gecc-8k_20170512.htm

 

 

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): May 12, 2017

 

Great Elm Capital Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland
(State or other jurisdiction of incorporation)

 

814-01211
(Commission File Number)

 

81-2621577
(IRS Employer Identification No.)

 

 

 

 

200 Clarendon Street, 51st Floor, Boston, MA
(Address of principal executive offices)

 

02116
(Zip Code)

 

Registrant's telephone number, including area code (617) 375-3006

 

(Former name or former address, if changed since last report.)

 

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))

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 May 12, 2017, the registrant issued the press release furnished as Exhibit 99.1 to this report and published the presentation furnished as Exhibit 99.2 to this report with respect to its results of operations for the quarter ended March 31, 2017.

 

Item 8.01 Other Events.

 

The registrant finalized the calculations under its modified “Dutch auction” self-tender offer that expired at 5:00 p.m., New York City time, on May 5, 2017.

 

The registrant expects to repurchase 869,565 shares of its common stock, representing 6.94 percent of its outstanding shares, for payment on or about May 12, 2017 at a price of $11.50 per share on a pro rata basis, except for tenders of odd lots, which were accepted in full, for a total cost of approximately $10 million, excluding fees and expenses relating to the self-tender offer.

 

The proration factor for the tender offer, after giving effect to the priority of odd lots, is approximately 9.7 percent. The purchase price of properly tendered shares represents 85% of net asset value per share based on the December 31, 2016 NAV per share. A total of 7,518,408 shares, including 144,326 shares through notice of guaranteed delivery, were properly tendered at the final purchase price of $11.50 per share and not withdrawn by expiration date. Therefore, on a pro-rated basis, approximately 11.4 percent of the shares tendered by each tendering stockholder have been accepted for payment. The Company will fund the repurchase of common stock using a portion of its cash and cash equivalents on hand.

 

Janney Montgomery Scott LLC (the “Dealer Manager”) served as dealer manager for the tender offer. MacKenzie Partners, Inc. (the “Information Agent”) served as information agent for the tender offer and American Stock Transfer & Trust Company, LLC (the “Depositary”) is serving as depositary for the tender offer. For more information about the tender offer, please contact MacKenzie Partners, Inc. at +1 (800) 322-2885 (toll-free).

 

Item 9.01 Financial Statements and Exhibits.

 

The exhibit index following the signature page to this report is incorporated herein by reference.

 

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 “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “target,” “opportunity,” “sustained,” “positioning,” “designed,” “create,” “seek,” “would,” “could”, “potential,” “continue,” “ongoing,” “upside,” “increases,” 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: the success of the tender offer, the satisfaction of the conditions to the tender offer, conditions in the credit markets, the price of the registrant’s common stock, performance of the registrant’s portfolio and investment manager. Additional information concerning these and other factors can be found in the registrant’s Form 10-K and other reports filed with the SEC. The registrant assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this this report or the exhibits hereto 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.

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized as of May 12, 2017.

 

GREAT ELM CAPITAL CORP.

 

/s/ Michael J. Sell

By:  Michael J. Sell

Title:  Chief Financial Officer

 


Exhibit Index

 

Exhibit Number

 

Description

99.1

 

Press release dated May 12, 2017

99.2

 

Presentation dated May 12, 2017

 

 

gecc-ex991_6.htm

 

Exhibit 99.1

Great Elm Capital Corp. Announces First Quarter 2017 Financial Results; Net Investment Income of $0.32 Per share; Board Declares Third Quarter Distribution of $0.25 Per Share ($0.083 Per Share Per Month)

Boston, May 12, 2017 – 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.

1

 


 

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.

