10/28/2024 | Press release | Distributed by Public on 10/28/2024 04:28
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Explanatory Note: The sole purpose of this filing is to add inline XBRL tagging to the Registrant's Prospectus dated August 8, 2023, filed on August 9, 2023 with the Securities and Exchange Commission pursuant to Rule 424(b)(1) under the Securities Act of 1933 (the "Prospectus"). This filing does not make any changes to the Prospectus. This filing does not modify or update in any way disclosures made in the original filing of the Prospectus.
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Per Note
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Total
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Public Offering Price
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$
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25.00
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$
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40,000,000
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Underwriting Discount and Commissions (sales load)(1)
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$
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0.78125
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$
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1,110,137
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Proceeds to us, before expenses(2)
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$
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24.21875
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$
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38,889,863
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(1)
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We will receive the full proceeds of the $4,475,625 aggregate principal amount of Notes purchased by GEG, and no underwriting discounts or commissions will be paid in respect of these Notes.
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(2)
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Before deducting expenses payable by us related to this offering, estimated at $507,000, or approximately $0.316875 per Note. See "Underwriting." The underwriters may also purchase up to an additional $6,000,000 aggregate principal amount of the Notes offered hereby, to cover over-allotments, if any, within 30 days of the date of this prospectus. If the underwriters exercise this option in full, the total public offering price would be $46,000,000, the total underwriting discount and commissions (sales load) paid by us would be $1,437,500, and total proceeds to us, before expenses, would be $44,562,500.
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Ladenburg Thalmann
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Janney Montgomery Scott
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Oppenheimer & Co.
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Page
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About This Prospectus
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ii
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Prospectus Summary
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1
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Financial Highlights
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6
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The Offering
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7
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Risk Factors
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14
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Cautionary Note Regarding Forward-Looking Information
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38
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Use of Proceeds
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39
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Capitalization
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40
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Senior Securities
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41
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Description of the Notes
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42
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Portfolio Companies
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53
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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62
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Quantitative and Qualitative Disclosure About Market Risk
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75
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The Company
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76
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Management
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95
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Control Persons and Principal Stockholders
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106
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Determination of Net Asset Value
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108
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Dividend Reinvestment Plan
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109
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Certain U.S. Federal Income Tax Considerations
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110
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Underwriting
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121
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Custodian, Transfer and Distribution Paying Agent and Registrar
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125
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Legal Matters
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126
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Independent Registered Public Accounting Firm
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127
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Where You Can Find More Information
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128
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Incorporation By Reference
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129
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(in thousands)
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For the Six Months
Ended June 30, 2023
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For the Year
Ended
December 31, 2022
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Beginning Investment Portfolio, at fair value
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$ 224,957
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$212,149
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Portfolio Investments acquired(1)
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76,335
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150,128
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Amortization of premium and accretion of discount, net
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1,121
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1,328
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Portfolio Investments repaid or sold(2)
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(73,150)
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(112,628)
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Net change in unrealized appreciation (depreciation) on investments
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4,774
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100,016
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Net realized gain (loss) on investments
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2,394
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(126,036)
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Ending Investment Portfolio, at fair value
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$236,431
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$224,957
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(1)
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Includes new investments, additional fundings (inclusive of those on revolving credit facilities), refinancings, and capitalized payment-in-kind ("PIK") income.
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(2)
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Includes scheduled principal payments, prepayments, sales, and repayments (inclusive of those on revolving credit facilities).
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June 30, 2023 | December 31, 2022 | |||||||||||
Industry | Investments at Fair Value | Percentage of Fair Value | Investments at Fair Value | Percentage of Fair Value | ||||||||
Specialty Finance | $54,208 | 22.93% | $58,250 | 25.89% | ||||||||
Chemicals | 26,172 | 11.07% | 31,702 | 14.09% | ||||||||
Insurance | 16,365 | 6.92% | 2,340 | 1.04% | ||||||||
Transportation Equipment Manufacturing | 16,041 | 6.79% | 11,803 | 5.25% | ||||||||
Shipping | 14,066 | 5.95% | 7,206 | 3.20% | ||||||||
Oil & Gas Exploration & Production | 13,262 | 5.61% | 15,136 | 6.74% | ||||||||
Consumer Products | 11,951 | 5.05% | 8,413 | 3.74% | ||||||||
Metals & Mining | 10,938 | 4.63% | 6,046 | 2.69% | ||||||||
Internet Media | 9,870 | 4.17% | 12,247 | 5.44% | ||||||||
Energy Services | 9,647 | 4.08% | 2,877 | 1.28% | ||||||||
Casinos & Gaming | 9,332 | 3.95% | 9,301 | 4.13% | ||||||||
Closed-End Fund | 7,738 | 3.27% | 5,825 | 2.59% | ||||||||
Food & Staples | 7,657 | 3.24% | 3,660 | 1.63% | ||||||||
Energy Midstream | 6,327 | 2.68% | 22,559 | 10.03% | ||||||||
Industrial | 6,014 | 2.54% | 5,498 | 2.44% | ||||||||
Aircraft | 4,015 | 1.70% | 3,577 | 1.59% | ||||||||
Oil & Gas Refining | 3,917 | 1.66% | 5,388 | 2.40% | ||||||||
Restaurants | 3,483 | 1.47% | 3,110 | 1.38% | ||||||||
Hospitality | 3,338 | 1.41% | 4,988 | 2.22% | ||||||||
Apparel | 2,013 | 0.85% | 2,371 | 1.05% | ||||||||
Retail | 44 | 0.02% | 5 | 0.00% | ||||||||
Special Purpose Acquisition Company | 28 | 0.01% | 19 | 0.01% | ||||||||
IT Services | 2 | 0.00% | - | -% | ||||||||
Auto Manufacturer | 1 | 0.00% | 2 | 0.00% |
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June 30, 2023 | December 31, 2022 | ||||||||||||
Industry |
Investments at Fair Value |
Percentage of Fair Value |
Investments at Fair Value |
Percentage of Fair Value |
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Communications Equipment | 1 | 0.00 | % | - | - | % | |||||||
Biotechnology | 1 | 0.00 | % | 1 | 0.00 | % | |||||||
Technology | - | - | % | (365) | (0.16 | )% | |||||||
Household & Personal Products | - | - | % | 1 | 0.00 | % | |||||||
Wireless Telecommunications Services | - | - | % | 2,997 | 1.33 | % | |||||||
Total | $ 236,431 | 100.00 | % | $ 224,957 | 100.00 | % |
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We face competition for investment opportunities. Limited availability of attractive investment opportunities in the market could cause us to hold a larger percentage of our assets in liquid securities until market conditions improve.
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Our portfolio is limited in the number of portfolio companies which may subject us to a risk of significant loss if one or more of these companies defaults on its obligations under any of its debt instruments.
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Our portfolio is concentrated in a limited number of industries, which subjects us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
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Defaults by our portfolio companies may harm our operating results.
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By investing in companies that are experiencing significant financial or business difficulties, we are exposed to distressed lending risks.
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Certain of the companies we target may have difficulty accessing the capital markets to meet their future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity.
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Investing in middle market companies involves a high degree of risk and our financial results may be affected adversely if one or more of our portfolio investments defaults on its loans or notes or fails to perform as we expect.
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An investment strategy that includes privately held companies presents challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.
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Investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.
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Economic recessions or downturns could impair our portfolio companies and harm our operating results.
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Our failure to maintain our status as a BDC would reduce our operating flexibility.
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Regulations governing our operations as a BDC affect our ability to raise additional capital and the way in which we do so. As a BDC, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.
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We will be subject to corporate level U.S. federal income tax if we are unable to qualify as a RIC under the Code.
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We may incur additional debt, which could increase the risk in investing in our Company.
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The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning, could impair our ability to conduct business effectively.
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There are significant potential conflicts of interest that could impact our investment returns.
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pari passu, or equal, with our existing and future unsecured indebtedness, including, without limitation, the $45.6 million in aggregate principal amount of 6.75% unsecured notes that mature on January 31, 2025 (the "GECCM Notes"), the $42.8 million in aggregate principal amount of 6.50% unsecured notes that mature on June 30, 2024 (the "GECCN Notes") and the $57.5 million in aggregate principal amount of 5.875% unsecured notes that mature on June 30, 2026 (the "GECCO Notes");
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effectively subordinated to all of our existing and future secured indebtedness, including any amounts outstanding under the Loan, Guarantee and Security Agreement, as amended (the "Loan Agreement"), with City National Bank ("CNB") and any indebtedness that is initially unsecured to which we subsequently grant security, to the extent of the value of the assets securing such indebtedness (as of June 30, 2023, there were $5.0 million in borrowings outstanding under the Loan Agreement);
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structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries; and
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senior to any of our future indebtedness that expressly provides it is subordinated to the Notes.
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We do not pay the principal of any Note when due and payable.
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We do not pay interest on any Note when due, and such default is not cured within 30 days.
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We remain in breach of any other covenant with respect to the Notes for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the Trustee or holders of at least 25% of the principal amount of the Notes.
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We file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur
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If, pursuant to Sections 18(a)(1)(c)(ii) and 61 of the Investment Company Act, or any successor provisions thereto of the Investment Company Act, on the last business day of each of 24 consecutive calendar months, the Notes have an asset coverage (as such term is used in the Investment Company Act) of less than 100%, as such obligation may be amended or superseded but giving effect to any exemptive relief that may be granted to us by the SEC.
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We agree that for the period of time during which the Notes are outstanding, we will not violate, whether or not we are subject to, Section 18(a)(1) (A) as modified by Sections 61(a)(1) and (2) of the Investment Company Act or any successor provisions thereto of the Investment Company Act, as such obligation may be amended or superseded but giving effect to any exemptive relief that may be granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt securities, unless our asset coverage, as defined in the Investment Company Act, equals at least 150% after such borrowings. See "Risk Factors-Risks Relating to Indebtedness-Incurring additional indebtedness could increase the risk in investing in ourCompany."
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We agree that for the period of time during which the Notes are outstanding, we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution, upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the Investment Company Act) of at least the threshold specified in pursuant to Section 18(a)(1)(B) as modified by Sections 61(a)(1) and (2) of the Investment Company Act or any successor provisions thereto of the Investment Company Act, as such obligation may be amended or superseded (regardless of whether we are subject thereto), after deducting the amount of such dividend, distribution or purchase price, as the
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If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with GAAP.
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issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that
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pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes, except that we have agreed that for the period of time during which the Notes are outstanding, we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution, upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the Investment Company Act) of at least the threshold specified in pursuant to Section 18(a)(1)(B) as modified by Sections 61(a)(1) and (2) of the Investment Company Act or any successor provisions thereto of the Investment Company Act, as such obligation may be amended or superseded (regardless of whether we are subject thereto), after deducting the amount of such dividend, distribution or purchase price, as the case may be, and giving effect, in each case, (i) to any exemptive relief granted to us by the SEC and (ii) to any no-action relief granted by the SEC to another BDC (or to us if we determine to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Sections 61(a)(1) and (2) of the Investment Company Act, as such obligation may be amended or superseded, in order to maintain such BDC's status as a RIC under Subchapter M of the Code;
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sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
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enter into transactions with affiliates;
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create liens (including liens on the stock of our subsidiaries) or enter into sale and leaseback transactions;
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make investments; or
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create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
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these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;
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they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors' actions and market conditions, as well as general economic downturns;
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they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on you;
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they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and GECM may be named as defendants in litigation arising from our investments in the portfolio companies;
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they may have difficulty accessing the capital markets to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity; and
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a portion of our income may be non-cash income, such as contractual PIK interest, which represents interest added to the debt balance and due at the end of the instrument's term, in the case of loans, or issued as additional notes in the case of bonds. Instruments bearing PIK interest typically carry higher interest rates as a result of their payment deferral and increased credit risk. When we recognize income in connection with PIK interest, there is a risk that such income may become uncollectable if the borrower defaults.
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as part of GECM's strategy in order to take advantage of investment opportunities as they arise;
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when GECM believes that market conditions are unfavorable for profitable investing;
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when GECM is otherwise unable to locate attractive investment opportunities;
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as a defensive measure in response to adverse market or economic conditions; or
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to meet RIC qualification requirements.
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management's attention will be diverted from running our existing business by efforts to source, negotiate, close and integrate acquisitions;
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our due diligence investigation of potential acquisitions may not reveal risks inherent in the acquired business or assets;
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we may over-value potential acquisitions resulting in dilution to stockholders, incurrence of excessive indebtedness, asset write downs and negative perception of our common stock;
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the interests of our existing stockholders may be diluted by the issuance of additional shares of our common stock or preferred stock;
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we may borrow to finance acquisitions, and there are risks associated with borrowing as described in this prospectus;
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GECM has an incentive to increase our assets under management in order to increase its fee stream, which may not be aligned with your interests;
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we and GECM may not successfully integrate any acquired business or assets; and
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GECM may compensate the existing managers of any acquired business or assets in a manner that results in the combined company taking on excessive risk.
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Assumed Return on Our Portfolio(1)(2) (net of expenses)
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(10.0)%
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(5.0)%
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0.0%
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5.0%
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10.0%
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Corresponding net return to common stockholder
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(14.46)%
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(9.46)%
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(4.46)%
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0.54%
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5.54%
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(1)
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Assumes $225.0 million in total portfolio assets, excluding short term investments, $155.9 million in senior securities outstanding, $84.8 million in net assets, and an average cost of funds of 6.43%. Actual interest payments may be different.
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(2)
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In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2022 total portfolio assets of at least 4.46%.
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Assumed Return on Our Portfolio(1)(2) (net of expenses)
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(10.0)%
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(5.0)%
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0.0%
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5.0%
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10.0%
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Corresponding net return to common stockholder
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(14.57)%
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(9.57)%
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(4.57)%
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0.43%
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5.43%
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(1)
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Assumes $238.6 million in total portfolio assets, excluding short term investments, $169.6 million in senior securities outstanding, $84.8 million in net assets, and an average cost of funds of 6.43%. Actual interest payments may be different.
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(2)
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In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2022 total portfolio assets of at least 4.57%.
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our, or our portfolio companies', future business, operations, operating results or prospects;
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the return or impact of current and future investments;
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the impact of a protracted decline in the liquidity of credit markets on our business;
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the impact of fluctuations in interest rates on our business;
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the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;
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our contractual arrangements and relationships with third parties;
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our current and future management structure;
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the general economy, including recessionary trends, and its impact on the industries in which we invest;
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the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;
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serious disruptions and catastrophic events;
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our expected financings and investments, including interest rate volatility;
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the adequacy of our financing resources and working capital;
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the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;
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the timing of cash flows, if any, from the operations of our portfolio companies;
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the timing, form and amount of any dividend distributions;
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the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and
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our ability to maintain our qualification as a RIC and as a BDC.
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On an actual basis; and
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On an as adjusted basis to give effect to (i) the $40.0 millionaggregate principal amount of the Notes at a public offering price of $25.00 per Note, after deducting underwriting discounts and commissions of approximately $1.1million and estimated offering expenses of $0.5 millionpayable by us and (ii) the use of such net proceeds to redeem all of the outstanding GECCN Notes.
