Great Elm Capital Corp. (“GECC”) Issues $22 Million of Additional GECCI Notes

Rhea-AI Summary

Great Elm Capital Corp. (NASDAQ: GECC) has issued $22 million of additional 8.50% notes due 2029 (GECCI Notes) in a registered direct offering to an institutional investor.

This follows a $12 million equity raise at NAV last month, aimed at optimizing their weighted average cost of capital. CEO Matt Kaplan emphasized that attracting capital from institutional partners highlights the strength of GECC's platform.

Positive

• Raised $22 million through additional GECCI Notes.
• Previously raised $12 million in equity at NAV.
• Optimizing weighted average cost of capital.

Negative

• None.

Insights

Financial Analyst

Issuing $22 million in additional notes indicates GECC's strategic move to leverage debt for growth. These notes have an 8.50% interest rate, implying a relatively high-cost borrowing, which investors should monitor closely in relation to GECC's revenue growth and profitability to ensure it can service this debt without compromising financial stability.

The fact that the issuance was met by an institutional investor suggests confidence in GECC's creditworthiness and strategic direction. Institutional investors usually conduct thorough due diligence, which could be a positive signal for retail investors.

However, adding more debt increases financial leverage and risk. Investors should consider the company’s current debt-to-equity ratio and other financial metrics to understand the impact on overall financial health. The recent $12 million equity raise is a positive sign as it diversifies funding sources and supports liquidity.

Market Research Analyst

This debt issuance can affect the market perception of GECC. The blend of equity and debt financing shows GECC is actively managing its capital structure to strike a balance between equity dilution and debt service costs. The 8.50% interest rate might be higher than average but could be justified if GECC's growth prospects are strong and the returns on new investments exceed this cost.

For retail investors, understanding the nature of the notes (due 2029) provides insight into the company’s long-term planning. This move suggests GECC is positioning itself for long-term projects or acquisitions that could drive future growth.

Overall, this could lead to short-term pressure on earnings due to higher interest expenses but might result in long-term gains if the capital is deployed effectively.

PALM BEACH GARDENS, Fla., July 09, 2024 (GLOBE NEWSWIRE) -- Great Elm Capital Corp. (the “Company” or “GECC”), (NASDAQ: GECC), a business development company, today announced it issued $22 million of additional 8.50% notes due 2029 (the “GECCI Notes”) in a registered direct offering to an institutional investor.

“We are pleased to announce this tack-on debt financing on the heels of our $12 million equity raise at NAV last month, further optimizing our weighted average cost of capital,” said Matt Kaplan, GECC’s Chief Executive Officer. “Our ability to attract capital from institutional partners is a testament to the strength of our platform.”

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.

Media & Investor Contact:
Investor Relations
investorrelations@greatelmcap.com

Source: Great Elm Capital Corp.

FAQ

What did Great Elm Capital Corp. announce on July 09, 2024?

Great Elm Capital Corp. announced it issued $22 million of additional 8.50% notes due 2029 in a registered direct offering.

What is the purpose of GECC issuing $22 million of additional GECCI Notes?

The purpose is to optimize GECC's weighted average cost of capital.

What is the interest rate on the newly issued GECC notes?

The interest rate on the newly issued notes is 8.50%.

To whom did GECC issue the additional GECCI Notes?

GECC issued the additional GECCI Notes to an institutional investor.

What did GECC achieve last month prior to issuing the $22 million GECCI Notes?

Last month, GECC achieved a $12 million equity raise at NAV.

What is the maturity date for the additional GECCI Notes issued by GECC?

The maturity date for the additional GECCI Notes is in 2029.

Which stock symbol is associated with Great Elm Capital Corp.?

The stock symbol associated with Great Elm Capital Corp. is GECC.