Great Elm Capital Corp.

Thank you. Thank you. Ladies and gentlemen, this is the operator. Today's conference call is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Great M Capital Corporation Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to a representative of the company. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us for Great Elm BDC's third quarter earnings conference call. If you would like to be added to our distribution list, you can email investorrelations at greatelmcap.com, or you can sign up for alerts directly on our website at greatelmcc.com. In addition to our comments for today's call, we will be utilizing investor presentation as an accompaniment. While we will not be referring directly to the slides, our comments today will generally follow the form and structure of the presentation. The slide presentation accompanying this morning's call can be found on our website under financial information quarterly results. On the website, you can also find a copy of our earnings release form 10Q and a link to the webcast. I would now like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or solicitation of offers to purchase our securities. Today's conference call includes forward-looking statements and projections, and we ask that you refer to Great Elm Capital Corp's filings with the SEC for important factors that could cause actual results to differ materially from these projections. Great Elm Capital Corp does not undertake to update its forward-looking statements unless required by law. To obtain copies of SEC filings, please visit Great Elm Capital Corp's website under Financial Information, SEC Filings, or visit the SEC's website. Hosting this call this morning is Peter Reed, Great Elm Capital Corp's President and Chief Executive Officer. As a reminder, this webcast is being recorded on Monday, November 9th, 2020. With that, I'd now like to turn the call over to Peter. Please go ahead, Peter. Peter Reed Thank you, Adam.

Good morning. and thank you for joining us today. On today's call, we have our COO, Adam Kleinman, and our CFO, Kerry Davis. I'll begin with an overview of Great Elm Capital Corp's investment performance during the quarter, discuss the results and improving financial status of our company following the recently completed rights offering. Kerry will discuss our capital position in greater detail, and then I'll return for closing remarks. We are very pleased to report a third quarter that exceeded our expectations in terms of profitability, the overall performance of our portfolio, and our ability to recapitalize the company through a rights offering. This leaves us with the ability to take advantage of investment opportunities, particularly in specialty finance. We grew NAV per share, continued to pay out a regular dividend, and believe that the company is well positioned to continue returning capital to our shareholders in an effective manner. I'll begin today's call with a basic overview of Great Elm Capital Corp. and outline our strategy and milestones to date. GECC is an externally managed total return focused BDC. We seek to generate both current income and capital appreciation from our portfolio of investments comprised primarily of secured loans, secured bonds, and specialty finance investments. Our quarter ended September 30th, 2020, improved considerably quarter over quarter. In several instances, we will outline where the financial standing of the company is as of September 30th, 2020, but I'll also discuss certain metrics on a pro forma basis in relation to our completed rights offering, which closed on October 1st, 2020. As of September 30th, 2020, GECC had total assets of approximately $265 million, a portfolio fair value of approximately $170 million, and a net asset value of $60.5 million, equating to $5.53 per share. All of these totals represent a considerable improvement over the June 30, 2020 period, demonstrating a favorable trend following the onset of the COVID-19 pandemic on our portfolio companies. The weighted average current yield on our debt holdings was approximately 10.1%. Importantly, roughly 43.6% of GECC shares are held by employees and affiliates of Great Elm Capital Management Inc., GECC's investment manager, creating a very clear alignment of interest between management and our shareholders. Moving to the highlights for the third quarter, Great Elm Capital Corp. achieved solid NII largely due to better-than-expected performance from our factoring business, Prestige Capital. Our NII per share of 18 cents is strong evidence that the portfolio repositioning we referenced last quarter is proceeding as expected, if not better. In our last call, we outlined a shift in strategy centered around a general repositioning of the portfolio, including taking actions to create liquidity that had the effect of depressing net investment income, or NII. Specifically, if the impact of COVID-19 increased volatility in the leveraged credit secondary markets, we proactively monetized investments in anticipation of more attractive redeployment opportunities. Through 2020, we have monetized over $85.4 million of our portfolio, while redeploying a majority of our capital into new cash-generative investment opportunities to diversify our holdings. As we continued our evaluation of the current markets, we were also aware of the need for liquidity in order to grow NII and NAV pursuant to our operating goals. Our capital adequacy at quarter end