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As of June 30, 2023
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Dollar amounts in thousands (except per share amounts)
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Actual
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As Adjusted(1)
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Investments, at fair value(2)
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$314,570
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$ 313,920
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Cash and cash equivalents
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3,352
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-
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Total assets
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322,477
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318,475
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GECCM Notes(3)
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45,204
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45,204
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GECCN Notes(3)
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42,385
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-
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GECCO Notes(3)
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56,132
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56,132
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The Notes(4)
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-
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38,383
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Revolving Credit Facility
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5,000
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5,000
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Total liabilities
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$229,627
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$ 225,625
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NET ASSETS
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Common stock, par value $0.01 per share, 100,000,000 shares of common stock authorized, 7,601,958 shares issued and outstanding
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$76
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$ 76
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Additional paid in capital
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284,107
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284,107
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Accumulated losses
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(191,333)
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(191,333)
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Total net assets
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92,850
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92,850
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Total liabilities and net assets
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$322,477
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$ 318,475
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(1)
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Excludes up to $7.5million in aggregate principal amount of Notes issuable by us upon exercise of the underwriters' over-allotment option.
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(2)
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Includes approximately $8.4 million of money market fund investments at fair value, a portion of which may be used to redeem the outstanding GECCN Notes.
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(3)
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Including unamortized discount of $406, $438 and $1,368 relating to the GECCM Notes, GECCN Notes and GECCO Notes, respectively.
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(4)
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Net of deferred offering costs.
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As of
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Total Amount
Outstanding
Exclusive of Treasury
Securities(1)
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Asset Coverage Per
Unit(2)
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Involuntary
Liquidating
Preference Per Unit(3)
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Average Market
Value Per Unit(4)
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December 31, 2016
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8.25% Notes due 2020
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$33,646
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$6,168
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N/A
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$1.02
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December 31, 2017
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6.50% Notes due 2022 ("GECCL Notes")
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$32,631
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$5,010
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N/A
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$1.02
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December 31, 2018
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GECCL Notes
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$32,631
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$2,393
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N/A
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$1.01
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GECCM Notes
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$46,398
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$2,393
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N/A
|
| |
$0.98
|
December 31, 2019
|
| | | | | | | | ||||
GECCL Notes
|
| |
$32,631
|
| |
$1,701
|
| |
N/A
|
| |
$1.01
|
GECCM Notes
|
| |
$46,398
|
| |
$1,701
|
| |
N/A
|
| |
$1.01
|
GECCN Notes
|
| |
$45,000
|
| |
$1,701
|
| |
N/A
|
| |
$1.00
|
December 31, 2020
|
| | | | | | | | ||||
GECCL Notes
|
| |
$30,293
|
| |
$1,671
|
| |
N/A
|
| |
$0.89
|
GECCM Notes
|
| |
$45,610
|
| |
$1,671
|
| |
N/A
|
| |
$0.84
|
GECCN Notes
|
| |
$42,823
|
| |
$1,671
|
| |
N/A
|
| |
$0.84
|
December 31, 2021
|
| | | | | | | | ||||
GECCM Notes
|
| |
$45,610
|
| |
$1,511
|
| |
N/A
|
| |
$1.00
|
GECCN Notes
|
| |
$42,823
|
| |
$1,511
|
| |
N/A
|
| |
$1.00
|
GECCO Notes
|
| |
$57,500
|
| |
$1,511
|
| |
N/A
|
| |
$1.02
|
December 31, 2022
|
| | | | | | | | ||||
GECCM Notes
|
| |
$45,610
|
| |
$1,544
|
| |
N/A
|
| |
$0.99
|
GECCN Notes
|
| |
$42,823
|
| |
$1,544
|
| |
N/A
|
| |
$1.00
|
GECCO Notes
|
| |
$57,500
|
| |
$1,544
|
| |
N/A
|
| |
$1.00
|
Revolving Credit Facility
|
| |
$10,000
|
| |
$1,544
|
| |
N/A
|
| |
-
|
June 30, 2023 (Unaudited)
|
| | | | | | | | ||||
GECCM Notes
|
| |
$45,610
|
| |
$1,615
|
| |
N/A
|
| |
$0.98
|
GECCN Notes
|
| |
$42,823
|
| |
$1,615
|
| |
N/A
|
| |
$0.99
|
GECCO Notes
|
| |
$57,500
|
| |
$1,615
|
| |
N/A
|
| |
$0.96
|
Revolving Credit Facility
|
| |
$5,000
|
| |
$1,615
|
| |
N/A
|
| |
-
|
(1)
|
Total amount of each class of senior securities outstanding at the end of the period presented.
|
(2)
|
Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
|
(3)
|
The amount to which such class of senior security would be entitled upon the voluntary liquidation of the issuer in preference to any security junior to it.
|
(4)
|
The average market value per unit for the notes, as applicable, is based on the average daily prices of such notes and is expressed per $1 of indebtedness.
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TABLE OF CONTENTS
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•
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We do not pay the principal of any Note when due and payable.
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•
|
We do not pay interest on any Note when due, and such default is not cured within 30 days.
|
•
|
We remain in breach of any other covenant with respect to the Notes for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the Trustee or holders of at least 25% of the principal amount of the Notes.
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•
|
We file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and, in the case of certain orders or decrees entered against us under any bankruptcy law, such order or decree remains undischarged or unstayed for a period of 90 days.
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•
|
If, pursuant to Sections 18(a)(1)(c)(ii) and 61 of the Investment Company Act, or any successor provisions thereto of the Investment Company Act, on the last business day of each of 24 consecutive calendar months the Notes have an asset coverage (as such term is used in the Investment Company Act) of less than 100%, as such obligation may be amended or superseded but giving effect to any exemptive relief that may be granted to us by the SEC.
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•
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You must give the Trustee written notice that an Event of Default has occurred with respect to the Notes and remains uncured.
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•
|
The holders of at least 25% in principal amount of all the Notes must make a written request that the Trustee take action because of the default and must offer reasonable indemnity to the Trustee against the cost and other liabilities of taking that action.
|
•
|
The Trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity.
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•
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The holders of a majority in principal amount of the Notes must not have given the Trustee a direction inconsistent with the above notice during that 60-day period.
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•
|
in the payment of principal or interest; or
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•
|
in respect of a covenant that cannot be modified or amended without the consent of each holder of the Notes.
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•
|
Where we merge out of existence or convey or transfer substantially all of our assets, the resulting entity must agree to be legally responsible for our obligations under the Notes;
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•
|
The merger or sale of assets must not cause a default on the Notes and we must not already be in default (unless the merger or sale would cure the default). For purposes of this no-default test, a default would include an Event of Default that has occurred and has not been cured, as described under "Events of Default" above. A default for this purpose would also include any event that would be an Event of Default if the requirements for giving us a notice of default or our default having to exist for a specified period of time were disregarded; and
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•
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We must deliver certain certificates and documents to the Trustee.
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TABLE OF CONTENTS
•
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change the stated maturity of the principal of or interest on the Notes;
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•
|
reduce any amounts due on the Notes;
|
•
|
reduce the amount of principal payable upon acceleration of the maturity of the Notes following a default;
|
•
|
change the place or currency of payment on the Notes;
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•
|
impair your right to sue for payment;
|
•
|
reduce the percentage of holders of Notes whose consent is needed to modify or amend the indenture; and
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•
|
reduce the percentage of holders of Notes whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults.
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•
|
If the change affects only the Notes, it must be approved by the holders of a majority in principal amount of the Notes.
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•
|
If the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose.
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•
|
Since the Notes are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the Notes on their due dates.
|
•
|
We must deliver to the Trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make the above deposit without causing you to be taxed on the Notes any differently than if we did not make the deposit and just repaid the Notes ourselves at maturity.
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•
|
Defeasance must not result in a breach or violation of, or result in a default under, the indenture or any of our other material agreements or instruments.
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•
|
No default or Event of Default with respect to the Notes shall have occurred and be continuing and no defaults or Events of Default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days.
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•
|
We must deliver to the Trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the Investment Company Act and a legal opinion and officers' certificate stating that all conditions precedent to covenant defeasance have been complied with.
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•
|
Since the Notes are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the Notes on their various due dates.
|
•
|
We must deliver to the Trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling that allows us to make the above deposit without causing you to be taxed on the Notes any differently than if we did not make the deposit and just repaid the Notes ourselves at maturity. Under current U.S. federal tax law, the deposit and our legal release from the
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TABLE OF CONTENTS
•
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We must deliver to the Trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the Investment Company Act and a legal opinion and officers' certificate stating that all conditions precedent to defeasance have been complied with.
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•
|
Defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any of our other material agreements or instruments.
|
•
|
No default or Event of Default with respect to the Notes shall have occurred and be continuing and no defaults or Events of Default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days.
|
•
|
We agree that for the period of time during which the Notes are outstanding, we will not violate, whether or not it is subject to, Section 18 (a)(1)(A) as modified by Sections 61(a)(1) and (2) of the Investment Company Act or any successor provisions thereto of the Investment Company Act, as such obligation may be amended or superseded but giving effect to any exemptive relief that may be granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt securities, unless our asset coverage, as defined in the Investment Company Act, equals at least 150% after such borrowings.
|
•
|
We agree that for the period of time during which the Notes are outstanding, we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution, upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the Investment Company Act) of at least the threshold specified in pursuant to Section 18(a)(1) (B) as modified by Sections 61(a)(1) and (2) of the Investment Company Act or any successor provisions thereto of the Investment Company Act, as such obligation may be amended or superseded (regardless of whether we are subject thereto), after deducting the amount of such dividend, distribution or purchase price, as the case may be, and giving effect, in each case, (i) to any exemptive relief granted to us by the SEC and (ii) to any no-action relief granted by the SEC to another BDC (or to us if we determine to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Sections 61(a)(1) and (2) of the Investment Company Act, as such obligation may be amended or superseded, in order to maintain such BDC's status as a RIC under Subchapter M of the Code.