 

gecc-ex992_7.pptx.htm

Slide 1

Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended March 31, 2017 May 12, 2017 © 2017 Great Elm Capital Corp. Exhibit 99.2

Slide 2

© 2017 Great Elm Capital Corp. Disclaimer 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 “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “target,” “opportunity,” “sustained,” “positioning,” “designed,” “create,” “seek,” “would,” “could”, “potential,” “continue,” “ongoing,” “upside,” “increases,” 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. Additional 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. You should consider the investment objective, risks, charges and expenses of GECC carefully before investing. GECC’s filings with the SEC contain this and other information about GECC and are available by contacting GECC at the phone number and address at the end of this presentation. These documents should be read and considered carefully before investing.   The performance, distribution and financial data contained herein represent past performance, distributions and results and neither guarantees nor is indicative of future performance, distributions or results. Investment return and principal value of an investment will fluctuate so that an investor’s shares may be worth more or less than the original cost. GECC’s market price and net asset value will fluctuate with market conditions. Current performance may be lower or higher than the performance data quoted. All information and data, including portfolio holdings and performance characteristics, is as of March 31, 2017, unless otherwise noted, and is subject to change.

Slide 3

© 2017 Great Elm Capital Corp. About GECC GECC Investment Objective Investment Strategy Externally managed special situations-focused BDC Common stock trades as “GECC” and baby bonds as “FULLL” $0.083 per share monthly distribution 1 Seek to generate both current income and capital appreciation, while seeking to protect against risk of capital loss Focus predominantly on secondary market opportunities by investing in leveraged loans and high yield bonds of middle market issuers with a catalyst-driven, total-return orientation Portfolio $152.2 million in investments at fair value; $170.4 million total net asset value Weighted average yield of 12.63% 23 companies in more than 15 industries (1) Based on distributions that have been declared through September 2017. Past distributions are not indicative of future distributions. Distributions are declared by the Board by the funds legally available therefor. Though GECC intends to pay distributions monthly, it is not obligated to do so. Please refer to “Distribution Policy and Declared Distributions” later in this presentation.

Slide 4

© 2017 Great Elm Capital Corp. Realized Investments (through May 10, 2017) Past performance is not indicative of future results. It should not be assumed that the realization of other positions will be profitable or equal the performance of the positions realized in the quarter ended March 31, 2017 and the partial quarter reported through May 10, 2017. Because we focus on a catalyst-driven, special situations investment approach, results will vary from period to period and it should not be assumed that results attained in any one period will be replicated. Please refer to “Disclaimer” at the beginning of this presentation.

Slide 5

© 2017 Great Elm Capital Corp. Optima Specialty Steel, Inc. (“Optima”) Background Catalyst Outcome Optima’s 12.5% Senior Secured Notes due 12/15/2016 were a component of the MAST-contributed portfolio. These notes were contributed at a discount to par. Shortly after the merger closed, in December 2016, Optima filed for bankruptcy protection. This resulted in an interest rate increase on these notes and provided the catalyst for a restructuring of the company’s debt obligations. On February 28, 2017, these notes were refinanced at par plus accrued and unpaid interest by a debtor in possession (“DIP”) facility. GECC anchored the first out portion of the DIP loan. We believe this example of Optima’s bankruptcy filing / restructuring highlights the total return potential of the catalyst-driven, special situations investment approach with which GECC intends to manage the GECC portfolio.

Slide 6

© 2017 Great Elm Capital Corp. Everi Payments, Inc. (“Everi”) Background Catalyst Outcome Everi’s 10.0% Senior Unsecured Notes due 1/15/2022 were a component of the MAST-contributed portfolio. Approximately $12.3 million of the notes were contributed at a discount to par. On 3/14/2017, Everi reported 4Q16 results that beat expectations and showed continued improvement in both operating segments. In addition, Everi released its FY17 guidance, which showed forecasted growth in revenue, EBITDA and free cash flow. On 4/10/2017, Everi launched a refinancing of all of its outstanding secured debt. At the proposed rate (Libor + 4.5% with a Libor floor of 1.0%), the refinancing will save the company $8.2 million in annual interest expense, simplify the capital structure, and provide more cushion under covenants. Both of these catalysts were integral components of our investment thesis in Everi’s bonds. Everi’s bonds rallied, subsequent to the catalysts noted above, and GECC exited $8.3 million of its position in Q1 and the balance of the position in Q2, all at a gain. GECC did not participate in the Libor + 4.5% financing. We believe this example illustrates how GECC intends to utilize in-depth, fundamental research to identify near-term catalysts and capitalize on mispriced and misunderstood securities, as well as the value of investing in securities for which there is a trading market.

