


 

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

 

 

-5-


 

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

 

 

(1)
Weighted average shares outstanding and per share amounts have been adjusted for the periods shown to reflect the six-for-one reverse stock split effected on February 28, 2022 on a retroactive basis.

-6-


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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