|
•
|
If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we will furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable GAAP.
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•
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only in fully registered certificated form;
|
•
|
without interest coupons; and
|
•
|
unless we indicate otherwise, in denominations of $25 and amounts that are multiples of $25.
|
•
|
pari passu, or equal, with our existing and future unsecured indebtedness, including, without limitation, the GECCM Notes, the GECCN Notes and the GECCO Notes;
|
•
|
effectively subordinated to all of our existing and future secured indebtedness, including any amounts outstanding under the Loan Agreement, and any indebtedness that is initially unsecured to which we subsequently grant security, to the extent of the value of the assets securing such indebtedness;
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TABLE OF CONTENTS
•
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structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries; and
|
•
|
senior to our common stock and any of our future indebtedness that expressly provides it is subordinated to the Notes.
|
•
|
our indebtedness (including indebtedness of others guaranteed by us), whenever created, incurred, assumed or guaranteed, for money borrowed, that we have designated as "Senior Indebtedness" for purposes of the indenture and in accordance with the terms of the indenture (including any indenture securities designated as Senior Indebtedness), and
|
•
|
renewals, extensions, modifications and refinancings of any of this indebtedness.
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TABLE OF CONTENTS
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TABLE OF CONTENTS
Dollar amounts in thousands
Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity |
Par Amount / Quantity |
Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Investments at Fair Value | |||||||||||||||||||||||||||
Advancion |
Chemicals | 2nd Lien, Secured Loan | 2 | 1M L + 7.75%, 8.50% Floor (12.94%) | 09/21/2022 | 11/24/2028 | 1,625 | 1,509 | 1,430 | ||||||||||||||||||
APTIM Corp. 4171 Essen Lane Baton Rouge, LA 70809 |
Industrial | 1st Lien, Secured Bond | 11 | 7.75% | 03/28/2019 | 06/15/2025 | 5,000 | 4,274 | 4,050 | ||||||||||||||||||
Avanti Space Limited Cobham House 20 Black Friars Lane London, UK EC4V 6EB |
Wireless Telecommunications Services | Junior Priority E2 Notes | 6, 7, 9, 10 | 12.50% | 04/13/2022 | 04/13/2024 | 1,373 | 1,138 | - | ||||||||||||||||||
Avanti Space Limited Cobham House 20 Black Friars Lane London, UK EC4V 6EB |
Wireless Telecommunications Services | Junior Priority F Notes | 6, 7, 9, 10 | 12.50% | 04/13/2022 | 04/13/2024 | 5,442 | 4,552 | - | ||||||||||||||||||
Avanti Space Limited Cobham House 20 Black Friars Lane London, UK EC4V 6EB |
Wireless Telecommunications Services | Junior Priority G Notes | 6, 7, 9, 10 | 12.50% | 04/13/2022 | 10/13/2024 | 1,601 | 1,339 | - | ||||||||||||||||||
Avanti Space Limited Cobham House 20 Black Friars Lane London, UK EC4V 6EB |
Wireless Telecommunications Services | Common Equity | 6, 8, 10 | n/a | 04/13/2022 | n/a | 1,722 | - | - | 1.39 | % | ||||||||||||||||
Avation Capital SA 65 Kampong Bahru Road, #01-01 Singapore 169370 |
Aircraft | 2nd Lien, Secured Bond | 7, 10 | 9.00%, (6.50% cash + 2.50% PIK) | 02/04/2022 | 10/31/2026 | 4,613 | 4,111 | 4,015 | ||||||||||||||||||
Blackstone Secured Lending 345 Park Avenue New York, NY 10154 |
Closed-End Fund | Common Stock | 10 | n/a | 08/18/2022 | n/a | 190,000 | 4,405 | 5,198 | * | |||||||||||||||||
Blue Ribbon, LLC 110 E Houston St. San Antonio, TX 78205 |
Food & Staples | 1st Lien, Secured Loan | 2, 6 | 1M L + 6.00%, 6.75% Floor (11.17%) | 02/06/2023 | 05/07/2028 | 4,954 | 3,607 | 3,495 | ||||||||||||||||||
Eagle Point Credit Company Inc 600 Steamboat Road, Suite 202 Greenwich, CT 06830 |
Closed-End Fund | Common Stock | 10 | n/a | 08/18/2022 | n/a | 250,000 | 2,705 | 2,540 | * | |||||||||||||||||
ECL Entertainment, LLC 8978 Spanish Ridge Ave Las Vegas, NV 89148 |
Casinos & Gaming | 1st Lien, Secured Loan | 2, 6 | 1M SOFR + 7.50%, 8.25% Floor (12.72%) | 03/31/2021 | 04/30/2028 | 4,659 | 4,626 | 4,660 | ||||||||||||||||||
Enservco / Heat Waves 14133 County Rd 9 1/2 Longmont, CO 80504 |
Specialty Finance | Term Loan | 6 | 29.44% | 03/24/2022 | 06/24/2026 | 1,674 | 1,695 | 1,872 | ||||||||||||||||||
First Brands, Inc. 3255 West Hamlin Road Rochester Hills, MI 48309 |
Transportation Equipment Manufacturing | 2nd Lien, Secured Loan | 2 | 6M L + 8.50%, 9.50% Floor (13.6%) | 03/24/2021 | 03/30/2028 | 12,545 | 12,189 | 11,165 | ||||||||||||||||||
First Brands, Inc. 3255 West Hamlin Road Rochester Hills, MI 48309 |
Transportation Equipment Manufacturing | 1st Lien, Secured Loan | 2 | 6M SOFR + 5.00%, 6.00% Floor (10.25%) | 06/09/2023 | 03/30/2027 | 4,987 | 4,848 | 4,872 | ||||||||||||||||||
Flexsys Holdings 260 Springside Drive Akron, OH 44333 |
Chemicals | 1st Lien, Secured Loan | 2 | 3M SOFR + 5.25%, 6.00% Floor (10.75%) | 11/04/2022 | 11/01/2028 | 4,962 | 3,977 | 4,483 | ||||||||||||||||||
Florida Marine, LLC 2360 5th Street Mendeville, LA 70471 |
Shipping | 1st Lien, Secured Loan | 2, 6 | 1M SOFR + 10.30%, 12.30% Floor (15.51%) | 03/17/2023 | 03/17/2028 | 7,107 | 6,916 | 6,932 |
TABLE OF CONTENTS
Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Foresight Energy 211 North Broadway, Suite 2600 St. Louis, MO 63102 |
Metals & Mining | 1st Lien, Secured Loan | 2, 6 | 3M SOFR + 8.00%, 9.50% Floor (13.34%) | 07/29/2021 | 06/30/2027 | 6,009 | 6,041 | 6,009 | ||||||||||||||||||
FTAI Infrastructure Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 |
Industrial | 1st Lien, Secured Bond | 10 | 10.50% | 06/29/2022 | 06/01/2027 | 2,000 | 1,908 | 1,964 | ||||||||||||||||||
GAC HoldCo Inc. Suite 1220, 407 - 2nd Street S.W. Calgary, AB T2P 2Y3 |
Oil & Gas Exploration & Production | 1st Lien, Secured Bond | 10 | 12.00% | 07/27/2021 | 08/15/2025 | 6,850 | 7,123 | 7,278 | ||||||||||||||||||
Great Elm Healthcare Finance, LLC 3100 West End Ave, Suite 750 Nashville, TN 37203 |
Specialty Finance | Subordinated Note | 4, 6 | 12.00% | 11/17/2022 | 11/09/2027 | 4,375 | 4,375 | 4,375 | ||||||||||||||||||
Great Elm Healthcare Finance, LLC 3100 West End Ave, Suite 750 Nashville, TN 37203 |
Specialty Finance | Common Equity | 4, 6 | n/a | 11/17/2022 | n/a | 88 | 4,375 | 4,375 | 87.50 | % | ||||||||||||||||
Greenway Health, LLC 4301 W. Boy Scout Blvd, Suite 800 Tampa, FL 33607 |
Technology | 1st Lien, Secured Revolver | 2, 6 | 3M SOFR + 3.75%, 3.75% Floor (8.91%) | 01/27/2020 | 11/17/2023 | - | (15 | ) | - | |||||||||||||||||
Greenway Health, LLC 4301 W. Boy Scout Blvd, Suite 800 Tampa, FL 33607 |
Technology | 1st Lien, Secured Revolver - Unfunded | 6 | 0.50% | 01/27/2020 | 11/17/2023 | 8,026 | - | - | ||||||||||||||||||
Harvey Gulf Holdings LLC 701 Poydras Street, Suite 3700 New Orleans, LA 70139 |
Shipping | Secured Loan A | 2, 6 | 3M SOFR + 4.50%, 5.50% Floor (9.81%) | 08/10/2022 | 08/10/2027 | 434 | 428 | 433 | ||||||||||||||||||
Harvey Gulf Holdings LLC 701 Poydras Street, Suite 3700 New Orleans, LA 70139 |
Shipping | Secured Loan B | 2, 6 | 3M SOFR + 8.62%, 9.62% Floor (13.93%) | 08/10/2022 | 08/10/2027 | 6,634 | 6,463 | 6,701 | ||||||||||||||||||
ITP Live Production Group 101 Greenwich Street, Floor 26 New York, NY 10006 |
Specialty Finance | Term Loan | 2, 6 | 25.61% | 12/22/2021 | 05/22/2026 | 1,364 | 1,379 | 1,451 | ||||||||||||||||||
Lenders Funding, LLC 523 A Avenue Coronado, CA 92118 |
Specialty Finance | Subordinated Note | 4, 6, 10 | 6.73% | 09/20/2021 | 09/20/2026 | 9,521 | 9,521 | 9,521 | ||||||||||||||||||
Lenders Funding, LLC 523 A Avenue Coronado, CA 92118 |
Specialty Finance | 1st Lien, Secured Revolver - Unfunded | 4, 6, 10 | n/a | 09/20/2021 | 09/20/2023 | 5,000 | - | - | ||||||||||||||||||
Lenders Funding, LLC 523 A Avenue Coronado, CA 92118 |
Specialty Finance | Common Equity | 4, 6, 10 | n/a | 09/20/2021 | n/a | 6,287 | 7,250 | 250 | 56.13 | % | ||||||||||||||||
Lummus Technology Holdings 5825 N. Sam Houston Parkway West, #600 Houston, TX 77086 |
Chemicals | Unsecured Bond | 9.00% | 05/17/2022 | 07/01/2028 | 4,150 | 3,587 | 3,616 | |||||||||||||||||||
Mad Engine Global, LLC 6740 Cobra Way San Diego, CA, 92121 |
Apparel | 1st Lien, Secured Loan | 2 | 3M L + 7.00%, 8.00% Floor (12.54%) | 06/30/2021 | 07/15/2027 | 2,869 | 2,815 | 2,013 | ||||||||||||||||||
Martin Midstream Partners LP 4200 Stone Road Kilgore, TX 75662 |
Energy Midstream | 2nd Lien, Secured Bond | 11.50% | 01/31/2023 | 02/15/2028 | 2,000 | 1,944 | 1,929 |
TABLE OF CONTENTS
Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Maverick Gaming LLC 12530 NE 144th Street Kirkland, WA 98034 |
Casinos & Gaming | 1st Lien, Secured Loan | 2, 6 | 3M L + 7.50%, 8.50% Floor (12.98%) | 11/16/2021 | 09/03/2026 | 5,884 | 5,748 | 4,672 | ||||||||||||||||||
New Wilkie Energy Pty Limited 56 Pitt Street Sydney, New South Wales 2000, Australia |
Metals & Mining | 1st Lien, Secured Loan | 2, 6, 7, 10 | 3M SOFR + 12.50%, 14.50% Floor (17.44%), (12.44% cash + 5.00% PIK) | 04/06/2023 | 04/06/2026 | 5,000 | 4,860 | 4,894 | ||||||||||||||||||
New Wilkie Energy Pty Limited 56 Pitt Street Sydney, New South Wales 2000, Australia |
Metals & Mining | Warrants | 6, 10 | n/a | 04/06/2023 | n/a | 1,078,899 | - | 35 | * | |||||||||||||||||
NICE-PAK Products, Inc. Two Nice-Pak Park Orangeburg, NY 10962 |
Consumer Products | Secured Loan B | 2, 6, 7 | 3M SOFR + 13.50%, 14.50% Floor (19.00%), (11.00% cash + 8.00% PIK) | 09/30/2022 | 09/30/2027 | 9,026 | 8,783 | 8,189 | ||||||||||||||||||
NICE-PAK Products, Inc. Two Nice-Pak Park Orangeburg, NY 10962 |
Consumer Products | Promissory Note | 6, 8 | n/a | 09/30/2022 | 09/30/2029 | 1,449 | - | 1,065 | ||||||||||||||||||
NICE-PAK Products, Inc. Two Nice-Pak Park Orangeburg, NY 10962 |
Consumer Products | Warrants | 6 | n/a | 09/30/2022 | n/a | 880,909 | - | - | 2.56 | % | ||||||||||||||||
NuStar Energy LP 19003 1H-10 West San Antonio, TX 78257 |
Energy Midstream | Preferred Equity | 2, 10 | 3M L + 6.88%, 6.88% Floor (11.72%) | 12/12/2022 | n/a | 6,406 | 142 | 162 | * | |||||||||||||||||
Par Petroleum, LLC 825 Town & Country Lane, Suite 1500 Houston, TX 77024 |
Oil & Gas Refining | 1st Lien, Secured Loan | 2, 10 | 3M SOFR + 4.25%, 4.75% Floor (9.61%) | 02/14/2023 | 02/28/2030 | 3,990 | 3,931 | 3,917 | ||||||||||||||||||
PFS Holdings Corp. 3747 Hecktown Road Easton, PA 18045 |
Food & Staples | 1st Lien, Secured Loan | 2, 5, 6 | 1M L + 7.00%, 8.00% Floor (12.15%) | 11/13/2020 | 11/13/2024 | 1,049 | 1,049 | 944 | ||||||||||||||||||
PFS Holdings Corp. 3747 Hecktown Road Easton, PA 18045 |
Food & Staples | Common Equity | 5, 6, 8 | n/a | 11/13/2020 | n/a | 5,238 | 12,378 | 506 | 5.20 | % | ||||||||||||||||
PIRS Capital LLC 1688 Meridian Ave Ste 700 Miami Beach, FL 33139 |
Specialty Finance | Term Loan | 2, 6 | Prime + 6.50%, 6.50% Floor (14.75%) | 11/22/2021 | 12/31/2024 | 2,000 | 2,000 | 1,995 | ||||||||||||||||||
Prestige Capital Finance, LLC 400 Kelby St., 10th Floor Fort Lee, NJ 07024 |
Specialty Finance | Subordinated Note | 2, 4, 6, 10 | 3M SOFR + 8.50%, 10.50% Floor (13.74%) | 06/15/2021 | 06/15/2025 | 3,000 | 3,000 | 3,000 | ||||||||||||||||||
Prestige Capital Finance, LLC 400 Kelby St., 10th Floor Fort Lee, NJ 07024 |
Specialty Finance | Common Equity | 4, 6, 10 | n/a | 02/08/2019 | n/a | 100 | 7,786 | 12,792 | 80.00 | % | ||||||||||||||||
ProFrac Holdings II, LLC 333 Shops Boulevard Suite 301 Weatherford, Texas 76087 |
Energy Services | 1st Lien, Secured Loan | 2, 10 | 3M SOFR + 7.25%, 8.25% Floor (12.75%) | 02/01/2023 | 03/04/2025 | 9,647 | 9,487 | 9,647 | ||||||||||||||||||
Research Now Group, Inc. 5800 Tennyson Parkway Suite 600 Plano, TX 75024 |
Internet Media | 1st Lien, Secured Revolver | 2, 6 | 3M SOFR + 4.50%, 4.50% Floor (10.00%) | 01/29/2019 | 06/14/2024 | 6,093 | 6,090 | 5,411 |
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Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Research Now Group, Inc. 5800 Tennyson Parkway Suite 600 Plano, TX 75024 |
Internet Media | 1st Lien, Secured Revolver - Unfunded | 6 | 0.50% | 01/29/2019 | 06/14/2024 | 3,907 | - | (438 | ) | |||||||||||||||||
Research Now Group, Inc. 5800 Tennyson Parkway Suite 600 Plano, TX 75024 |
Internet Media | 2nd Lien, Secured Loan | 2, 6 | 3M SOFR + 9.50%, 10.50% Floor (14.80%) | 05/20/2019 | 12/20/2025 | 8,000 | 7,971 | 4,897 | ||||||||||||||||||
Ruby Tuesday Operations LLC 333 E. Broadway Avenue Maryville, TN 37804 |
Restaurants | 1st Lien, Secured Loan | 2, 6, 7 | 1M SOFR + 12.00%, 13.25% Floor (17.26%), (11.26% cash + 6.00% PIK) | 02/24/2021 | 02/24/2025 | 2,180 | 2,180 | 2,114 | ||||||||||||||||||
Ruby Tuesday Operations LLC 333 E. Broadway Avenue Maryville, TN 37804 |
Restaurants | 1st Lien, Secured Loan | 2, 6, 7 | 1M SOFR + 16.00%, 17.25% Floor (21.26%) | 01/31/2023 | 02/24/2025 | 537 | 537 | 537 | ||||||||||||||||||
Ruby Tuesday Operations LLC 333 E. Broadway Avenue Maryville, TN 37804 |
Restaurants | Warrants | 6, 8 | n/a | 02/24/2021 | n/a | 311,697 | - | 832 | 2.81 | % | ||||||||||||||||
SCIH Salt Holdings Inc. 1875 Century Park East, Suite 320 Los Angeles, CA 90067 |
Food & Staples | 1st Lien, Secured Loan | 2 | 1M L + 4.00%, 4.75% Floor (9.15%) | 06/21/2023 | 03/16/2027 | 1,994 | 1,959 | 1,962 | ||||||||||||||||||
Sterling Commercial Credit, LLC 10153 Grand River Rd Brighton, MI 48116 |
Specialty Finance | Subordinated Note | 4, 6, 7 | 11.00% | 02/03/2022 | 05/03/2025 | 8,733 | 8,733 | 8,733 | ||||||||||||||||||
Sterling Commercial Credit, LLC 10153 Grand River Rd Brighton, MI 48116 |
Specialty Finance | Common Equity | 4, 6 | n/a | 02/03/2022 | n/a | 3,280,000 | 7,842 | 5,844 | 80.00 | % | ||||||||||||||||
Stone Ridge Opportunities Fund L.P. One Vanderbilt Ave., 65th Floor New York, NY 10017 |
Insurance | Private Fund | 12 | n/a | 12/15/2022 | n/a | 3,000,000 | 3,000 | 3,415 | ||||||||||||||||||
Summit Midstream Holdings, LLC 910 Louisiana Street, Suite 4200 Houston, TX 77002 |
Energy Midstream | Unsecured Bond | 5.75% | 08/10/2022 | 04/15/2025 | 386 | 340 | 351 | |||||||||||||||||||
Summit Midstream Holdings, LLC 910 Louisiana Street, Suite 4200 Houston, TX 77002 |
Energy Midstream | 2nd Lien, Secured Bond | 9.00% | 10/19/2021 | 10/15/2026 | 4,000 | 3,833 | 3,885 | |||||||||||||||||||
Target Hospitality Corp. 2170 Buckthorne Place, Suite 440 The Woodlands, TX 77380 |
Hospitality | Secured Bond | 10 | 9.50% | 05/13/2021 | 03/15/2024 | 3,331 | 3,321 | 3,338 | ||||||||||||||||||
Traeger Inc. 1215 E Wilmington Ave. Suite 200 Salt Lake City, UT 84106 |
Consumer Products | 1st Lien, Secured Loan | 2, 10 | 1M L + 3.25%, 4.00% Floor (8.45%) | 03/30/2023 | 06/29/2028 | 3,240 | 2,579 | 2,697 | ||||||||||||||||||
TRU Taj Trust 505 Park Avenue, 2nd Floor New York, NY 10022 |
Retail | Common Equity | 6, 8 | n/a | 07/21/2017 | n/a | 16,000 | 611 | 44 | 2.75 | % | ||||||||||||||||
United Insurance Holdings Corp. 800 2nd Avenue S. Saint Petersburg, FL 33701 |
Insurance | Unsecured Bond | 7.25% | 12/20/2022 | 12/15/2027 | 17,500 | 8,707 | 12,950 | |||||||||||||||||||
Universal Fiber Systems 640 State Street Bristol, TN 37620 |
Chemicals | Term Loan B | 2, 6, 7 | 3M SOFR + 13.06%, 14.06% Floor (18.28%), (9.28% cash + 9.00% PIK) | 09/30/2021 | 09/29/2026 | 7,472 | 7,385 | 7,547 | ||||||||||||||||||
Universal Fiber Systems 640 State Street Bristol, TN 37620 |
Chemicals | Term Loan C | 2, 6, 7 | 3M SOFR + 13.06%, 14.06% Floor (18.28%), (9.28% cash + 9.00% PIK) | 09/30/2021 | 09/29/2026 | 2,881 | 2,838 | 2,694 |
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Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Universal Fiber Systems 640 State Street Bristol, TN 37620 |
Chemicals | Warrants | 6, 8 | n/a | 09/30/2021 | n/a | 3,383 | - | 1,579 | 1.50 | % | ||||||||||||||||
Vantage Specialty Chemicals, Inc. 1751 Lake Cook Rd., Suite 550 Deerfield, IL 60015 |
Chemicals | 1st Lien, Secured Loan | 2 | 1M SOFR + 4.75%, 5.25% Floor (9.90%) | 03/03/2023 | 10/26/2026 | 4,975 | 4,836 | 4,823 | ||||||||||||||||||