Slide 7

© 2017 Great Elm Capital Corp. Chester Downs & Marina LLC (“Chester Downs”) Background Catalyst Outcome GECC purchased $6 million of Chester Downs’ 9.25% Senior Secured Bonds due 2/1/2020 during 4Q16 at a discount to par. On 3/31/2017, Chester Downs reported 4Q16 results, which were weaker year-over-year given the ongoing construction disruption at the property and some gaming capacity reductions. Importantly, however, gaming productivity metrics continued to improve and free cash flow was positive, increasing the total cash balance at the entity to more than $90 million (approximately 27% of the cash needed to refinance the entire bond issue). On 3/20/17, Chester Downs’ indirect parent company, who is currently in Chapter 11, launched the term loan component of its exit financing. During the marketing process, the issuer’s management identified regulatory reasons for not refinancing Chester Downs’ bonds, and indicated there was an accordion feature built into the proposed exit term loan to handle an anticipated refinancing. GECC sold its entire position in Chester Downs during 2Q17 at a gain. We believe this example demonstrates how a holistic view of a complicated organization and capital structure, including an affiliate in bankruptcy, and a thorough understanding of the covenants can lead to a positive investment outcome.

Slide 8

© 2017 Great Elm Capital Corp. Trilogy International, LLC (“Trilogy”) Background Catalyst Outcome $10 million of Trilogy’s 13.375% Senior Secured Notes due 5/15/2019 were a component of the MAST-contributed portfolio. These notes were contributed at a slight premium to par. Trilogy’s fundamentals were steadily improving, which we believed would likely result in a significantly lower cost of debt capital. The short maturity of the notes and borrower-friendly call structure lined up well for a possible refinancing. Research led our team to believe that a sale of one of the company’s business or a value-enhancing merger was likely to occur in the near-term. In 4Q16, Trilogy announced a merger that would de-lever the balance sheet and improve the credit quality of the remaining debt. During 1Q17, we sold all of our holdings in Trilogy at a premium to par for a slight gain, as noted in our 10-K and 10-Q. We believe this investment highlights the depth of our fundamental underwriting process, as well as our event-driven investing approach.

Slide 9

© 2017 Great Elm Capital Corp. JN Medical Corporation (“JN Medical”) Background Catalyst Outcome JN Medical’s Libor + 11.0% Senior Secured Term Loan due 6/30/2016 was a component of the Full Circle portfolio that we acquired in our merger with Full Circle. This term loan was valued at a discount to par in the merger transaction. Post default, the interest rate increased to Libor + 16.0% because of default interest. JN Medical defaulted on its debt obligations in June 2016, prompting Full Circle to foreclose on some of the company’s assets later that year. Post merger, GECC fielded interest from multiple parties in both the newly acquired assets and the outstanding term loan, working toward potential sales. In February 2017, GECC sold the acquired assets and the remaining term loan balance to a strategic buyer at a gain.

Slide 10

© 2017 Great Elm Capital Corp. Financial & Portfolio Review (Quarter Ended 3/31/2017)

Slide 11

© 2017 Great Elm Capital Corp. Financial & Portfolio Highlights Q4/2016 2 Q1/2017 Earnings Per Share (“EPS”) ($1.39) $0.27 Net Investment Income (“NII”) Per Share $0.00 $0.32 NII Per Share Excluding One-Time Merger / Formation Costs $0.28 N/A Net Realized Gains Per Share $0.02 $0.16 Net Unrealized Losses Per Share ($1.05) ($0.21) Net Asset Value Per Share at Period End $13.52 $13.59 Financial Highlights Q4/2016 2 Q1/2017 Capital Deployed $42.5 million $75.9 million Investments Monetized $41.7 million $78.8 million Total Fair Value of Investments at Period End $154.7 million $152.2 million Net Asset Value at Period End $173.0 million $170.4 million Total Assets at Period End $236.5 million $225.5 million Cash and Cash Equivalents at Period End $66.8 million $66.8 million Portfolio Highlights (2) References to Q4 refer to the partial period commencing on November 3, 2016 upon the closing of the merger and ending December 31, 2016.

