Great Elm Capital Corp.

Greetings. Thank you for standing by, and welcome to the Great Elm Capital Court First Quarter 2021 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. 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 Capital Corp.' 's first 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 www.greatelmcc.com. In addition to our comments for today's call, we'll be utilizing an investor presentation as an accompaniment. While we will not be directly referring to the slide, our comments today will generally follow the form and structure of the presentation. The slide presentation accompanying this morning's conference call and webcast can be found on our website under Financial Information, Quarterly Results. On the website, you can also find a copy of this presentation, our earnings release, Form 10-Q, and a link to this webcast. I would like to call your attention to the customary safe harbor language 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 Friday, May 7, 2021. With that, I'd now like to turn the call over to Peter. Please go ahead, Pete.

Thank you, Adam. Good morning, and thank you for joining us today. On today's call, we have our COO, Adam Kleinman, our CFO, Kerry Davis, and Matt Kaplan, a portfolio manager and member of our investment committee. I will begin with an overview of GECC's investment performance during the quarter. Matt will discuss our portfolio. Kerry will discuss our capital position in greater detail, and then I'll return for closing remarks. To begin, While we experienced a slower than anticipated deployment of new capital early in the first quarter that depressed NII to a degree, we ended the period in an excellent position and were able to deploy $43.9 million in new investments excluding SPACs in the quarter at a weighted average current yield of approximately 9.9%. In addition, we ended the period with our strongest asset coverage ratio and debt-to-equity ratio since the beginning of the pandemic. Finally, we also announced the signing of a $25 million revolving credit facility yesterday that will allow Great Elm to be more fully invested in yielding assets and take advantage of the specialty finance overflow opportunities we are seeing as part of our ownership position in Prestige Capital. To begin with a quick outline, at quarter end, GECC had a portfolio of investments with a fair market value of $193.6 million, cash of $26.6 million, and $91.5 million of net asset value, or $3.89 per share. In terms of NAV, this is a sizable increase from the $3.46 per share reported on December 31, 2020. This is largely due to higher realized and unrealized gains on investments, which we'll detail shortly. NII for the quarter was approximately $1.5 million, or $0.06 per share, as compared to NII of $1.6 million, or $0.07 per share, for the quarter ended December 31, 2020. NII was depressed as we entered the quarter with a high cash balance and legal expenses remain elevated. While I'll let Matt go into greater detail on our portfolio review, there were a couple of notable developments that we expect will favorably impact NII in the coming quarters. We exited a legacy position in board writers during the quarter and will no longer incur related legal fees after April. These fees have served as a drag on NII over the past two quarters. Second, it's important to understand the impact of timing during the period. We considerably increased our deployment of capital in February and March. To quantify, of the 43.9 million deployed for GECC during the quarter, over 75% was deployed after January, and we have seen this momentum continue into the second quarter. We continue to work towards building an increasingly diversified investment portfolio and are utilizing a number of sourcing channels as we invest. In the first quarter, we also continued to benefit from our investment in Prestige Capital. In past calls, we have provided background on Prestige and its 34-year history as a factoring business. Today, I want to provide a little insight on how this relationship works and provides GECC with proprietary opportunities to leverage its balance sheet to achieve attractive IRRs over time. 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. In the past, Prestige may have been unable to pursue these larger transactions due to capital constraints. However, following our investment in 2019, it became apparent that Prestige merely needed additional capital to pursue these opportunities. In 2020, we completed three participations in Prestige investments, which we believe have a stronger credit quality than typical leveraged investments at a rate of 13% per annum. Our goal now is to continue to working with the management at Prestige to help them pursue larger transactions. To that end, we were very pleased to enter into a $25 million revolving credit facility with Citi National Bank with an interest rate on borrowings at LIBOR plus 3.5% and a three-year maturity. This facility allows us to more efficiently manage our liquidity take advantage of overflow opportunities at Prestige, and make other investments with a favorable cost of capital. As I discussed last call, we recently added two new members to our investment committee from Imperial Capital Asset Management, Jason Reese and Matt Kaplan. Both Jason and Matt were instrumental in closing the recent credit facility. We've benefited from their expertise throughout our investment selection process. To that end, I'd like to turn the call over to Matt to discuss our portfolio performance for the quarter.