Vector Group Ltd. 4400 Biscayne Blvd Miami, FL 33137 |
Food & Staples | Unsecured Bond | 10 | 10.50% | 07/08/2022 | 11/01/2026 | 750 | 718 | 750 | ||||||||||||||||||
W&T Offshore, Inc. 5718 Westheimer Road, Suite 700 Houston, TX 77057 |
Oil & Gas Exploration & Production | 2nd Lien, Secured Bond | 10 | 11.75% | 01/12/2023 | 02/01/2026 | 6,000 | 6,000 | 5,984 | ||||||||||||||||||
Investments in Special Purpose Acquisition Companies (SPAC) & De-SPAC Companies | |||||||||||||||||||||||||||
AdTheorent Holding Company, Inc 330 Hudson Street, 13th Floor New York, NY 10013 |
Internet Media | Warrants | 8, 10 | n/a | 02/26/2021 | n/a | 4,166 | 3 | - | * | |||||||||||||||||
Allego N.V. Industriepark Kleefse Waard Westervoortsedijk 73 KB 6827 AV Arnhem, The Netherlands |
Transportation Equipment Manufacturing | Warrants | 8, 10 | n/a | 03/17/2021 | n/a | 8,000 | 9 | 2 | * | |||||||||||||||||
Apollo Strategic Growth Capital II 9 West 57th Street, 43rd Floor New York, NY 10019 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/10/2021 | n/a | 500 | 1 | - | * | |||||||||||||||||
Ares Acquisition Corp 245 Park Avenue, 44th Floor New York, NY 10167 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/02/2021 | n/a | 20,000 | 18 | 16 | * | |||||||||||||||||
BigBear.ai Holdings, Inc. 6811 Benjamin Franklin Dr, Suite 200 Columbia, MD 21046 |
IT Services | Warrants | 8, 10 | n/a | 02/09/2021 | n/a | 8,333 | 6 | 2 | * | |||||||||||||||||
Catcha Investment Corp Level 42, Suntec Tower Three, 8 Temasek Blvd, Singapore 038988 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/12/2021 | n/a | 166 | - | - | * | |||||||||||||||||
CC Neuberger Principal Holdings III 200 Park Avenue, 58th Floor New York, NY 10166 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/03/2021 | n/a | 500 | 1 | - | * | |||||||||||||||||
CF Acquisition Corp VIII 110 East 59th Street New York, NY 10022 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/12/2021 | n/a | 1,000 | 1 | - | * | |||||||||||||||||
Compute Health Acquisition Corp. 1105 North Market Street, 4th Floor Wilmington, DE 19890 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/05/2021 | n/a | 125 | - | - | * | |||||||||||||||||
Core Scientific, Inc. 210 Barton Springs Road Austin, Texas 78704 |
Technology | Warrants | 8, 10 | n/a | 02/10/2021 | n/a | 1,250 | 2 | - | * | |||||||||||||||||
Dave Inc. 750 N. San Vicente Blvd. 900W West Hollywood, CA 90069 |
Consumer Finance | Warrants | 8, 10 | n/a | 03/05/2021 | n/a | 10,000 | 7 | - | * |
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Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Digital Transformation Opportunities Corp. 10207 Cleatis Court Los Angeles, CA 90077 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/10/2021 | n/a | 2,500 | 2 | - | * | |||||||||||||||||
FAST Acquisition Corp II 109 Old Branchville Road Ridgefield, CT 06877 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/16/2021 | n/a | 5,000 | 7 | 3 | * | |||||||||||||||||
Fathom Digital Manufacturing Corporation 1050 Walnut Ridge Drive Hartland, WI 53029 |
Industrial | Warrants | 8, 10 | n/a | 02/05/2021 | n/a | 125 | - | - | * | |||||||||||||||||
FinServ Acquisition Corp II 1345 Avenue of the Americas New York, NY 10105 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/18/2021 | n/a | 125 | - | - | * | |||||||||||||||||
Forest Road Acquisition Corp. II 1177 Avenue of the Americas, 5th Floor New York, NY 10036 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/10/2021 | n/a | 80 | - | - | * | |||||||||||||||||
Forum Merger IV Corp 1615 South Congress Avenue, Suite 103 Delray Beach, FL 33445 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/18/2021 | n/a | 5,000 | 9 | - | * | |||||||||||||||||
Freedom Acquisition I Corp 14 Wall Street, 20th Floor New York, NY 10005 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/26/2021 | n/a | 625 | 1 | - | * | |||||||||||||||||
Fusion Acquisition Corp II 667 Madison Avenue, 5th Floor New York, NY 10065 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/26/2021 | n/a | 1,666 | 1 | - | * | |||||||||||||||||
Ginko Bioworks Holdings, Inc. 27 Drydock Avenue, 8th Floor Boston, MA 02210 |
Biotechnology | Warrants | 8, 10 | n/a | 02/24/2021 | n/a | 5,000 | 13 | 1 | * | |||||||||||||||||
Grove Collaborative Holdings, Inc. 1301 Sansome Street San Francisco, CA 94111 |
Household & Personal Products | Warrants | 8, 10 | n/a | 03/23/2021 | n/a | 5,000 | 7 | - | * | |||||||||||||||||
Iris Acquisition Corp 2700 19th Street San Francisco, CA 94110 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/05/2021 | n/a | 500 | 1 | - | * | |||||||||||||||||
Jaws Mustang Acquisition Corporation 1601 Washington Avenue, Suite 800 Miami Beach, FL 33139 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/02/2021 | n/a | 6,250 | 7 | - | * | |||||||||||||||||
Kismet Acquisition Two Corp. 850 Library Avenue, Suite 204 Newark, DE 19715 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/18/2021 | n/a | 326 | - | - | * | |||||||||||||||||
L Catterton Asia Acquisition C 8 Marina View Asia Square Tower 1, No 41-03 Singapore, 018960 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/11/2021 | n/a | 5,933 | 6 | 3 | * | |||||||||||||||||
Lanvin Group Holdings Ltd Building S2, Bund Finance Center, No. 600, Zhongshan East 2nd Road Huangpu District, Shanghai, China |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/19/2021 | n/a | 5,000 | 6 | 2 | * | |||||||||||||||||
M3-Brigade Acquisition II Corp. 1700 Broadway, 19th Floor New York, NY 10019 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/04/2021 | n/a | 3,333 | 4 | - | * | |||||||||||||||||
Movella Holdings Inc. 3535 Executive Terminal Dr. Suite 110 Henderson, NV 89052 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/17/2021 | n/a | 1,000 | 1 | - | * |
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Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Northern Star Investment Corp. II The Chrysler Building 405 Lexington Avenue New York, NY 10174 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 01/26/2021 | n/a | 100 | - | - | * | |||||||||||||||||
Northern Star Investment Corp. III The Chrysler Building 405 Lexington Avenue New York, NY 10174 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/02/2021 | n/a | 66 | - | - | * | |||||||||||||||||
Northern Star Investment Corp. IV The Chrysler Building 405 Lexington Avenue New York, NY 10174 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/02/2021 | n/a | 66 | - | - | * | |||||||||||||||||
Pear Therapeutics, Inc. 200 State Street, 13th Floor Boston, MA 02109 |
Technology | Warrants | 8, 10 | n/a | 02/02/2021 | n/a | 1,666 | 2 | - | * | |||||||||||||||||
Pivotal Investment Corp III The Chrysler Building 405 Lexington Avenue, 11th Floor New York, NY 10174 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/09/2021 | n/a | 100 | - | - | * | |||||||||||||||||
Planet Labs PBC 645 Harrison Street, 4th Floor San Francisco, CA 94107 |
Communications Equipment | Warrants | 8, 10 | n/a | 03/05/2021 | n/a | 400 | - | - | * | |||||||||||||||||
Plum Acquisition Corp. I 2021 Fillmore Street, #2089 San Francisco, CA 94115 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/16/2021 | n/a | 1,600 | 2 | - | * | |||||||||||||||||
Polestar Automotive Holding UK PLC Assar Gabrielssons Väg 9 405 31 Göteborg, Sweden |
Auto Manufacturer | Warrants | 8, 10 | n/a | 03/23/2021 | n/a | 2,000 | 5 | 1 | * | |||||||||||||||||
RMG Acquisition Corp. III 57 Ocean, Suite 403 5775 Collins Avenue Miami Beach, FL 33140 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/05/2021 | n/a | 3,333 | 5 | - | * | |||||||||||||||||
Ross Acquisition Corp II 1 Pelican Lane Palm Beach, FL 33480 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 03/12/2021 | n/a | 6,666 | 7 | 1 | * | |||||||||||||||||
Rumble Inc. 444 Gulf of Mexico Drive Longboat Key, FL 34228 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 05/10/2021 | n/a | 1,250 | 1 | 3 | * | |||||||||||||||||
Slam Corp. 55 Hudson Yards, 47th Floor, Suite C New York, NY 10001 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 04/26/2021 | n/a | 1,250 | 1 | - | * | |||||||||||||||||
Sonder Holdings Inc. 101 15th Street San Francisco, CA 94103 |
Hospitality | Warrants | 8, 10 | n/a | 03/19/2021 | n/a | 500 | 1 | - | * | |||||||||||||||||
Sustainable Development Acquisition I Corp. 5701 Truxtun Avenue, Suite 201 Bakersfield, CA 90036 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 02/05/2021 | n/a | 1,250 | 1 | - | * | |||||||||||||||||
Terran Orbital Corporation 6800 Broken Sound Pkwy NW, Suite 200 Boca Raton, FL 33487 |
Communications Equipment | Warrants | 8, 10 | n/a | 02/19/2021 | n/a | 3,333 | 3 | 1 | * | |||||||||||||||||
TLG Acquisition One Corp. 515 North Flagler Drive, Suite 520 West Palm Beach, FL 33401 |
Special Purpose Acquisition Company | Warrants | 8, 10 | n/a | 01/28/2021 | n/a | 5,000 | 3 | - | * |
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Portfolio Company | Industry | Security(1) | Notes | Interest Rate(2) | Initial Acquisition Date | Maturity | Par Amount / Quantity | Cost | Fair Value |
Percentage of Class(3) |
|||||||||||||||||
Tritium DCFC Ltd 23 Archimedes Place Murarrie, QLD Australia |
Transportation Equipment Manufacturing | Warrants | 8, 10 | n/a | 02/04/2021 | n/a | 5,000 | 6 | 2 | * | |||||||||||||||||
Total Investments in Special Purpose Acquisition Companies | 150 | 37 | |||||||||||||||||||||||||
Total Investments excluding Short-Term Investments (254.64% of Net Assets) | 257,879 | 236,431 | |||||||||||||||||||||||||
Short-Term Investments | |||||||||||||||||||||||||||
United States Treasury | Short-Term Investments | Treasury Bill | 0.00% | 06/30/2023 | 08/01/2023 | 70,000,000 | 69,734 | 69,715 | |||||||||||||||||||
GS Financial Square Treasury Obligations Fund | Short-Term Investments | Money Market | 0.00% | 06/30/2022 | n/a | 8,424,039 | 8,424 | 8,424 | |||||||||||||||||||
Total Short-Term Investments (84.16% of Net Assets) | 78,158 | 78,139 | |||||||||||||||||||||||||
TOTAL INVESTMENTS (338.80% of Net Assets) | 13 | $ | 336,037 | $ | 314,570 | ||||||||||||||||||||||
Other Liabilities in Excess of Net Assets (238.79% of Net Assets) | $ | (221,720 | ) | ||||||||||||||||||||||||
NET ASSETS | $ | 92,850 |
(1) | The Company's investments are generally acquired in private transactions exempt from registration under the Securities Act and, therefore, are generally subject to limitations on resale, and may be deemed to be "restricted securities" under the Securities Act. |
(2) | Certain of the Company's variable rate debt investments bear interest at a rate that is determined by reference to LIBOR ("L"), prime rate ("Prime"), or SOFR which are reset periodically. For each debt investment, the Company has provided the interest rate in effect as of period end. A floor is the minimum rate that will be applied in calculating an interest rate. A cap is the maximum rate that will be applied in calculating an interest rate. The one-month ("1M") LIBOR as of period end was 5.22%. The three-month ("3M") LIBOR as of period end was 5.55%. The six-month ("6M") LIBOR as of period end was 5.76%. The prime rate as of period end was 8.25%. The SOFR as of period end was 5.09%. |
(3) | Percentage of class held refers only to equity held, if any, calculated on a fully diluted basis. |
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(4) | "Controlled Investments" are investments in those companies over which we exercise "control", as defined in the Investment Company Act. A company is deemed to be a "Controlled Investment" of the Company if the Company owns more than 25% of the voting securities of such company. |
(5) | "Affiliate Investments" are investments in those companies that are "Affiliated Companies" of the Company, as defined in the Investment Company Act, which are not "Controlled Investments." A company is deemed to be an "Affiliate" of the Company if the Company owns 5% or more, but less than 25%, of the voting securities of such company. |
(6) | Investments classified as Level 3 whereby fair value was determined by the Company's board of directors (the "Board"). |
(7) | Security pays, or has the option to pay, some or all of its interest in kind. As of June 30, 2023, the Avation Capital SA secured bond, New Wilkie Energy Pty Limited secured loan, Nice-Pak Products, Inc. secured loan B, Ruby Tuesday Operations, LLC secured loans and each of the Universal Fiber Systems term loans pay all or a portion of their interest in-kind and the rates above reflect the PIK interest rates. As of June 30, 2023, each of the Avanti Space Limited secured debt pay in kind and the rates above reflect the PIK interest rates, however, each position is on non-accrual. |
(8) | Non-income producing security. |
(9) | Investment was on non-accrual status as of period end. |
(10) | Indicates assets that the Company believes do not represent "qualifying assets" under Section 55(a) of the Investment Company Act. Qualifying assets must represent at least 70% of the Company's total assets at the time of acquisition of any additional non-qualifying assets. Of the Company's total assets, 24.21% were non-qualifying assets as of period end. |
(11) | Security exempt from registration pursuant to Rule 144A under the Securities Act. Such security may be sold in certain transactions (normally to qualified institutional buyers) and remain exempt from registration. |
(12) | As a practical expedient, the Company uses NAV to determine the fair value of this investment. |
(13) | As of period end, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $15,906; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $37,373; the net unrealized depreciation was $21,467; the aggregate cost of securities for Federal income tax purposes was $336,037. |
* | Represents less than 1%. |
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Portfolio and Investment Activity
The following is a summary of our investment activity for the years ended December 31, 2022 and 2021 and the six months ended June 30, 2023:
(in thousands) | Acquisitions(1) | Dispositions(2) |
Weighted Average Yield End of Period(3) |
||||||
Quarter ended March 31, 2021 | $ 58,429 | $ (28,268) | 10.91% | ||||||
Quarter ended June 30, 2021 | 49,904 | (35,583) | 11.10% | ||||||
Quarter ended September 30, 2021 | 72,340 | (31,640) | 11.27% | ||||||
Quarter ended December 31, 2021 | 34,184 | (40,270) | 10.81% | ||||||
For the Year Ended December 31, 2021 | 214,857 | (135,761) | |||||||
Quarter ended March 31, 2022 | $ 27,578 | $ (29,723) | 10.38% | ||||||
Quarter ended June 30, 2022 | 44,750 | (34,014) | 10.27% | ||||||
Quarter ended September 30, 2022 | 40,212 | (28,430) | 11.59% | ||||||
Quarter ended December 31, 2022 | 37,588 | (20,461) | 12.43% | ||||||
For the Year Ended December 31, 2022 | 150,128 | (112,628) | |||||||
Quarter ended March 31, 2023 | 53,293 | (57,175) | 13.06% | ||||||
Quarter ended June 30, 2023 | 23,042 | (15,975) | 13.47% | ||||||
For the Six Months Ended June 30, 2023 | $ 76,335 | $ (73,150) |
(1) | Includes new investments, additional fundings (inclusive of those on revolving credit facilities), refinancings and capitalized PIK income. Investments in short-term securities, including U.S. Treasury Bills and money market mutual funds, were excluded. |
(2) | Includes scheduled principal payments, prepayments, sales, and repayments (inclusive of those on revolving credit facilities). Investments in short-term securities, including U.S. Treasury Bills and money market mutual funds, were excluded. |
(3) | Weighted average yield is based upon the stated coupon rate and fair value of outstanding debt securities at the measurement date. Debt securities on non-accrual status are included in the calculation and are treated as having 0% as their applicable interest rate for purposes of this calculation, unless such debt securities are valued at zero. |
Portfolio Reconciliation
The following is a reconciliation of the investment portfolio for the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021. Investments in short-term securities, including U.S. Treasury Bills and money market mutual funds, are excluded from the table below.