Slide 12

© 2017 Great Elm Capital Corp. Financial Review Total investment income for the quarter ended March 31, 2017 was approximately $7.3 million, or $0.58 per share Net expenses for the quarter ended March 31, 2017 were approximately $3.2 million, or $0.26 per share Net investment income for the quarter ended March 31, 2017 was approximately $4.1 million, or $0.32 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 of investments for the quarter ended March 31, 2017 was approximately $2.7 million, or ($0.21) per share

Slide 13

© 2017 Great Elm Capital Corp. Financial Review - Quarter Ended 3/31/2017 In thousands Per Share 3 Total Investment Income $ 7,315 $ 0.58 Interest Income 4 6,826 0.54 Other Income 443 0.04 Net Operating Expenses 3,221 0.26 Management Fee 593 0.05 Incentive Fee 1,023 0.08 Total Advisory Fees 1,616 0.13 Total Costs Incurred Under Administration Agreement 495 0.04 Directors’ Fees 27 0.00 Interest Expenses 631 0.05 Professional Services Expense 331 0.03 Custody Fees 13 0.00 Other 113 0.01 Income tax expense, including excise tax (5) (0.00) Fees Waivers and Expense Reimbursement Net Investment Income $ 4,094 $ 0.32 (3) The per share figures noted above are based on a weighted average of 12.636 million shares for the quarter ended March 31, 2017, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements. (4) Total investment income includes PIK income of $1,142 for the quarter ended March 31, 2017.

Slide 14

© 2017 Great Elm Capital Corp. Portfolio Highlights 12.63% Weighted average current yield on portfolio; 94.0% of the portfolio (based on fair value of investments) invested in 1st lien and/or senior secured instruments 57.3% Percentage of NAV invested in our largest five positions, consistent with our view that portfolio concentration leads to investment out-performance over time $0.78 Weighted average dollar price of debt investments in the portfolio, representative of our special situations investment approach As of March 31, 2017, approximately 67% 5 of the portfolio was invested in ideas that are representative of the manner in which GECM intends to manage the portfolio going forward (5) The balance of the portfolio remains in legacy Full Circle positions that were acquired in the merger with Full Circle.

Slide 15

© 2017 Great Elm Capital Corp. Portfolio Overview as of March 31, 2017 23 Debt Investments $149.6 million Fair Value Invested in Debt Instruments 47% in Floating Rate Instruments 12.63% Weighted Average Current Yield 98.3% Of Invested Capital in Debt Instruments (94.0% in first lien / senior secured and 4.3% in unsecured) 7 Equity Investments $2.6 million Fair Value Invested in Equity Instruments Debt Investments: Equity Investments: 1.7% Of Invested Capital in Equity Investments

Slide 16

© 2017 Great Elm Capital Corp. Q1 Portfolio Activity $75.9 million Capital deployed into eight companies (two new, six existing) with a weighted average dollar price of $0.98 and a weighted average current yield of 12.29% 6 $78.8 million Monetized (in part or full) 17 investments, including the complete exit of one legacy Full Circle holding, at a weighted average dollar price of $0.99 and a weighted average current yield of 13.34% 7 During the quarter ended March 31, 2017, here is a snapshot of portfolio activity (6) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and payment in kind “PIK” interest. (7) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities).

Slide 17

© 2017 Great Elm Capital Corp. Portfolio Breakdown by Asset Type and Interest Rate Type Portfolio by Asset Type Portfolio by Interest Rate Type Weighted average fixed rate coupon of 10.11%

Slide 18

© 2017 Great Elm Capital Corp. Portfolio Breakdown by Industry

Slide 19

© 2017 Great Elm Capital Corp. Subsequent Events (through May 10, 2017) 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 in realized 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 in realized 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 Past performance is not indicative of future results. It should not be assumed that the realization of other positions will be profitable or equal the performance of the positions realized in the during the period from April 1, 2017 and May 10, 2017. Because we focus on a catalyst-driven, special situations investment approach, results will vary from period to period and it should not be assumed that results attained in any one period will be replicated. Please refer to “Disclaimer” at the beginning of this presentation.

