What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-03 · 116 added, 133 removed, 230 unchanged (52% of the section changed)

67 unchanged sentences

Portfolio and Investment Activity

The following is a summary of our investment activity for the year ended December 31, 2020 and the six months ended June 30, 2021:

The following is a summary of our investment activity for the year ended December 31, 2020 and the nine months ended September 30, 2021:

(in thousands)

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Quarter ended June 30, 2021

For the six months ended June 30, 2021

Quarter ended September 30, 2021

For the nine months ended September 30, 2021

Includes new investments, additional fundings (inclusive of those on revolving credit facilities), refinancings and capitalized PIK income.

7 unchanged sentences

Portfolio Reconciliation

The following is a reconciliation of the investment portfolio for the six months ended June 30, 2021 and the year ended December 31, 2020.

The following is a reconciliation of the investment portfolio for the nine months ended September 30, 2021 and the year ended December 31, 2020.

Investments in short-term securities, including U.S.

1 unchanged sentence

(in thousands)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

For the Year Ended December 31, 2020

9 unchanged sentences

Portfolio Classification

The following table shows the fair value of our portfolio of investments by industry as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021

The following table shows the fair value of our portfolio of investments by industry as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

December 31, 2020

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Percentage of

Wireless Telecommunications Services

Specialty Finance

Wireless Telecommunications Services

Internet Media

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Special Purpose Acquisition Company

Media & Entertainment

Metals & Mining

Transportation Equipment Manufacturing

Software Services

Home Security

Casinos & Gaming

Software Services

Food & Staples

Media & Entertainment

Radio Broadcasting

Home Security

Wholesale-Apparel, Piece Goods & Notions

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Hotel Operator

Maritime Security Services

Apparel & Textile Products

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Building Cleaning and Maintenance Services

Maritime Security Services

Telecommunications Services

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Investment Income

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Per Share ( 1)

5 unchanged sentences

Dividend income

The per share amounts are based on a weighted average of 23,508,232 and 23,455,328 outstanding common shares for the three and six months ended June 30, 2021.

The per share amounts are based on a weighted average of 10,195,857 and 10,129,269 outstanding common shares for the three and six months ended June 30, 2020.

The per share amounts are based on a weighted average of 23,914,447 and 23,610,050 outstanding common shares for the three and nine months ended September 30, 2021.

The per share amounts are based on a weighted average of 10,660,894 and 10,307,771 outstanding common shares for the three and nine months ended September 30, 2020.

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 three and six months ended June 30, 2021, interest income includes non-cash PIK income of $1.6 million and $3.1 million, respectively.

For the three and six months ended June 30, 2020, interest income includes non-cash PIK income of $1.3 million and $2.5 million, respectively.

Interest income increased for the three months ended June 30, 2021 as compared to the corresponding period in the prior year due to increases in the interest-earning assets of the portfolio over the past year.

Interest income decreased for the six months ended June 30, 2021 as compared to the corresponding period in the prior year due to exits from certain high yielding positions, including Commercial Barge Line Company (“Commercial Barge”) 1 st lien secured loan and the restructuring of our investment in PFS Holdings Corp.

(“PFS”) 1 st lien secured loan due 2021, for which we recognized $0.4 million and $0.6 million, respectively, in accretion income during the first half of fiscal year 2020.

In addition, interest rates on our floating rate investments decreased sharply beginning at the end of the first fiscal quarter of 2020 as the London Interbank Offered Rate (“LIBOR”) base rates experienced declines during the COVID-19 pandemic.

Dividend income for the three and six months ended June 30, 2021 increased as compared to the corresponding period in the prior year due to investments made in dividend-yielding preferred equities during the 2020 fiscal year and increases in distributions from our investment in Prestige Capital Finance, LLC.

The decrease in other income for the three months ended June 30, 2021 as compared to the corresponding period in the prior year is due to certain one-time commitment fees earned in the three months ended June 30, 2020 which did not recur in the current year period.

The increase in other income for the six months ended June 30, 2021 as compared to the corresponding period in the prior year is primarily attributable to PIK commitment and funding fees earned on our February 2021 investment in Avanti Communications Group, plc (“Avanti”) 1.125 lien senior secured notes.

For the three and nine months ended September 30, 2021, interest income includes non-cash PIK income of $1.7 million and $4.8 million, respectively.