For the Six Months Ended June 30, 2023 |
For the Year Ended December 31, |
||||||||
(in thousands) | 2022 | 2021 | |||||||
Beginning Investment Portfolio, at fair value | $ 224,957 | $ 212,149 | $ 151,648 | ||||||
Portfolio Investments acquired(1) | 76,335 | 150,128 | 214,857 | ||||||
Amortization of premium and accretion of discount, net | 1,121 | 1,328 | 3,958 | ||||||
Portfolio Investments repaid or sold(2) | (73,150) | (112,628) | (135,761) | ||||||
Net change in unrealized appreciation (depreciation) on investments | 4,774 | 100,016 | (12,922) | ||||||
Net realized gain (loss) on investments | 2,394 | (126,036) | (9,631) | ||||||
Ending Investment Portfolio, at fair value | $ 236,431 | $ 224,957 | $ 212,149 |
(1) | Includes new investments, additional fundings (inclusive of those on revolving credit facilities), refinancings, and capitalized PIK income. |
(2) | Includes scheduled principal payments, prepayments, sales, and repayments (inclusive of those on revolving credit facilities). |
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Portfolio Classification
The following table shows the fair value of our portfolio of investments by industry as of June 30, 2023 and December 31, 2022 and 2021 (in thousands):
June 30, 2023 | December 31, 2022 | December 31, 2021 | |||||||||||||||||
Industry |
Investments at Fair Value |
Percentage of Fair Value |
Investments at Fair Value |
Percentage of Fair Value |
Investments at Fair Value |
Percentage of Fair Value |
|||||||||||||
Specialty Finance | $ 54,208 | 22.93 | % | $ 58,250 | 25.89 | % | $ 47,952 | 22.60 | % | ||||||||||
Chemicals | 26,172 | 11.07 | % | 31,702 | 14.09 | % | 15,058 | 7.10 | % | ||||||||||
Insurance | 16,365 | 6.92 | % | 2,340 | 1.04 | % | - | - | % | ||||||||||
Transportation Equipment Manufacturing | 16,041 | 6.79 | % | 11,803 | 5.25 | % | 6,030 | 2.84 | % | ||||||||||
Shipping | 14,066 | 5.95 | % | 7,206 | 3.20 | % | - | - | % | ||||||||||
Oil & Gas Exploration & Production | 13,262 | 5.61 | % | 15,136 | 6.74 | % | 9,849 | 4.64 | % | ||||||||||
Consumer Products | 11,951 | 5.05 | % | 8,413 | 3.74 | % | - | - | % | ||||||||||
Metals & Mining | 10,938 | 4.63 | % | 6,046 | 2.69 | % | 13,711 | 6.46 | % | ||||||||||
Internet Media | 9,870 | 4.17 | % | 12,247 | 5.44 | % | 11,870 | 5.60 | % | ||||||||||
Energy Services | 9,647 | 4.08 | % | 2,877 | 1.28 | % | - | - | % | ||||||||||
Casinos & Gaming | 9,332 | 3.95 | % | 9,301 | 4.13 | % | 5,291 | 2.49 | % | ||||||||||
Closed-End Fund | 7,738 | 3.27 | % | 5,825 | 2.59 | % | - | - | % | ||||||||||
Food & Staples | 7,657 | 3.24 | % | 3,660 | 1.63 | % | 2,724 | 1.28 | % | ||||||||||
Energy Midstream | 6,327 | 2.68 | % | 22,559 | 10.03 | % | 31,815 | 15.00 | % | ||||||||||
Industrial | 6,014 | 2.54 | % | 5,498 | 2.44 | % | 7,551 | 3.56 | % | ||||||||||
Aircraft | 4,015 | 1.70 | % | 3,577 | 1.59 | % | - | - | % | ||||||||||
Oil & Gas Refining | 3,917 | 1.66 | % | 5,388 | 2.40 | % | 3,030 | 1.43 | % | ||||||||||
Restaurants | 3,483 | 1.47 | % | 3,110 | 1.38 | % | 8,310 | 3.92 | % | ||||||||||
Hospitality | 3,338 | 1.41 | % | 4,988 | 2.22 | % | 4,085 | 1.93 | % | ||||||||||
Apparel | 2,013 | 0.85 | % | 2,371 | 1.05 | % | 2,929 | 1.38 | % | ||||||||||
Retail | 44 | 0.02 | % | 5 | 0.00 | % | 4,267 | 2.01 | % | ||||||||||
Special Purpose Acquisition Company | 28 | 0.01 | % | 19 | 0.01 | % | 3,044 | 1.43 | % | ||||||||||
IT Services | 2 | 0.00 | % | - | - | % | 7 | 0.01 | % | ||||||||||
Auto Manufacturer | 1 | 0.00 | % | 2 | 0.00 | % | - | - | % | ||||||||||
Communications Equipment | 1 | 0.00 | % | - | - | % | 1,057 | 0.50 | % | ||||||||||
Biotechnology | 1 | 0.00 | % | 1 | 0.00 | % | 11 | 0.01 | % | ||||||||||
Technology | - | - | % | (365) | (0.16 | )% | (158) | (0.07 | )% | ||||||||||
Household & Personal Products | - | - | % | 1 | 0.00 | % | - | - | % | ||||||||||
Wireless Telecommunications Services | - | - | % | 2,997 | 1.33 | % | 8,137 | 3.84 | % | ||||||||||
Construction Materials Manufacturing | - | - | % | - | - | % | 10,461 | 4.93 | % | ||||||||||
Home Security | - | - | % | - | - | % | 5,590 | 2.63 | % | ||||||||||
Commercial Printing | - | - | % | - | - | % | 2,025 | 0.95 | % | ||||||||||
Healthcare Supplies | - | - | % | - | - | % | 2,869 | 1.35 | % | ||||||||||
Consumer Services | - | - | % | - | - | % | 2,640 | 1.24 | % | ||||||||||
Software Services | - | - | % | - | - | % | 1,994 | 0.94 | % | ||||||||||
Total | $ 236,431 | 100.00 | % | $ 224,957 | 100.00 | % | $ 212,149 | 100.00 | % |
TABLE OF CONTENTS
Results of Operations
Investment Income
For the Three Months Ended June 30, | For the Six Months Ended June 30, | For the Year Ended December 31, | ||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2022 | 2021 | |||||||||||||||||||||
In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(3) | In Thousands | Per Share(3) | |||||||||||||||
Total Investment Income | $ 8,977 | $ 1.18 | $ 5,513 | $ 1.06 | $ 17,387 | $ 2.29 | $ 11,071 | $ 2.27 | $ 24,429 | $ 3.91 | $ 25,254 | $ 6.20 | ||||||||||||||
Interest income | 7,081 | 0.93 | 3,734 | 0.72 | 13,711 | 1.80 | 7,775 | 1.59 | 18,684 | 2.99 | 19,917 | 4.89 | ||||||||||||||
Dividend income | 1,027 | 0.14 | 1,389 | 0.27 | 1,961 | 0.26 | 2,656 | 0.54 | 4,354 | 0.70 | 4,347 | 1.07 | ||||||||||||||
Other income | 869 | 0.11 | 390 | 0.08 | 1,715 | 0.23 | 640 | 0.13 | 1,391 | 0.22 | 990 | 0.24 |
(1) | The per share amounts are based on a weighted average of 7,601,958 outstanding common shares for the three and six months ended June 30, 2023. |
(2) | The per share amounts are based on a weighted average of 5,194,910 and 4,878,439 outstanding common shares for the three and six months ended June 30, 2022, respectively. These weighted average share amounts have been retroactively adjusted for the reverse stock split effected on February 28, 2022. |
(3) | The per share amounts are based on a weighted average of 6,251,391 outstanding common shares for the year ended December 31, 2022 and a weighted average of 4,073,454 outstanding common shares for the year ended December 31, 2021. These weighted average share amounts have been retroactively adjusted for the 6-for-1 reverse stock split effected on February 28, 2022. |
Investment income consists of interest income, including net amortization of premium and accretion of discount on loans and debt securities, dividend income and other income, which primarily consists of amendment fees, commitment fees and funding fees on loans. For the years ended December 31, 2022 and 2021, income includes non-cash PIK income of $1.3 million and $5.5 million, respectively.
Interest income increased for the three and six months ended June 30, 2023 as compared to the corresponding periods in the prior year primarily due to growth of the portfolio and rising interest rates. As of June 30, 2023, the debt investment portfolio had an average coupon rate of 12.3% on approximately $217.5 million of principal as compared to 9.8% on approximately $161.0 million of principal as of June 30, 2022, excluding positions on non-accrual in each period.
Dividend income for the three and six months ended June 30, 2023 decreased as compared to the corresponding periods in the prior year due to lower quarterly distributions from our investments in specialty finance portfolio companies and exits from certain preferred equity positions.
The increase in other income for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 is attributable to earning approximately $0.8 million per quarter in fees in connection with the extensions of certain revolver commitments.
The decrease in interest income for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is primarily attributable to our investments in Avanti Communications which were put on non-accrual status at the end of fiscal year 2021 and in early fiscal year 2022 and subsequently restructured in April 2022. As a result, we recognized only $0.1 in interest income on our investments in Avanti Communications for the year ended December 31, 2022 as compared to $6.2 million for the year ended December 31, 2021. This decrease was partially offset by interest income earned on new positions in the portfolio.
Other income increased for the year ended December 31, 2022 as compared to the year ended December 31, 2021 as a result of earning approximately $1.2 million in fees in connection with the extensions of certain revolver commitments. This increase was partially offset by a decrease of $0.8 million in other funding and consent fees earned in the year ended December 31, 2022 as compared to the year ended December 31, 2021.
TABLE OF CONTENTS
Expenses
For the Three Months Ended June 30, | For the Six Months Ended June 30, | For the Year Ended December 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2022 | 2021 | |||||||||||||||||||
In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(3) | In Thousands | Per Share(3) | |||||||||||||
Total Expenses | $ 5,609 | $ 0.74 | $ 4,325 | $ 0.83 | $ 11,152 | $ 1.47 | $ 3,828 | $ 0.78 | $ 13,716 | $ 2.19 | $ 12,921 | $ 3.17 | ||||||||||||
Management fees | 884 | 0.12 | 771 | 0.15 | 1,753 | 0.23 | 1,551 | 0.32 | 3,205 | 0.51 | 3,182 | 0.78 | ||||||||||||
Incentive fees | 842 | 0.11 | - | - | 1,552 | 0.20 | - | - | 565 | 0.10 | (4,323) | (1.06) | ||||||||||||
Incentive fee waiver | - | - | - | - | - | - | (4,854) | (0.99) | (4,854) | (0.78) | - | - | ||||||||||||
Total advisory and management fees | $ 1,726 | $ 0.23 | $ 771 | $ 0.15 | $ 3,305 | $ 0.43 | $ (3,303) | $ (0.68) | (1,084) | (0.17) | (1,141) | (0.28) | ||||||||||||
Administration fees | 341 | 0.04 | 262 | 0.05 | 636 | 0.08 | 483 | 0.10 | 938 | 0.15 | 673 | 0.17 | ||||||||||||
Directors' fees | 53 | 0.01 | 44 | 0.01 | 105 | 0.01 | 107 | 0.02 | 215 | 0.03 | 233 | 0.06 | ||||||||||||
Interest expense | 2,769 | 0.36 | 2,667 | 0.51 | 5,590 | 0.74 | 5,337 | 1.09 | 10,690 | 1.71 | 10,428 | 2.56 | ||||||||||||
Professional services | 434 | 0.06 | 373 | 0.07 | 970 | 0.13 | 791 | 0.16 | 1,967 | 0.31 | 1,937 | 0.48 | ||||||||||||
Custody fees | 21 | 0.00 | 14 | 0.00 | 43 | 0.01 | 28 | 0.01 | 53 | 0.01 | 54 | 0.01 | ||||||||||||
Other | 265 | 0.04 | 194 | 0.04 | 503 | 0.07 | 385 | 0.08 | 937 | 0.15 | 737 | 0.17 | ||||||||||||
Income Tax Expense | ||||||||||||||||||||||||
Excise tax | - | - | - | - | 28 | 0.00 | 101 | 0.02 | 252 | 0.04 | 48 | 0.01 |
(1) | The per share amounts are based on a weighted average of 7,601,958 outstanding common shares for the three and six months ended June 30, 2023. |
(2) | The per share amounts are based on a weighted average of 5,194,910 and 4,878,439 outstanding common shares for the three and six months ended June 30, 2022, respectively. These weighted average share amounts have been retroactively adjusted for the reverse stock split effected on February 28, 2022. |
(3) | The per share amounts are based on a weighted average of 6,251,391 outstanding common shares for the year ended December 31, 2022 and a weighted average of 4,073,454 outstanding common shares for the year ended December 31, 2021. These weighted average share amounts have been retroactively adjusted for the 6-for-1 reverse stock split effected on February 28, 2022. |
Expenses are largely comprised of advisory fees and administration fees paid to GECM and interest expense on our outstanding notes payable. See "-Liquidity and Capital Resources." Advisory fees include management fees and incentive fees calculated in accordance with the Investment Management Agreement, and administration fees include direct costs reimbursable to GECM under the Administration Agreement and fees paid for sub-administration services.
Incentive fees increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 due to increased pre-incentive net investment income over the same periods. In addition, GECM waived all accrued and unpaid incentive fees pursuant to the Investment Management Agreement as of March 31, 2022. As of March 31, 2022, there were approximately $4.9 million of accrued and unpaid incentive fees held on our balance sheet. In connection with the incentive fee waiver, we recognized the reversal of these accrued and unpaid incentive fees during the period ended March 31, 2022, resulting in a corresponding increase in NAV in such period. The incentive fee waiver is not subject to recapture.
Professional services costs increased for the three and six months ended June 30, 2023 as compared to the corresponding periods in the prior year, primarily due to increased legal expenses associated with specific transaction matters, as well as general rate increases for professional services including legal and accounting costs.
