Great Elm Capital Corp. Prices Public Offering of $36,000,000 of 8.125% Notes Due 2029

Rhea-AI Summary

Great Elm Capital Corp. (NASDAQ: GECC) has priced a public offering of $36 million in 8.125% notes due 2029. The offering is expected to yield net proceeds of approximately $34.4 million after expenses. The notes will mature on December 31, 2029, with an option for early redemption from December 31, 2026. GECC has granted underwriters a 30-day option to purchase up to an additional $5.4 million in notes to cover over-allotments. The notes are expected to be listed on The Nasdaq Global Market under the symbol 'GECCH' within 30 days of issuance. GECC plans to use the net proceeds, along with cash on hand, to redeem all outstanding 6.75% unsecured notes due 2025. The offering is subject to customary closing conditions, with delivery expected around September 19, 2024.

Positive

• Successful pricing of $36 million notes offering at 8.125% interest rate
• Expected net proceeds of $34.4 million after expenses
• Potential for additional $5.4 million from underwriters' over-allotment option
• Planned listing on Nasdaq Global Market under 'GECCH' symbol
• Refinancing of existing 6.75% notes due 2025 with new 8.125% notes due 2029

Negative

• Higher interest rate on new notes (8.125%) compared to existing notes (6.75%)
• Potential dilution if underwriters exercise over-allotment option
• Increased debt obligations with $36 million (potentially $41.4 million) in new notes

Insights

Financial Analyst

Great Elm Capital Corp's new $36 million note offering at 8.125% interest is a strategic move to refinance existing debt. The higher interest rate compared to the 6.75% notes being redeemed suggests increased borrowing costs, potentially due to the current economic climate. This could impact GECC's profitability in the short term.

However, the extended maturity to 2029 provides GECC with improved financial flexibility. The net proceeds of $34.4 million indicate relatively low issuance costs. The additional $5.4 million over-allotment option could further strengthen GECC's capital position if exercised.

Investors should note the potential dilution effect on earnings per share due to increased interest expenses. The planned Nasdaq listing under 'GECCH' may enhance liquidity for these notes, potentially benefiting both the company and investors.

Market Research Analyst

The pricing of GECC's notes at 8.125% reflects current market conditions and investor appetite for yield. This rate, while higher than their previous notes, is competitive in the current high-interest environment, indicating continued investor confidence in GECC's business model.

The involvement of multiple underwriters, including Lucid Capital Markets and Piper Sandler, suggests broad market interest. The 30-day over-allotment option is a standard feature that allows underwriters to meet excess demand, potentially indicating strong initial interest from investors.

The planned Nasdaq listing could increase visibility and trading volume for these notes, potentially attracting a wider investor base. However, investors should monitor how this new debt impacts GECC's overall leverage and financial flexibility in the evolving economic landscape.

PALM BEACH GARDENS, Fla., Sept. 12, 2024 (GLOBE NEWSWIRE) -- Great Elm Capital Corp. (the “Company” or “GECC”) (NASDAQ: GECC) announced today the pricing of its underwritten public offering of $36,000,000 aggregate principal amount of its 8.125% notes due 2029 (the “Notes”), which will result in net proceeds to the Company of approximately $34.4 million after payment of underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Notes will mature on December 31, 2029, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after December 31, 2026. The Company has also granted the underwriters a 30-day option to purchase up to an additional $5,400,000 aggregate principal amount of Notes to cover over-allotments, if any.

The closing of the transaction is subject to customary closing conditions, and the Notes are expected to be delivered on or about September 19, 2024. The Notes are expected to be listed on The Nasdaq Global Market under the trading symbol “GECCH,” and to trade thereon within 30 days from the original issue date.

The Company intends to use the net proceeds from the offering together with cash on hand to redeem all of its outstanding 6.75% unsecured notes due 2025.

Lucid Capital Markets, LLC, Janney Montgomery Scott LLC and Piper Sandler & Co. are acting as joint book-running managers for the offering. Clear Street LLC, InspereX LLC and Ladenburg Thalmann & Co. Inc. are acting as co-managers for the offering.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities in this offering or any other securities nor will there be any sale of these securities or any other securities referred to in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

A registration statement relating to these securities is on file with and has been declared effective by the Securities and Exchange Commission (the “SEC”). The offering will be made only by means of a prospectus, copies of which may be obtained, when available, from:

Lucid Capital Markets, LLC
570 Lexington Ave., 40th Floor
New York, New York 10022
(646) 362-0256

Investors are advised to carefully consider the investment objectives, risks and charges and expenses of the Company before investing. The preliminary prospectus, dated September 9, 2024, which has been filed with the SEC, contains a description of these matters and other important information about the Company and should be read carefully before investing.

The information in this press release and the preliminary prospectus is not complete and may be changed.

About Great Elm Capital Corp.

GECC is an externally managed business development company that seeks to generate both current income and capital appreciation through debt and income generating equity investments, 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, fluctuations in 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 registration statement, its 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.

Media & Investor Contact:

Investor Relations
investorrelations@greatelmcap.com

Source: Great Elm Capital Corp.

FAQ

What is the size and interest rate of GECC's new notes offering?

Great Elm Capital Corp. (GECC) has priced a public offering of $36 million in 8.125% notes due 2029.

When will GECC's new notes mature?

The new notes offered by GECC will mature on December 31, 2029.

How does GECC plan to use the proceeds from the notes offering?

GECC intends to use the net proceeds, along with cash on hand, to redeem all of its outstanding 6.75% unsecured notes due 2025.

What is the expected trading symbol for GECC's new notes on Nasdaq?

The new notes are expected to be listed on The Nasdaq Global Market under the trading symbol 'GECCH'.

Has GECC granted any over-allotment option to the underwriters?

Yes, GECC has granted the underwriters a 30-day option to purchase up to an additional $5.4 million aggregate principal amount of notes to cover over-allotments.