Slide 20

© 2017 Great Elm Capital Corp. Capital Activity

Slide 21

© 2017 Great Elm Capital Corp. Distribution Policy & Declared Distributions On March 29, 2017, we announced our Q2 distribution amount and schedule; we generated $0.32 in NII during the quarter, a 1.3x distribution coverage On May 12, 2017, we announced our Q3 distribution amount and schedule: We intend to supplement these distributions with special distributions from NII in excess of the declared distribution and as catalyst-driven investments are realized 8 (8) There can be no assurance that any such supplemental amounts will be received or realized, or even if received and realized, distributed or available for distribution. Past distributions are not indicative of future distributions. Distributions are declared by the Board out of the funds legally available therefor. Though GECC intends to pay distributions monthly, it is not obligated to do so.

Slide 22

© 2017 Great Elm Capital Corp. Stock Buyback Program & Self-Tender Post the closing of the merger in November 2016, we commenced our stock buyback program, executed through a 10b5-1 plan, to repurchase shares whenever they trade below 90% of the last published NAV Our Board of Directors approved $15 million for the 10b5-1 plan over 18 months, which commenced in November 2016 For the quarter ended March 31, 2017, we purchased an aggregate of 245,729 shares at a weighted average price of $11.35 per share, resulting in $2.8 million of cumulative cash paid to purchase shares (at 84% of March 31, 2017 NAV) From the commencement of the 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 purchase shares (at 82% of March 31, 2017 NAV) We conducted a self-tender for $10 million of common stock through a modified Dutch auction. This tender offer concluded on May 5, 2017. In this tender, 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 represented approximately 85% of our net asset value per share as of March 31, 2017 In addition to the 10b5-1 plan, our Board of Directors has authorized an additional $35 million in share repurchasing capacity We had approximately $53 million of cash and cash equivalents as of May 10, 2017

Slide 23

Contact Information © 2017 Great Elm Capital Corp. Investor Relations Meaghan K. Mahoney Senior Vice President 200 Clarendon Street, 51st Floor Boston, MA 02116 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com

Slide 24

© 2017 Great Elm Capital Corp. Appendix: General Risks Debt instruments are subject to credit and interest rate risks.   Credit risk refers to the likelihood that an obligor will default in the payment of principal or interest on an instrument. Financial strength and solvency of an obligor are the primary factors influencing credit risk. In addition, lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument and debt instrument that are rated by rating agencies are often reviewed and may be subject to downgrade. Our debt investments either are, or if rated would be, rated below investment grade by independent rating agencies. These “junk bonds” and “leveraged loans” are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may be illiquid and difficult to value and typically do not require repayment of principal before maturity, which potentially heightens the risk that we may lose all or part of our investment.   Interest rate risk refers to the risks associated with market changes in interest rates. Interest rate changes may affect the value of a debt instrument indirectly (especially in the case of fixed rate obligations) or directly (especially in the case of instrument whose rates are adjustable). In general, rising interest rates will negatively impact the price of a fixed rate debt instrument and falling interest rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among other factors).   GECC utilizes leverage to seek to enhance the yield and net asset value of its common stock. These objectives will not necessarily be achieved in all interest rate environments. The use of leverage involves risk, including the potential for higher volatility and greater declines of GECC’s net asset value, fluctuations of dividends and other distributions paid by GECC and the market price of GECC’s common stock, among others. The amount of leverage that GECC may employ at any particular time will depend on, among other things, our Board’s and our adviser’s assessment of market and other factors at the time of any proposed borrowing.   As part of our lending activities, we may purchase notes or make loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although the terms of such financings may result in significant financial returns to us, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is unusually high. We cannot assure you that we will correctly evaluate the value of the assets collateralizing our investments or the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a portfolio company, we may lose all or part of the amounts advanced to the borrower or may be required to accept collateral with a value less than the amount of the investment advanced by us to the borrower.