Overall expenses for the year ended December 31, 2022 increased as compared to the year ended December 31, 2021 primarily driven by increases in administration fees and other expenses. The $0.3 million increase in administration fees for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is attributable to increased allocation of personnel costs from GECM as a result of additional resource time spent on GECC matters.
Other expenses include costs for insurance, transfer agent fees, shareholder materials and other compliance related expenses. The $0.2 million increase in other expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily driven by increased costs associated with systems, travel and diligence expenses and a settlement payment related to a former investment.
For the year ended December 31, 2022, GECC recognized $0.6 million in incentive fees which was offset by $4.9 million in previously recognized incentive fees which were waived by GECM as of March 31, 2022 resulting in a net reversal of $4.3 million for incentive fees for the year. For the year ended December 31, 2021, GECC recognized $1.2 million in incentive fees which were offset by the reversal of $5.3 million in previously recognized incentive fees as a result of income reversals, realized losses where proceeds did not cover the amortized cost basis, and the determination that previously recognized incentive fees earned on certain non-accrual positions with significant write-downs should not be recognized as a liability.
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Realized Gains (Losses)
The following table summarizes our realized gains (losses) resulting from investment activity and purchase accounting.
For the Three Months Ended June 30, | For the Six Months Ended June 30, | For the Year Ended December 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2022 | 2021 | |||||||||||||||||||
In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(3) | In Thousands | Per Share(3) | |||||||||||||
Net Realized Gain (Loss) | $ 542 | $ 0.07 | $ (109,751) | $ (21.13) | $ 2,387 | $ 0.31 | $ (129,684) | $ (26.58) | $ (126,046) | $ (20.16) | $ (9,639) | $ (2.37) | ||||||||||||
Gross realized gain | 600 | 0.08 | 1,678 | 0.32 | 2,502 | 0.33 | 2,470 | 0.51 | 6,207 | 0.99 | 8,128 | 2.00 | ||||||||||||
Gross realized loss | (58) | (0.01) | (111,429) | (21.45) | (115) | (0.02) | (132,153) | (27.09) | (132,253) | (21.15) | (17,767) | (4.37) |
(1) | The per share amounts are based on a weighted average of 7,601,958 outstanding common shares for the three and six months ended June 30, 2023. |
(2) | The per share amounts are based on a weighted average of 5,194,910 and 4,878,439 outstanding common shares for the three and six months ended June 30, 2022, respectively. These weighted average share amounts have been retroactively adjusted for the reverse stock split effected on February 28, 2022. |
(3) | The per share amounts are based on a weighted average of 6,251,391 outstanding common shares for the year ended December 31, 2022 and a weighted average of 4,073,454 outstanding common shares for the year ended December 31, 2021. These weighted average share amounts have been retroactively adjusted for the 6-for-1 reverse stock split effected on February 28, 2022. |
For the three months ended June 30, 2023, net realized gains were primarily driven by the sales of our investments in the Perforce Software, Inc. ("Perforce") first lien secured revolver and Equitrans Midstream Corp. preferred equity on which we realized gains of $0.3 million and $0.2 million, respectively. During the six months ended June 30, 2023, net realized gains were primarily driven by sales of our investments in Crestwood Equity Partners LP preferred equity, the paydown of our investment in Par Petroleum, LLC first lien secured bond and the sale of our investment in the Perforce first lien secured revolver resulting in realized gains of $0.7 million, $0.4 million, and $0.3 million, respectively.
During the three months ended June 30, 2022, net realized losses were primarily driven by the restructuring of our investment in Avanti Communications which included the write off of our investments in the Avanti Communications second lien bonds, 1.5 lien loan and common equity resulting in realization of $110 million in previously recognized unrealized losses. Gross realized gains include $0.9 million and $0.6 million realized on the refinancing of our investment in Tensar Corporation 2nd lien secured loan and the sale of the GAC Holdco Inc. warrants, respectively.
During the six months ended June 30, 2022, gross realized losses included the losses recognized as a result of the Avanti Communications restructuring discussed above along with additional losses of $15.9 million and $4.2 million recognized on the sale of our positions in Tru (UK) Asia Limited ("Tru Taj") common stock and California Pizza Kitchen, Inc. ("CPK") common stock, respectively.
During the year ended December 31, 2022, net realized losses on investments were primarily driven by the restructuring of Avanti Communications on which we realized approximately $111 million of previously recognized unrealized losses as a result of the April 2022 restructuring. In addition, we realized approximately $15.9 million and $4.2 million of previously recognized unrealized losses as a result of the sales of our positions in Tru Taj common stock and CPK common stock, respectively. Such realized losses are offset by the relief of those previously recognized unrealized losses as discussed under "-Changes in Unrealized Appreciation (Depreciation) on Investments" below.
During the year ended December 31, 2022, gross realized gains included approximately $2.2 million on sales of our investment in Crestwood preferred stock, $1.0 million on the sale of our investment in GAC HoldCo Inc. warrants and $0.9 million on the refinancing of our investment in Tensar Corporation 2nd Lien secured loan.
During the year ended December 31. 2021, net realized losses on investments were primarily driven by exits from our investments in Davidzon Radio, Inc. ("Davidzon"), OPS Acquisitions Limited and Ocean Protection Services Limited ("OPS"), Boardriders, Inc. and Best Western Luling, on which we recognized $5.7 million, $4.2 million, $2.9 million and $1.3 million, respectively, in realized losses. We recognized realized gains of $4.0 million on sales of our investment in Crestwood and $1.2 million and $0.4 million, respectively, on paydowns of our investments in Subcom, LLC revolver and CPK 1st Lien secured loan.
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Change in Unrealized Appreciation (Depreciation) on Investments
The following table summarizes the significant unrealized appreciation (depreciation) of our investment portfolio.
For the Three Months Ended June 30, | For the Six Months Ended June 30, | For the Year Ended December 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2022 | 2021 | |||||||||||||||||||
In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(1) | In Thousands | Per Share(2) | In Thousands | Per Share(3) | In Thousands | Per Share(3) | |||||||||||||
Net change in unrealized appreciation/ (depreciation) | $ 1,292 | $ 0.17 | $ 104,045 | $ 20.03 | $ 4,768 | $ 0.63 | $ 112,915 | $ 23.15 | $ 100,002 | $ 16.00 | $ (12,921) | $ (3.17) | ||||||||||||
Unrealized appreciation | 5,453 | 0.72 | 112,487 | 21.65 | 11,005 | 1.45 | 123,327 | 25.28 | 130,699 | 20.91 | 54,377 | 13.35 | ||||||||||||
Unrealized depreciation | (4,161) | (0.55) | (8,442) | (1.63) | (6,237) | (0.82) | (10,413) | (2.13) | (30,697) | (4.91) | (67,298) | (16.52) |
(1) | The per share amounts are based on a weighted average of 7,601,958 outstanding common shares for the three and six months ended June 30, 2023. |
(2) | The per share amounts are based on a weighted average of 5,194,910 and 4,878,439 outstanding common shares for the three and six months ended June 30, 2022, respectively. These weighted average share amounts have been retroactively adjusted for the reverse stock split effected on February 28, 2022. |
(3) | The per share amounts are based on a weighted average of 6,251,391 outstanding common shares for the year ended December 31, 2022 and a weighted average of 4,073,454 outstanding common shares for the year ended December 31, 2021. These weighted average share amounts have been retroactively adjusted for the 6-for-1 reverse stock split effected on February 28, 2022. |
For the three months ended June 30, 2023, net unrealized appreciation was primarily driven by increases in the fair value of our investment in American Coastal Insurance Corporation (formerly known as United Insurance Holding Corp.) ("ACIC") unsecured bonds, Maverick Gaming, LLC term loan, and Nice-Pak Products, Inc. promissory notes on which recognized appreciation of $1.3 million, $0.7 million, and $0.5 million, respectively. These gains were partially offset by unrealized depreciation of $1.7 million, $0.6 million and $0.5 million due to decreases in the fair value of our investments in Lenders Funding common equity, Research Now Group, Inc. ("Research Now") second lien secured loan and Research Now revolver, respectively.
Net unrealized appreciation for the six months ended June 30, 2023 was primarily driven by increases in the fair value of our investment in ACIC unsecured bonds, Prestige Capital Finance, LLC common equity, and Blackstone Secured Lending common equity on which recognized appreciation of $4.4 million, $1.2 million, and $1.0 million, respectively. These gains were partially offset by unrealized depreciation of $2.0 million, $0.7 million and $0.7 million due to decreases in fair value of our investment in Lenders Funding common equity, Research Now second lien secured loan and First Brands, Inc. second lien secured loan, respectively.
During the three months ended June 30, 2022, gross unrealized appreciation primarily due to the realization of previously recognized unrealized losses on our investments in the Avanti Communications 2nd lien bonds, 1.5 lien notes and common equity as discussed under Realized Gains (Losses) above, resulting in the reversal of approximately $110 million in previously recognized unrealized depreciation. For the six months ended June 30, 2022, unrealized appreciation also includes approximately $15.3 million and $4.2 million in reversals of previously recognized unrealized depreciation as a result of the sales of our investments in Tru Taj common equity and CPK common equity. Unrealized depreciation for the three and six months ended June 30, 2022 also includes approximately $6.8 million of loss on our investments in Avanti Space Limited E2, F and G junior priority notes.
For the year ended December 31, 2022, net unrealized appreciation was attributable to the relief of previously recognized unrealized depreciation as a result of sales of our investments in Tru Taj and CPK and the restructuring of our investments in Avanti Communications, as discussed under Realized Gains (Losses) above.
Unrealized depreciation for the year ended December 31, 2022 includes approximately $7.0 million in decrease in fair value of our investment in Avanti Space Limited junior priority notes received in the April 2022 restructuring of Avanti Communications and $5.1 million in decrease in fair value of our equity investment in Lenders Funding.
For the year ended December 31, 2021, net unrealized depreciation was largely driven by decreases in portfolio company valuations as compared to the prior year end. Most notably, we recognized unrealized depreciation of $32.0 million on our investments in Avanti Communications and approximately $5.9 million on our investments in PFS Holdings Corp. These were offset by unrealized appreciation of $6.0 million, $5.2 million, and $4.2 million on the investments in CPK common equity, Davidzon and OPS 1st lien secured loan, respectively, due to exits from these positions resulting in reversing previously recognized unrealized depreciation.
Please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for a discussion of fiscal year 2020.
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Liquidity and Capital Resources
We generate liquidity through our operations with cash received from investment income and sales and paydowns on investments. Such proceeds are generally reinvested in new investment opportunities, distributed to shareholders in the form of dividends, or used to pay operating expenses. We also receive proceeds from our issuances of notes payable and our revolving credit facility and from time to time may raise additional equity capital. See "-Revolver" and "-Notes Payable" below for more information regarding our outstanding credit facility and notes.
At June 30, 2023, we had approximately $3.4 million of cash and cash equivalents and approximately $8.4 million of money market fund investments at fair value. At June 30, 2023, we had investments in 50 debt instruments across 41 companies, totaling approximately $198.8 million at fair value and 60 equity investments in 60 companies, totaling approximately $37.6 million at fair value.
In the normal course of business, we may enter into investment agreements under which we commit to make an investment in a portfolio company at some future date or over a specified period of time. As of June 30, 2023, we had approximately $11.9 million in unfunded loan commitments, subject to our approval in certain instances, to provide debt financing to certain of our portfolio companies. We had sufficient cash and other liquid assets on our June 30, 2023 balance sheet to satisfy the unfunded commitments.
For the six months ended June 30, 2023, net cash provided by operating activities was approximately $13.1 million, reflecting the purchases and repayments of investments offset by net investment income, including non-cash income related to accretion of discount and PIK income and proceeds from sales of investments and principal payments received. Net cash provided by purchases and proceeds from sales of investments was approximately $5.4 million, reflecting payments for additional investments of $68.1 million, offset by proceeds from principal repayments and sales of $73.5 million. Such amounts include draws and repayments on investments in revolving credit facilities.
For the six months ended June 30, 2023, net cash used in financing activities was $10.3 million, consisting of $5.0 million in net repayments on the revolving credit facility and $5.3 million in distributions to stockholders.
At December 31, 2022, we had approximately $0.6 million of cash and cash equivalents and approximately $6.3 million of money market fund investments at fair value. At December 31, 2022, we had investments in 52 debt instruments across 42 companies, totaling approximately $185.0 million at fair value and 89 equity investments in 88 companies, totaling approximately $40.0 million at fair value.
In the normal course of business, we may enter into investment agreements under which we commit to make an investment in a portfolio company at some future date or over a specified period of time. As of December 31, 2022, we had approximately $19.9 million in unfunded loan commitments to provide debt financing to certain of our portfolio companies. We had sufficient cash and other liquid assets on our December 31, 2022 balance sheet to satisfy the unfunded commitments.
For the year ended December 31, 2022, net cash used in operating activities was approximately $41.8 million, reflecting the purchases and repayments of investments offset by net investment income, including non-cash income related to accretion of discount and PIK income and proceeds from sales of investments and principal payments received. Net cash used in purchases and proceeds from sales of investments was approximately $36.5 million, reflecting payments for additional investments of $149.5 million, offset by proceeds from principal repayments and sales of $113.0 million. Such amounts include draws and repayments on revolving credit facilities.
For the year ended December 31, 2021, net cash used in operating activities was approximately $58.5 million, reflecting the purchases and repayments of investments offset by net investment income, including non-cash income related to accretion of discount and PIK income and proceeds from sales of investments and principal payments received. Net cash used in purchases and proceeds from sales of investments was approximately $56.9 million, reflecting payments for additional investments of $191.9 million, offset by proceeds from principal repayments and sales of $135.0 million. Such amounts include draws and repayments on revolving credit facilities.
For the year ended December 31, 2022, cash provided by financing activities was $33.2 million, which consisted of $37.5 million in proceeds from issuance of common stock and $10.0 million in borrowings under credit facility offset by $13.0 million in distributions and $1.3 million in payments of deferred financing costs. For the year ended December 31, 2021, cash provided by financing activities was $14.5 million, which consisted of $55.2 million in proceeds from the issuance of the GECCO Notes offset by $30.3 million in repayment on the GECCL Notes and payment of $9.9 million in distributions.
We believe we have sufficient liquidity available to meet our short-term and long-term obligations for at least the next 12 months and for the foreseeable future thereafter.
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Contractual Obligations and Cash Requirements
A summary of our material contractual payment obligations and cash obligations as of June 30, 2023 is as follows:
(in thousands) | Total |
Less than 1 year |
1-3 years | 3-5 years |
More than 5 years |
||||||||||
Contractual and Other Cash Obligations | |||||||||||||||
GECCM Notes | 45,610 | - | 45,610 | - | - | ||||||||||
GECCN Notes | 42,823 | 42,823 | - | - | - | ||||||||||
GECCO Notes | 57,500 | - | 57,500 | - | - | ||||||||||
Revolving Credit Facility | 5,000 | 5,000 | - | - | - | ||||||||||
Total | $150,933 | $47,823 | $103,110 | $ - | $ - |
See "-Revolver" and "-Notes Payable" below for more information regarding our outstanding credit facility and notes.
We have certain contracts under which we have material future commitments. Under the Investment Management Agreement, GECM provides investment advisory services to us. For providing these services, we pay GECM a fee, consisting of two components: (1) a base management fee based on the average value of our total assets and (2) an incentive fee based on our performance. On August 1, 2022, our stockholders approved an amendment to the Investment Management Agreement to eliminate $163.2 million of realized and unrealized losses incurred prior to April 1, 2022 from the calculation of future capital gains incentive fees and reset the capital gain incentive fee and mandatory deferral periods in Sections 4.4 and 4.5, respectively, of the Investment Management Agreement to begin on April 1, 2022.