For the three and nine months ended September 30, 2020, interest income includes non-cash PIK income of $1.3 million and $3.8 million, respectively.

Interest income increased for the three and nine months ended September 30, 2021 as compared to the corresponding periods in the prior year due to increases in the interest-earning assets of the portfolio over the past year.

Exits from certain high yielding positions, including Commercial Barge Line Company (“Commercial Barge”) 1st lien secured loan and the restructuring of our investment in PFS Holdings Corp.

(“PFS”) 1st lien secured loan due 2021 in 2020, and sharp decreases in the London Interbank Offered Rate (“LIBOR”) base rates since the beginning of the COVID-19 pandemic initially resulted in lower interest income for the nine months ended September 30, 2020, which continued through the end of 2020 and into the first quarter of 2021.

However, the redeployment of proceeds from realized transactions and the deployment of capital from other capital raising activities into new investments has offset the impact of the items noted above through September 30, 2021.

Dividend income for the three months ended September 30, 2021 decreased as compared to the corresponding period in the prior year due to a lower current quarter distribution from our investment in Prestige Capital Finance, LLC (“Prestige”) and reductions in our holdings of Crestwood Equity Partners, LP (“Crestwood”).

Dividend income for the nine months ended September 30, 2021 increased as compared to the corresponding period in the prior year due to investments made in dividend-yielding preferred equities, during 2020 and 2021.

The increase in other income for the three and nine months ended September 30, 2021 as compared to the corresponding periods in the prior year is primarily attributable to certain one-time commitment fees earned in the three months ended September 30, 2021 related to our investment in Greenway Health, LLC revolver for which we received $0.5 million in commitment fees.

In addition, during the nine months ended September 30, 2021, we received PIK commitment and funding fees earned on our February 2021 investment in Avanti Communications Group, plc (“Avanti”) 1.125 lien senior secured notes.

As discussed under “—Recent Developments”, the full impact of COVID-19 on each of our portfolio companies is not known at this time.

Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies may experience financial distress and may be unable to make future interest payments or dividend distributions resulting in decreased income to the Company.

If interest rates stay depressed or continue to decrease further and we are otherwise unable to offset these reductions by investing in other debt instruments with higher interest rates, we will see further decrease in our investment income.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Per Share ( 1)

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Professional services

The per share amounts are based on a weighted average of 23,508,232 and 23,455,328 outstanding common shares for the three and six months ended June 30, 2021.

The per share amounts are based on a weighted average of 10,195,857 and 10,129,269 outstanding common shares for the three and six months ended June 30, 2020.

The per share amounts are based on a weighted average of 23,914,447 and 23,610,050 outstanding common shares for the three and nine months ended September 30, 2021.

The per share amounts are based on a weighted average of 10,660,894 and 10,307,771 outstanding common shares for the three and nine months ended September 30, 2020.

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.

Total expenses for the three and six months ended June 30, 2021 increased as compared to total expenses for the three and six months ended June 30, 2020 primarily due to increases in management and incentive fees.

The increases in management fees is primarily driven by increases in the fair value of the portfolio during the first half of 2021 as compared to the first half of 2020 when fair values were negatively impacted by the effects of COVID-19.

The increase in incentive fees for the three months ended June 30, 2021 is consistent with the increased pre-incentive net investment income for the three months ended June 30, 2021 as compared to net investment income for the three months ended June 30, 2020.

Incentive fees recognized for the six months ended June 30, 2021 were higher than the incentive fees recognized for the six months ended June 30, 2020 as a result of the aforementioned increases in pre-incentive net investment income during the most recent quarter and lower reversals of incentive fees recognized in the current period than in prior periods.

Such reversals are the result of investment disposals where proceeds are not sufficient to cover the accreted cost basis relieved and were approximately $0.2 million for the six months ended June 30, 2021 as compared to $0.4 million for the six months ended June 30, 2020.

Administration fees decreased in the current period as compared to the corresponding period in the prior year as a result of changes in certain service providers and ongoing efficiency efforts at the management company.

Fees for professional services increased in for the six months ended June 30, 2021 as compared to the corresponding period in the prior year due to certain one-time costs, including approximately $0.2 million in legal fees for compliance matters and claims related to certain investments, that are not expected to recur in future periods.

For the three months ended June 30, 2021, interest expense decreased as compared to the corresponding period in the prior year as a result of the bond repurchases in fiscal year 2020 and the issuance of $50.0 million in aggregate principal amount of the 5.875% notes due 2026 (the “GECCO Notes”) on June 23, 2021.