improved considerably with an asset coverage ratio of 150.9% compared to 144.5% in the prior quarter. Throughout our history, we have sought to increase liquidity in a manner that is most advantageous to our shareholders, including where appropriate fixed rate debt. As we evaluated our needs going forward, our Board of Directors determined that a non-transferable rights offering would further strengthen GECC's balance sheet and allow our BDC to take advantage of being nimble in a period of market dislocation. We are keenly aware of the challenges to raising capital below NAV, and we structured this rights offering in a manner that we felt both reflected our alignment of interests as well as benefited loyal shareholders of Great Elm Capital Corp. We structured this equity raise as a rights offering to permit existing stockholders to subscribe for their pro rata rights and avoid dilution. We set the price per share mechanics for the offering at a level that we believe would minimize dilution to stockholders based on the then current trading price of our shares while seeking to ensure a successful offering. And lastly, we set a non-transferability of the rights to ensure that only current stockholders at the time were able to take part in the rights offering. thereby mitigating the concern that a non-stockholder would benefit from an offering at a discount from NAV or market price. The results of the rights offering achieved our objectives, raising gross proceeds at $31.7 million and raising our asset coverage ratio to 176.5% on a pro forma basis. More importantly, it left GECC with a stronger capital position in which to take advantage of certain investment opportunities. Throughout the quarter, we've seen a sharp uptick in our pipeline of potential investments. Our criteria remains strict in that we are not seeking in market concentration and are utilizing a number of sourcing channels as we redeploy the capital that we have raised over the past few months. New primarily cash income generating investments we've purchased helped increase the average current yield on the portfolio and diversify our holdings. Throughout this past quarter and subsequent to quarter end, we actively deployed approximately $34.2 million of available cash into eight new investments at a weighted average current yield of 12.3%. Going forward, we do intend to weight investments in specialty finance businesses like Prestige Capital Finance LLC, whose performance has exceeded internal expectations. Last quarter, we highlighted this business, and I'll briefly outline the background. Prestige is a New Jersey-based company that for over 34 years has been a provider of spot factoring services, growing into a leader throughout the market. With more than 30 years in business and through greater than $6 billion of transactions factored, Prestige has a track record of strong credit underwriting with minimal losses. GECC acquired 80% of the outstanding equity interest of Prestige for approximately $7.5 million in 2019. The original owner was retiring, and the business was transitioned to two talented executives and partial owners that were actively seeking new growth opportunities. In 2019, the company's pre-tax income was approximately $2.8 million on average book equity of $3.1 million. Through the first nine months of 2020, Prestige's pre-tax income was approximately $3.9 million on average book equity of $3.6 million. The company's growing profitability and new business pipeline continue to exceed our internal expectations. Further, GECC earns a high rate of return on its investment in Prestige. Despite not acquiring Prestige until February 2019, GECC received $1.6 million in distributions from Prestige throughout 2019, representing an approximate 24% annualized yield on its net investment. Through the first nine months of 2020, GECC received $1.8 million in distributions, representing an approximate 32% annualized yield on its investment. It has been an ideal relationship to date. GECC's balance sheet enables Prestige to increase the size of the transactions it can pursue, and our investment in Prestige may create opportunities that would allow GECC to participate in certain of Prestige's larger factoring transactions directly. This would be at potentially higher rates of return and potentially superior underlying credit quality than more traditional leverage credit investments. Unlike investment sourced in the secondary market or as part of a syndicate, these transactions would be proprietary to GECC and unique to our portfolio. As we discussed with the market in August, we believe that the return and benefits from Prestige truly was indicative of the strategic direction of GECC. We are continuing to focus on sourcing transactions in sectors that can serve as a de facto wheel-and-spoke model, such as factoring, asset-based lending, equipment leasing, hard money real estate lending, and trade claim acquisition. Our lending evaluation process remains stringent, but we are aware of the benefits that can arise from financial entities such as this. In other words, building a network that can create lending opportunities down the line. We feel that this is a more unique manner of building our BDC versus a wholesale approach. It's this hyper-focused element that we believe helps us provide a solid foundation from which to deploy our capital. With that, I'd like to turn it over to Kerry to briefly discuss our portfolio performance for the quarter.