We are also party to the Administration Agreement with GECM. Under the Administration Agreement, GECM furnishes us with, or otherwise arranges for the provision of, office facilities, equipment, clerical, bookkeeping, finance, accounting, compliance and record keeping services at such office facilities and other such services as our administrator.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.
Both the Investment Management Agreement and the Administration Agreement may be terminated by either party without penalty upon no fewer than 60 days' written notice to the other.
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Reference Rate Increase (Decrease)
|
| |
Increase (decrease) of Net
Investment Income
(in thousands)(1)
|
3.00%
|
| |
$4,262
|
2.00%
|
| |
2,841
|
1.00%
|
| |
1,409
|
(1.00)%
|
| |
(1,421)
|
(2.00)%
|
| |
(2,841)
|
(3.00)%
|
| |
(4,259)
|
(1)
|
Several of our debt investments with variable rates contain a reference rate floor. The actual increase (decrease) of net investment income reflected in the table above takes into account such floors to the extent applicable.
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American Coastal Insurance Corporation (f/k/a United Insurance Holdings Corp.)
ACIC is the holding company for American Coastal Insurance Company, Interboro Insurance Company and affiliated companies. ACIC is primarily engaged in sourcing, writing and servicing personal and commercial residential property and casualty insurance policies in the United States, primarily in Florida and New York. ACIC's most significant line of business is in providing commercial multi-peril property insurance for residential condominium associations and apartments in Florida. American Coastal Insurance Company has the #1 market share of commercial residential property insurance for condominium associations in Florida (commercial lines). All of the commercial lines business is administered through an exclusive agreement with an outside managing general underwriter, AmRisc, LLC, a Truist Financial Corporation (NYSE: TFC) subsidiary. Given ACIC's concentration to the Florida property and casualty market, it is subject to various risks including fluctuations in inflation impacting loss estimates, judicial decisions, legislative changes, regulatory oversight, and changes in claims handling procedures.
First Brands, Inc.
First Brands, Inc. ("First Brands") is a global automotive parts company that develops, markets and sells premium products through a portfolio of market-leading brands, offering best-in-class technology, industry-leading engineering capabilities and superior customer service. First Brands manufactures automotive and industrial components for the automotive aftermarket, original equipment and industrial markets and has built long standing relationships with key aftermarket customers including multiple national retail chains and automotive and industrial equipment makers. First Brands stands as a market leader in the expansive and stable automotive aftermarket industry, consistently securing either the #1 or #2 position across its core product categories. First Brands' Brake Component segment leads the market with its Centric, Raybestos, Specialty and private label offerings, capturing around 26% of the aftermarket brake components market. First Brands' Filter Products segment also holds a leading market position, thanks to its FRAM and Champion Laboratory and private label brands, which together hold a 30% market share. First Brands' Wiper Segment is the top supplier of aftermarket wiper blades, boasting a commanding 37% market share through its Trico, ANCO, Michelin and private label products.
Prestige Capital Finance, LLC
Prestige is a commercial finance company specializing in providing invoice financing services. Prestige provides clients with an opportunity to sell individual accounts receivable for an upfront payment. Prestige serves clients across a wide range of industries with between $100 thousand and $10 million of accounts receivable. Prestige has been in business for over 30 years and factored over $6 billion in transactions during that time.
Sterling Commercial Credit, LLC
Sterling is a specialty finance company providing asset based loans between $2 and $30 million. Sterling is an industry-leading commercial lending partner for growth-minded entrepreneurs, private equity firms and M&A professionals. Sterling focuses on providing capital for growth, acquisitions and corporate repositioning strategies.
Universal Fiber Systems
Universal Fiber Systems ("Universal Fiber") is a global leader in the production of uniquely colored and high-quality, solution-dyed synthetic filament-based fibers. Universal Fiber serves customers in the flooring, automotive, transportation, medical and industrial fiber industries. Universal Fiber's product offering consists of synthetic fibers extruded from a variety of polymers in a wide range of color combinations, sizes and chemical formulations. Universal Fiber's ability to produce a broad range of fiber types including Nylon 6,6, Nylon 6, polyethylene terephthalate and polytrimethylene terephthalate, among others, allows it to shift production based on customer or market demand. However, Universal Fiber focuses the majority of its production capabilities on Nylon 6,6, which is produced by only a few other manufacturers in the market due to the complexity involved in working with the raw material. UFI is Universal Fiber's largest division representing 65-70% of total sales and this segment supplies the commercial carpet, automotive carpet and residential carpet markets with a 50% and 40% market share within the North American independent fiber producer market for commercial and automotive carpets, respectively. Universal Fiber sells to a diverse set of customers across the world with no single customer responsible for greater than 17% of its sales. Universal Fiber generates about 70% of its sales in North America with 15% coming from both Europe and Asia, respectively.
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•
|
analysis of the credit documents by GECM's investment team (including the members of the team with legal training and years of professional experience). GECM will engage outside counsel when necessary as well;
|
•
|
review of historical and prospective financial information;
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research relating to the prospective portfolio company's management, industry, markets, customers, products and services and competitors and customers;
|
•
|
verification of collateral or assets;
|
•
|
interviews with management, employees, customers and vendors of the prospective portfolio company; and
|
•
|
informal or formal background and reference checks.
|
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•
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determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;
|
•
|
identifies, evaluates and negotiates the structure of our investments (including performing due diligence on our prospective portfolio companies);
|
•
|
closes and monitors our investments; and
|
•
|
determines the securities and other assets that we purchase, retain or sell.
|
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•
|
no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate;
|
•
|
100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate, but is less than 2.1875% in any calendar quarter (8.75% annualized). We refer to this portion of our pre-incentive fee net investment income as the "catch up" provision. The "catch up" is meant to provide GECM with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if our net investment income exceeds 2.1875% in any calendar quarter; and
|
•
|
20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).
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| |
Assumption 1
|
| |
Assumption 2
|
| |
Assumption 3
|
|
Investment income(1)
|
| |
4.94%
|
| |
6.09%
|
| |
6.94%
|
Hurdle rate (7% annualized)
|
| |
1.75%
|
| |
1.75%
|
| |
1.75%
|
"Catch up" provision (8.75% annualized)
|
| |
2.19%
|
| |
2.19%
|
| |
2.19%
|
Pre-incentive fee net investment income(2)
|
| |
1.00%
|
| |
2.15%
|
| |
3.00%
|
Incentive fee
|
| |
-%(3)
|
| |
0.40%(4)
|
| |
0.60%(5)
|
(1)
|
Investment income includes interest income, dividends and other fee income.
|
(2)
|
Pre-incentive fee net investment income is net of management fees and other expenses and excludes organizational and offering expenses. In these examples, management fees are 0.38% (1.50% annualized) of net assets and other expenses are assumed to be 3.57% of net assets.
|
(3)
|
The pre-incentive fee net investment income is below the hurdle rate and thus no incentive fee is earned.
|
(4)
|
The pre-incentive fee net investment income ratio of 2.15% is between the hurdle rate and the top of the "catch up" provision; thus the corresponding incentive fee is calculated as 100% X (2.15% - 1.75%).
|
(5)
|
The pre-incentive fee net investment income ratio of 3.00% is greater than both the hurdle rate and the "catch up" provision; thus the corresponding incentive fee is calculated as (i) 100% X (2.1875% - 1.75%) or 0.4375% (the "catch up"); plus (ii) 20% X (3.00% - 2.1875%).
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| |
In millions
|
||||
| |
Assumption 1
|
| |
Assumption 2
|
|
Year 1
|
| | | | ||
Investment in Company A
|
| |
$20.0
|
| |
$20.0
|
Investment in Company B
|
| |
30.0
|
| |
30.0
|
Investment in Company C
|
| |
-
|
| |
25.0
|
Year 2
|
| | | | ||
Proceeds from sale of investment in Company A
|
| |
50.0
|
| |
50.0
|
Fair market value ("FMV") of investment in Company B
|
| |
32.0
|
| |
25.0
|
FMV of investment in Company C
|
| |
-
|
| |
25.0
|
Year 3
|
| | | | ||
Proceeds from sale of investment in Company C
|
| |
-
|
| |
30.0
|
FMV of investment in Company B
|
| |
25.0
|
| |
24.0
|
Year 4
|
| | | | ||
Proceeds from sale of investment in Company B
|
| |
31.0
|
| |
-
|
FMV of investment in Company B
|
| |
-
|
| |
35.0
|
Year 5
|
| | | | ||
Proceeds from sale of investment in Company B
|
| |
-
|
| |
20.0
|
Capital Gains Incentive Fee:
|
| | | | ||
Year 1
|
| |
-(1)
|
| |
-(1)
|
Year 2
|
| |
6.0(2)
|
| |
5.0(6)
|
Year 3
|
| |
-(3)
|
| |
0.8(7)
|
Year 4
|
| |
0.2(4)
|
| |
1.2(8)
|
Year 5
|
| |
-(5)
|
| |
-(9)
|
(1)
|
There is no Capital Gains Incentive Fee in Year 1 as there have been no realized capital gains.
|
(2)
|
Aggregate realized capital gains are $30.0 million. There are no aggregate realized capital losses or aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as $30.0 million x 20%.
|
(3)
|
Aggregate realized capital gains are $30.0 million. There are no aggregate realized capital losses and there is $5.0 million in aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) ($30.0 million - $5.0 million) x 20% less $6.0 million (aggregate Capital Gains Incentive Fee paid in prior years).
|
(4)
|
Aggregate realized capital gains are $31.0 million. There are no aggregate realized capital losses or aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) $31.0 million x 20% less $6.0 million (aggregate Capital Gains Incentive Fee paid in prior years).
|
(5)
|
There is no Capital Gains Incentive Fee in Year 5 as there are no aggregate realized capital gains for which Capital Gains Incentive Fee has not already been paid in prior years.
|
(6)
|
Aggregate realized capital gains are $30.0 million. There are no aggregate realized capital losses and there is $5.0 million in aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) ($30.0 million - $5.0 million) x 20%. There have been no Capital Gains Incentive Fees paid in prior years.
|
(7)
|
Aggregate realized capital gains are $35.0 million. There are no aggregate realized capital losses and there is $6.0 million in aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) ($35.0 million - $6.0 million) x 20% less $5.0 million (aggregate Capital Gains Incentive Fee paid in prior years).
|
(8)
|
Aggregate realized capital gains are $35.0 million. There are no aggregate realized capital losses or aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) $35.0 million x 20% less $5.8 million (aggregate Capital Gains Incentive Fee paid in prior years).
|
(9)
|
Aggregate realized capital gains are $35.0 million. Aggregate realized capital losses are $10.0 million. There is no aggregate unrealized capital depreciation. Capital Gains Incentive Fee is calculated as the greater of (i) zero and (ii) ($35.0 million - $10.0 million) x 20% less $7.0 million (aggregate Capital Gains Incentive Fee paid in prior years).
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|
our organizational expenses;
|
•
|
fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to our investments, including, among others, professional fees (including the fees and expenses of counsel, consultants and experts) and fees and expenses relating to, or associated with, evaluating, monitoring, researching and performing due diligence on investments and prospective investments (including payments to third party vendors for financial information services);
|
•
|
out-of-pocket fees and expenses, including reasonable travel expenses, actually incurred by GECM or payable to third parties related to the provision of managerial assistance to our portfolio companies that we agree to provide such services to under the Investment Company Act (exclusive of the compensation of any investment professionals of GECM);
|
•
|
interest or other costs associated with debt, if any, incurred to finance our business;
|
•
|
fees and expenses incurred in connection with our membership in investment company organizations;
|
•
|
brokers' commissions;
|
•
|
investment advisory and management fees;
|
•
|
fees and expenses associated with calculating our NAV (including the costs and expenses of any independent valuation firm);
|
•
|
fees and expenses relating to offerings of our common stock and other securities;
|
•
|
legal, auditing or accounting expenses;
|
•
|
federal, state and local taxes and other governmental fees;
|
•
|
the fees and expenses of GECM, in its role as the administrator, and any sub-administrator, our transfer agent or sub-transfer agent, and any other amounts payable under the Administration Agreement, or any similar administration agreement or sub-administration agreement to which we may become a party;
|
•
|
the cost of preparing stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of our securities;
|
•
|
the expenses of and fees for registering or qualifying our common stock for sale and of maintaining our registration and registering us as a broker or a dealer;
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|
the fees and expenses of our directors who are not interested persons (as defined in the Investment Company Act);
|
•
|
the cost of preparing and distributing reports, proxy statements and notices to stockholders, the SEC and other governmental or regulatory authorities;
|
•
|
costs of holding stockholders' meetings;
|
•
|
listing fees;
|
•
|
the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by our bylaws or amended and restated articles of incorporation insofar as they govern agreements with any such custodian;
|
•
|
our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
|
•
|
our allocable portion of the costs associated with maintaining any computer software, hardware or information technology services (including information systems, Bloomberg or similar terminals, cyber security and related consultants and email retention) that are used by us or by GECM or its respective affiliates on our behalf (which allocable portion shall exclude any such costs related to investment professionals of GECM providing services to us);
|
•
|
direct costs and expenses incurred by us or GECM in connection with the performance of administrative services on our behalf, including printing, mailing, long distance telephone, cellular phone and data service, copying, secretarial and other staff, independent auditors and outside legal costs;
|
•
|
all other expenses incurred by us or GECM in connection with administering our business (including payments under the Administration Agreement) based upon our allocable portion of GECM's overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs (including reasonable travel expenses); and
|
•
|
costs incurred by us in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business.
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•
|
the nature, quality and extent of the advisory and other services to be provided to us by GECM;
|
•
|
the investment performance of us and GECM;
|
•
|
the extent to which economies of scale would be realized as we grow, and whether the fees payable under the Investment Management Agreement reflect these economies of scale for the benefit of our stockholders;
|
•
|
comparative data with respect to advisory fees or similar expenses paid by other BDCs with similar investment objectives;
|
•
|
our projected operating expenses and expense ratio compared to BDCs with similar investment objectives;
|
•
|
existing and potential sources of indirect income to GECM from its relationship with us and the profitability of those income sources;
|
•
|
information about the services to be performed and the personnel performing such services under the Investment Management Agreement;
|
•
|
the organizational capability and financial condition of GECM and its affiliates; and
|
•
|
the possibility of obtaining similar services from other third party service providers or through an internally managed structure.
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|
67% or more of such company's voting securities present at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or
|
•
|
more than 50% of the outstanding voting securities of such company.
|
•
|
in connection with a rights offering to our existing stockholders,
|
•
|
with the consent of the majority of our common stockholders, or
|
•
|
under such other circumstances as the SEC may permit.
|
•
|
securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;
|
•
|
securities received in exchange for or distributed with respect to securities described in the bullet above or pursuant to the exercise of options, warrants or rights relating to such securities; and
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•
|
cash, cash items, government securities or high quality debt securities (within the meaning of the Investment Company Act), maturing in one year or less from the time of investment.
|
•
|
does not have a class of securities with respect to which a broker may extend margin credit at the time the acquisition is made;
|
•
|
is controlled by the BDC and has an affiliate of the BDC on its board of directors;
|
•
|
does not have any class of securities listed on a national securities exchange;
|
•
|
is a public company that lists its securities on a national securities exchange with a market capitalization of less than $250.0 million; or
|
•
|
meets such other criteria as may be established by the SEC.
|
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•
|
our investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gain over net long-term capital loss and other taxable income (other than any net capital gain), reduced by deductible expenses) determined without regard to the deduction for dividends and distributions paid; and
|
•
|
net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) (the "Annual Distribution Requirement").
|
•
|
at least 98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;
|
•
|
at least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made by us to use our taxable year); and
|
•
|
certain undistributed amounts from previous years on which we paid no U.S. federal income tax (the "Excise Tax Avoidance Requirement").