The weighted average outstanding debt balance for the three months ended June 30, 2021 was $123.1 million as compared to $122.2 million for the three months ended June 30, 2020.

However, excluding the impact of the GECCO Notes which were issued on June 23, 2021, the weighted average outstanding debt balance for the three months ended June 30, 2021 was $118.7 million.

The decrease in interest expense for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 is due to the bond repurchases during the 2020 fiscal year, which resulted in a weighted average outstanding debt balance of $120.9 million for the six months ended June 30, 2021, as compared to $123.1 million for the six months ended June 30, 2020.

Total expenses for the three and nine months ended September 30, 2021 increased as compared to total expenses for the three and nine months ended September 30, 2020 primarily due to increases in management fees, professional services and interest expense.

The increases in management fees are primarily driven by increases in the fair value of the portfolio during through the three and nine months ended September 30, 2021 as compared to the corresponding periods in of 2020 when fair values were negatively impacted by the effects of COVID-19.

Fees for professional services increased in the nine months ended September 30, 2021 as compared to the corresponding period in the prior year due to certain one-time costs, including approximately $0.2 million in legal fees for compliance matters and claims related to certain investments incurred in the first half of 2021, that are not expected to recur in future periods.

In addition, during the three months ended September 30, 2021, certain due from portfolio company balances were determined to be uncollectible and expensed.

For the three and nine months ended September 30, 2021, interest expense increased as compared to the corresponding period in the prior year as a result of the issuance of $57.5 million in aggregate principal amount of the 5.875% notes due 2026 (the “GECCO Notes”) in June and July 2021 which was partially offset by the redemption of the 6.50% Notes due 2022 (the “GECCL Notes”) in July 2021.

The early redemption of the GECCL Notes also resulted in recognizing any unamortized debt issuance costs in full during the three months ended September 30, 2021.

Realized Gains (Losses)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Per Share ( 1)

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Gross realized loss

The per share amounts are based on a weighted average of 23,508,232 and 23,455,328 outstanding common shares for the three and six months ended June 30, 2021.

The per share amounts are based on a weighted average of 10,195,857 and 10,129,269 outstanding common shares for the three and six months ended June 30, 2020.

During the three months ended June 30, 2021, net realized losses were primarily driven by the paydown of our investment in OPS Acquisitions Limited and Ocean Protection Services Limited (“OPS”) 1 st lien secured loan for which we recognized a realized loss of $4.1 million as a result of receiving a portion of the final expected payout at a rate significantly below par.

In addition, we recognized realized losses of $1.6 million and $0.4 million on sales of our investments in California Pizza Kitchen, Inc.

(“CPK”) common stock and Tru (UK) Asia Limited (“Tru Taj”) common stock, respectively.

These realized losses were partially offset by realized gains of $2.3 million on our sale of Crestwood Equity Partners, LP preferred stock and $1.2 million on the termination of our investment in the Subcom, LLC (“Subcom”) 1 st lien secured revolver.

In addition to the above items, during the six months ended June 30, 2021, net realized losses were primarily driven by the sale of our investment in Boardriders, Inc.

(“Boardriders”) 1 st lien secured loan for which we recognized a realized loss of $3.0 million.

This realized loss was partially offset by realized gains of $0.3 million on proceeds received from our former investment in PR Wireless, Inc., $0.2 million on the early paydown of our investments in First Brands, Inc.

1st lien secured loan, $0.1 million in proceeds received from our investment in PE Facility Solutions, LLC common equity.

During the three months ended June 30, 2020, net realized gains were primarily driven by the realized gains of approximately $0.4 million on the maturity of our investment in Duff & Phelps 1 st lien revolver during the quarter.

Realized gains for the three months ended June 30, 2020 includes approximately $1.0 million in realized gain on repurchases of debt below par.

During the six months ended June 30, 2020, net realized losses on investments were primarily driven by the sales of our investments in Commercial Barge and Full House Resorts, Inc.

The per share amounts are based on a weighted average of 23,914,447 and 23,610,050 outstanding common shares for the three and nine months ended September 30, 2021.

The per share amounts are based on a weighted average of 10,660,894 and 10,307,771 outstanding common shares for the three and nine months ended September 30, 2020.

