Core Viewpoint - Great Elm Capital Corp. ("GECC") has provided an update regarding its investments in First Brands Group, LLC, which recently filed for bankruptcy, detailing the financial implications and exposure related to this investment [2][3]. Investment Exposure - GECC has investments in both First Lien Term Loan and Second Lien Term Loan of First Brands, which were placed on non-accrual due to the bankruptcy filing [2]. - The direct exposure to First Brands includes approximately 0.9% across all CLOs in which GECC is invested as of June 30, 2025 [3]. First Lien Loan Details - As of June 30, 2025, GECC held a principal amount of $9.3 million in the First Lien Loan, with a fair market value of $8.8 million, representing 94.3% of the principal amount [3]. - In Q3 2025, GECC sold $4.5 million of its First Lien Loan for $4.4 million, equating to 97.9% of the principal amount [3]. - The remaining $4.8 million principal amount of the First Lien Loan is estimated to have a fair market value of approximately $1.7 million as of September 30, 2025, or 35.2% of the principal amount, leading to an expected adverse impact of about $2.8 million on net asset value [3]. Second Lien Loan Details - GECC held a principal amount of $16.2 million in the Second Lien Loan, with a fair market value of $14.5 million, or 89.5% of the principal amount, as of June 30, 2025 [3]. - The fair market value of the Second Lien Loan is expected to drop to approximately $0.9 million, or 5.5% of the principal value, resulting in an anticipated adverse impact of about $13.6 million on net asset value [3]. Net Asset Value Impact - The total direct net asset value impact from First Brands is estimated to be approximately $16.5 million for the quarter ended September 30, 2025 [3]. - GECC anticipates that the change in values of its directly held First Brands investments will adversely affect its net asset value by approximately $1.15-$1.25 per share [3]. Capital Activity Update - In August 2025, GECC issued approximately 1.3 million shares for net proceeds of $14 million and utilized its ATM program to issue an additional 1.1 million shares for approximately $13 million, totaling about $27 million in net proceeds for Q3 2025 [6]. - GECC issued $50 million principal amount of 7.75% Notes due December 31, 2030, and redeemed $40 million principal amount of 8.75% Notes, saving approximately $0.4 million in cash interest expense annually [7]. Financial Position - As of September 30, 2025, GECC estimates its debt-to-equity ratio to be approximately 1.5x, consistent with recent operating history [8]. - The company retains over $20 million of deployable cash for future investments and has $50 million available under its revolving line of credit [8].

Financial Data and Key Metrics Changes - For the quarter ending March 31, 2025, the company reported net investment income before taxes of $700,000 or $0.05 per share, down from $0.06 per share in the prior quarter [4] - The net asset value per share increased by $0.02 to $5.42 compared to $5.39 as of September 30, 2024 [5] - The fair value of the portfolio was $192.4 million, up from $191.6 million on December 31 [14] - Net assets increased by $500,000 from the prior quarter to $78.1 million [14] - The weighted average yield of the debt portfolio increased to 10.8% from 10.4% in the previous quarter [14] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and two existing portfolio companies during the quarter, with total fundings for new investments amounting to $5.1 million [10] - Realized investments totaled $7.3 million with an internal rate of return (IRR) of approximately 9.6% [10] - The largest industry concentrations by fair market value included professional services at 15.5%, containers and packaging at 9.2%, and trading companies and distributors at 8.6% [13] Market Data and Key Metrics Changes - The company noted a noticeable slowdown in new deal activity, particularly in M&A volume and sponsor-less financing [6] - Less than 20% of the portfolio may experience moderate direct effects from tariffs, with proactive measures being implemented to mitigate impacts [8] Company Strategy and Development Direction - The company remains focused on maintaining net asset value stability and sustainable net investment income while selectively deploying capital in high-quality opportunities [17] - The management expressed cautious optimism about potential investment opportunities in the second half of 2025 as market volatility decreases [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the portfolio remains stable despite reduced investment activity and prepayment trends, with a significant reduction in non-accrual investments [5][6] - The company expects more stabilized profiles for the remainder of 2025, notwithstanding any macroeconomic shocks [6] - Management is optimistic about the potential for increased net investment income in the second quarter due to spread widening in new opportunities [32] Other Important Information - The Board of Directors declared a distribution of $0.12 per share payable in cash on June 14, 2025 [16] - As of March 31, the company had approximately $13 million in cash, with $10.7 million being restricted cash [16] Q&A Session Summary Question: How can the adviser scale or provide benefits to the BDC? - Management indicated that waiving fees is always a consideration and that scaling the private credit platform is an ongoing effort that will help absorb overhead and expenses [20][22] Question: What is the timeline for capital raising? - Management confirmed that they are currently in the process of raising another pool of capital, expected to benefit shareholders in the second half of 2025 [26][27] Question: Why not consider share repurchases given the current stock price? - Management acknowledged that share repurchases are a tool they consider but have no immediate plans in place [30] Question: Should there be an increase in net investment income in the second quarter? - Management suggested that there could be an increase in net investment income due to spread widening, holding other factors constant [32]