Business Context and Reporting Period
Great Elm Capital Corp. filed a Form 8-K on January 19, 2018, reporting the entry into a material definitive agreement and the creation of a direct financial obligation. The filing details the closing of a debt offering on the same date.
Key Financial Metrics
- Debt Issuance: The Company issued $43,000,000 in aggregate principal amount of 6.75% notes due 2025, plus a partial underwriter option exercise of $1,898,375.
- Total Principal: Approximately $44.9 million ($43 million base + $1.898 million option).
- Net Proceeds: Approximately $43.5 million (before expenses).
- Interest Rate: 6.75% per annum, payable quarterly.
- Maturity Date: January 31, 2025.
- Redemption: Callable by the Company on or after January 31, 2021, at a price of $25 per security plus accrued interest.
- Use of Proceeds: Investments consistent with investment objectives and general corporate purposes.
Material Changes
This filing represents a significant increase in the Company's debt obligations. The transaction closed on January 19, 2018, resulting in new unsecured obligations and the establishment of covenants regarding consolidation, mergers, and financial reporting under the Investment Company Act of 1940.
Outlook, Risks, and Contingencies
The Indenture restricts the Company from consolidating, merging, or transferring substantially all assets unless specific conditions are met. The Notes are direct unsecured obligations. The filing incorporates by reference the full text of the Supplemental Indenture and Notes for complete details on limitations and exceptions to covenants.
Investor Verification Checklist
- Verify the exact net proceeds after deducting underwriting expenses, as the filing states proceeds were approximately $43.5 million "before expenses."
- Review the full text of the Second Supplemental Indenture (Exhibit 4.1) for specific financial covenants and default conditions.
- Confirm the impact of the new debt on the Company's leverage ratios and liquidity position in subsequent quarterly reports.
- Monitor the Company's ability to meet quarterly interest payments commencing March 31, 2018.