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|
disallow, suspend or otherwise limit the allowance of certain losses or deductions, including the dividends received deduction, net capital losses, business interest expense and certain underwriting and similar fees;
|
•
|
convert lower taxed long-term capital gain and qualified dividend income into higher taxed, short-term capital gain or ordinary income;
|
•
|
convert ordinary loss or a deduction into capital loss (the deductibility of which is more limited);
|
•
|
cause us to recognize income or gain without a corresponding receipt of cash;
|
•
|
adversely affect the time as to when a purchase or sale of stock or securities is deemed to occur;
|
•
|
adversely alter the characterization of certain complex financial transactions; and
|
•
|
produce income that will not qualify as "good income" for purposes of the 90% annual gross income requirement described above.
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Name, Address and
Age
|
| |
Position(s) Held
with GECC
|
| |
Term of
Office
(Length of
Time Served)
|
| |
Principal Occupation(s)
During Past 5 Years
|
| |
Number of
Portfolios in Fund
Complex Overseen
by Director
|
| |
Other
Directorships Held
by Director During
Past 5 Years
|
Mark Kuperschmid (61)
|
| |
Director
|
| |
Until 2026 (since inception)
|
| |
Managing Member - Benmark Investments LLC
|
| |
N/A
|
| |
None
|
Richard M. Cohen (72)
|
| |
Director
|
| |
Until 2026 (since 2022)
|
| |
President - Richard M. Cohen Consultants
|
| |
N/A
|
| |
Direct Digital Holdings Ondas Network Smart For Life
|
Chad Perry (51)
|
| |
Director
|
| |
Until 2025 (since 2022)
|
| |
Executive Vice President and General Counsel - RLJ Lodging Trust; Executive Vice President and General Counsel - Tanger Factory Outlet Centers, Inc.
|
| |
N/A
|
| |
DWS Fund Complex
|
Name, Address and
Age
|
| |
Position(s) Held
with GECC
|
| |
Term of
Office
(Length of
Time Served)
|
| |
Principal Occupation(s)
During Past 5 Years
|
| |
Number of
Portfolios in Fund
Complex Overseen
by Director
|
| |
Other
Directorships Held
by Director During
Past 5 Years
|
Matthew A. Drapkin (50)(1)
|
| |
Chairman of the Board
|
| |
Until 2024 (since 2022)
|
| |
Chief Executive Officer - Northern Right
|
| |
N/A
|
| |
Northern Right GEG PRGX Intevac
|
Erik A. Falk (53)(2)
|
| |
Director
|
| |
Until 2024 (since 2021)
|
| |
Head of Strategy - Magnetar Capital
|
| |
N/A
|
| |
None
|
(1)
|
Mr. Drapkin is an interested person of the Company due to his and Northern Right Capital Management, L.P.'s ("Northern Right") ownership of GEG's common stock and GEG's Senior Convertible PIK Notes due 2030 ("GEG PIK Notes"). Mr. Drapkin is also the managing member of the general partner of BC Advisors, LLC ("BCA"), the General Partner of Northern Right. Northern Right is the general partner of Northern Right Capital (QP), L.P. ("Northern Right QP") and NRC Partners I, LP ("NRC"). Therefore, Northern Right has control of both entities. Northern Right also has investment management agreements with two separately managed accounts giving Northern Right the power to vote, acquire or dispose of securities.
|
(2)
|
Mr. Falk is an interested person of the Company due to his ownership of GEG PIK Notes.
|
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Name, Address and Age
|
| |
Position(s) Held with
GECC
|
| |
Term of Office
(Length of Time
Served)
|
| |
Principal Occupation(s) During Past 5 Years
|
Matt Kaplan (36)
|
| |
President and Chief Executive Officer
|
| |
Since March 2022
|
| |
President and Chief Executive Officer - GECC Portfolio Manager - GECM
Managing Director - ICAM
Analyst - Citadel LLC
|
Keri A. Davis (39)
|
| |
Chief Financial Officer and Treasurer
|
| |
Since March 2019
|
| |
Chief Financial Officer - GEG
SEC Reporting Manager - GECM
|
Adam M. Kleinman (48)
|
| |
Chief Compliance Officer and Secretary
|
| |
Since October 2017
|
| |
President, General Counsel and Chief Compliance Officer - GECM
President, General Counsel and Chief
Compliance Officer - GEG
|
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Name
|
| |
Fees Earned or
Paid in Cash
|
| |
All Other Name
Fees Earned or Paid
in Cash
Compensation(1)
|
| |
Total
|
Independent Directors
|
| | | | | | |||
Mark Kuperschmid
|
| |
$65,153
|
| |
$ -
|
| |
$65,153
|
Richard Cohen
|
| |
$53,806
|
| |
$-
|
| |
$53,806
|
Chad Perry
|
| |
$51,820
|
| |
$-
|
| |
$51,820
|
Randall Revell Horsey(2)
|
| |
$11,375
|
| |
$-
|
| |
$11,375
|
Michael C. Speller(3)
|
| |
$11,375
|
| |
$-
|
| |
$11,375
|
| | | | | | ||||
Interested Directors
|
| | | | | | |||
Peter A. Reed(4)
|
| |
$-
|
| |
$-
|
| |
$-
|
Matthew A. Drapkin
|
| |
$-
|
| |
$-
|
| |
$-
|
Erik A. Falk
|
| |
$7,875
|
| |
$-
|
| |
$7,875
|
(1)
|
In fiscal year 2022, we did not maintain a stock or option plan, non-equity incentive plan or pension plan or other retirement benefits for our directors.
|
(2)
|
Mr. Horsey resigned from the Board in March 2022.
|
(3)
|
Mr. Speller resigned from the Board in March 2022.
|
(4)
|
Mr. Reed resigned from the Board in March 2022.
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Name of Investment
Committee Voting Member
|
| |
Type of Accounts
|
| |
Total No. of
Other Accounts
Managed
|
| |
Total Other
Assets (in
millions)
|
| |
No. of Other
Accounts
where
Advisory Fee
is Based on
Performance
|
| |
Total Assets
in Other
Accounts
where
Advisory Fee
is Based on
Performance
(in millions)
|
Matt Kaplan
|
| |
Registered Investment Companies:
|
| |
None
|
| |
None
|
| |
None
|
| |
None
|
| |
Other Pooled Investment Vehicles:
|
| |
1
|
| |
$7.7
|
| |
1
|
| |
$7.7
|
|
| |
Other Accounts:
|
| |
None
|
| |
None
|
| |
None
|
| |
None
|
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•
|
each of the directors and executive officers;
|
•
|
all of our current executive officers and directors as a group; and
|
•
|
each person known by us to be beneficial owners of 5% or more of our outstanding common stock.
|
| |
Shares Beneficially
Owned
|
| |
Percent
of Class
|
|
Interested Directors
|
| | | | ||
Erik A. Falk
|
| |
-
|
| |
*
|
Matthew Drapkin(1)
|
| |
860,088
|
| |
11.3%
|
Independent Directors
|
| | | | ||
Mark Kuperschmid(2)
|
| |
16,972
|
| |
*
|
Richard Cohen
|
| |
-
|
| |
*
|
Chad Perry
|
| |
-
|
| |
*
|
Executive Officers
|
| | | | ||
Matt Kaplan
|
| |
12,000
|
| |
*
|
Adam Kleinman
|
| |
20,558
|
| | |
Keri Davis
|
| |
9,034
|
| |
*
|
Directors and executive officers as a group (8 persons)
|
| |
918,652
|
| |
12.1%
|
5% Beneficial Owners
|
| | | | ||
Great Elm Group, Inc.(3)
|
| |
1,532,519
|
| |
20.2%
|
Entities affiliated with Northern Right Capital Management, L.P.(4)
|
| |
798,471
|
| |
10.5%
|
Entities affiliated with Imperial Capital Asset Management, LLC(5)
|
| |
743,230
|
| |
9.8%
|
*
|
Less than one percent.
|
(1)
|
Includes the 798,471 shares identified in footnote (4) below.
|
(2)
|
Includes 13,972 shares held by Benmark Investments LLC (1568 Columbus Ave., Burlingame, California 94010). Mr. Kuperschmid disclaims beneficial ownership of these shares except to the extent of his pecuniary interest therein.
|
(3)
|
Based on information provided to the Company and furnished in a Form 4 filed with the SEC on May 23, 2023 by GEG, who reported sole voting and dispositive power over 1,569,787 shares of our common stock. The address for Great Elm Group, Inc. is 800 South Street, Suite 230, Waltham, Massachusetts 02453.
|
(4)
|
Based on information provided to the Company and furnished in a Schedule 13G/A filed with the SEC on June 21, 2022, jointly by Northern Right, Northern Right QP, NRC, BCA and Matthew Drapkin. Each of Northern Right, BCA and Mr. Drapkin reported shared voting and dispositive power over 798,471 shares of our common stock; Northern Right QP reported shared voting and dispositive power over 220,399 shares of our common stock; and NRC reported shared voting and dispositive power over 208,932 shares of our common stock. On March 1, 2023, NRC transferred 208,932 shares of our common stock to Northern Right QP, and, as a result, Northern Right QP shares voting and dispositive power over 429,331 shares of our common stock. The address for Northern Right is 9 Old Kings Hwy S., 4th Floor, Darien, CT 06820.
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(5)
|
Based on information provided to the Company and furnished in a Schedule 13G/A filed with the SEC on February 17, 2023, jointly by ICAM, Long Ball Partners, LLC ("Long Ball"), IC Leverage Income Fund, LLC ("IC Leverage"), Imperial Capital Group Holdings II, LLC ("Imperial Holdings II"), and Jason Reese. ICAM and Long Ball reported shared voting and dispositive power over 145,189 shares of our common stock; IC Leverage reported shared voting and dispositive power over 198,979 shares of our common stock; Imperial Holdings II reported shared voting and dispositive power over 399,062 shares of our common stock; and Mr. Reese reported shared voting and dispositive power over 743,230 shares of our common stock. The address for ICAM is 3801 PGA Boulevard, Suite 603, Palm Beach Gardens, FL 33410.
|
Name of Director
|
| |
Dollar Range of Equity
Securities of GECC(1)(2)
|
Independent Directors
|
| | |
Mark Kuperschmid
|
| |
$50,001 - $100,000
|
Richard Cohen
|
| |
None
|
Chad Perry
|
| |
None
|
Interested Directors
|
| | |
Matthew Drapkin
|
| |
Over $100,000
|
Erik A. Falk
|
| |
None
|
(1)
|
Dollar ranges are as follows: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or over $100,000.
|
(2)
|
The dollar range of equity securities beneficially owned is based on the closing price for our common stock of $8.29 on December 30, 2022.
|
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•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state therein or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) a valid election is in place under applicable U.S. Treasury regulations to treat such trust as a United States person.
|
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•
|
the Non-U.S. Holder is a "10-percent shareholder" of us within the meaning of 871(h)(3) of the Code;
|
•
|
the Non-U.S. Holder is a "controlled foreign corporation" for U.S. federal income tax purposes that is related to us (directly or indirectly) through stock ownership;
|
•
|
the Non-U.S. Holder is a bank extending credit under a loan agreement in the ordinary course of its trade or business; or
|
•
|
the Non-U.S. Holder does not satisfy the certification requirements described below.
|
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•
|
the gain is not effectively connected with the conduct of a trade or business within the United States, or a permanent establishment maintained in the United States if certain tax treaties apply;
|
•
|
in the case of a Non-U.S. Holder that is an individual, the Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year of the sale, exchange, or other disposition of the Notes; and
|
•
|
the Non-U.S. Holder is not subject to tax pursuant to certain provisions of U.S. federal income tax law applicable to certain expatriates.
|
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Title of Class
|
| |
Amount Authorized
|
| |
Amount Held
by GECC or for
GECC's
Account
|
| |
Amount
Outstanding
Exclusive of
Amounts Shown in
the Adjacent
Column
|
Common Stock
|
| |
100,000,000
|
| |
-
|
| |
7,601,958
|
GECCM Notes
|
| |
-
|
| |
-
|
| |
$45.6million
|
GECCN Notes
|
| |
-
|
| |
-
|
| |
$42.8million
|
GECCO Notes
|
| |
-
|
| |
-
|
| |
$57.5million
|
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•
|
amendments to the provisions of our Charter relating to the classification of our Board, the power of our Board to fix the number of directors and to fill vacancies on our Board, the vote required to elect or remove a director, the vote required to approve our dissolution, amendments to our Charter and extraordinary transactions and our Board exclusive power to amend our Bylaws;
|
•
|
Charter amendments that would convert us from a closed-end company to an open-end company or make our common stock a redeemable security (within the meaning of the Investment Company Act);
|
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•
|
our liquidation or dissolution or any amendment to our Charter to effect any such liquidation or dissolution;
|
•
|
any merger, consolidation, conversion, share exchange or sale or exchange of all or substantially all of our assets that the Maryland General Corporation Law requires be approved by our stockholders; or
|
•
|
any transaction between us, on the one hand, and any person or group of persons acting together that is entitled to exercise or direct the exercise, or acquire the right to exercise or direct the exercise, directly or indirectly (other than solely by virtue of a revocable proxy), of one-tenth or more of the voting power in the election of our directors generally, or any person controlling, controlled by or under common control with, employed by or acting as an agent of, any such person or member of such group, on the other hand.
|
•
|
one-tenth or more but less than one-third;
|
•
|
one-third or more but less than a majority; or
|
•
|
a majority or more of all voting power.
|
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•
|
any person who beneficially owns 10% or more of the voting power of the corporation's outstanding voting stock; or
|
•
|
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.
|
•
|
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
|
•
|
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than common stock held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
|
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Underwriters
|
| |
Principal Amount of
Notes
|
Ladenburg Thalmann & Co. Inc.
|
| |
$25,850,000
|
Janney Montgomery Scott LLC
|
| |
8,750,000
|
Oppenheimer & Co. Inc.
|
| |
5,400,000
|
Total
|
| |
$40,000,000
|
| |
Per Note
|
| |
Without Over-
allotment Option
|
| |
With Over-
allotment
Option
|
|
Public offering price
|
| |
$25.00
|
| |
$40,000,000
|
| |
$46,000,000
|
Underwriting discounts and commissions (3.125% of public offering price)(1)
|
| |
$0.78125
|
| |
$1,110,137
|
| |
$1,297,637
|
Proceeds (before expenses)
|
| |
$24.21875
|
| |
$38,889,863
|
| |
$44,702,363
|
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•
|
The GECC financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (File No. 814-01211), whichincludes the Financial Highlights for years ended December 31, 2022, 2021, 2020, 2019, 2018, 2017, and 2016, filed on March 2, 2023; and
|
•
|
The GECC financial statements contained in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (File No. 814-01211), which includes the Financial Highlights for the six months ended June 30, 2023 and 2022, filed on August 3, 2023.
|
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Ladenburg Thalmann
|
| |
Janney Montgomery Scott
|
| |
Oppenheimer & Co.
|