During the three months ended September 30, 2021, net realized gains were primarily driven by realized gains of $1.4 million recognized on partial sale of our investments in Crestwood preferred equity and $0.4 million recognized on the early paydown on our investment in California Pizza Kitchen, Inc.

(“CPK”) 1st lien secured loan.

These realized gains were partially offset by realized losses of $0.3 million on sales of our investments in Tru (UK) Asia Limited (“Tru Taj”) common stock and $0.1 million on the paydown of our investment in OPS Acquisitions Limited and Ocean Protection Services Limited (“OPS”) 1st lien secured loan.

In addition to the above items, during the nine months ended September 30, 2021, net realized losses were primarily driven by the paydown of our investment in OPS 1st lien secured loan and the sales of our investments in Boardriders, Inc.

(“Boardriders”) 1st lien secured loan, and CPK common stock for which we recognized realized losses of $4.2 million, $2.9 million, and $1.6 million, respectively.

These realized losses were partially offset by realized gains of $3.9 million, $1.2 million, and $0.4 million on the partial sale of our investment in Crestwood preferred equity and paydowns on our investments in Subcom, LLC revolver and CPK 1st lien secured loan, respectively.

During the three months ended September 30, 2020, net realized losses were primarily driven by the realized losses of approximately $0.3 million on the APTIM Corp.

1 st lien bond (“APTIM”) during the quarter.

Realized gains for the three months ended September 30, 2020 includes approximately $0.1 million in realized gain on repurchases of debt below par.

During the nine months ended September 30, 2020, net realized losses on investments were primarily driven by the sales of Commercial Barge and Full House Resorts, Inc.

(“Full House”) during the period, for which we recognized realized losses of $9.8 million and $1.3 million, respectively.

Realized gains for the six months ended June 30, 2020 includes approximately $1.1 million in realized gain on repurchases of debt below par.

Realized gains for the nine months ended September 30, 2020 includes approximately $1.2 million in realized gain on repurchases of debt below par.

Change in Unrealized Appreciation (Depreciation) on Investments

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Per Share ( 1)

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Unrealized depreciation

The per share amounts are based on a weighted average of 23,508,232 and 23,455,328 outstanding common shares for the three and six months ended June 30, 2021.

The per share amounts are based on a weighted average of 10,195,857 and 10,129,269 outstanding common shares for the three and six months ended June 30, 2020.

During the three months ended June 30, 2021 , unrealized appreciation was largely driven by the paydown of our investment in OPS and sale of our investment in CPK common stock, discussed under realized losses above, for which we relieved $4.1 million and $2.3 million of previously recognized unrealized losses, respectively.

In addition, we recognized $2.8 million in unrealized gain on the remaining shares of CPK common stock still held and $0.8 million in unrealized gain on our investment in Prestige Capital Finance, LLC common stock as a result of increases in fair value as of June 30, 2021 as compared to March 31, 2021.

During the three months ended June 30, 2021 , net unrealized appreciation included $6.1 million loss on our investment in Avanti 2 nd lien secured bond and $1.6 million loss on our investment in PFS Holding Corporation (“PFS”) common stock, both as a result of decreases in fair value.

In addition to the items noted for the quarter ended June 30, 2021, unrealized appreciation for the six months ended June 30, 2021 includes $3.5 million and $1.5 million, respectively, in increase in the fair value of our investments in Tru Taj common stock and Crestwood preferred equity.

Unrealized depreciation for the six months ended June 30, 2021, includes decreases in fair value of $3.8 million and $1.8 million on our investments in PFS common stock and Avanti 2 nd lien secured bonds, respectively.

The per share amounts are based on a weighted average of 23,914,447 and 23,610,050 outstanding common shares for the three and nine months ended September 30, 2021.

The per share amounts are based on a weighted average of 10,660,894 and 10,307,771 outstanding common shares for the three and nine months ended September 30, 2020 .

During the three months ended September 30, 2021 , net unrealized depreciation was largely driven by the net unrealized losses of $3.6 million and $1.4 million losses on our investments in Avanti 2nd lien secured bond and Tru Taj common stock, respectively, as a result of decreases in fair value.

These losses were offset by unrealized gains of $0.4 million and $0.3 million, recognized on our investments in Prestige common stock and Ruby Tuesday Operations, LLC warrants, respectively, as a result of increases in fair value as of September 30, 2021 as compared to June 30, 2021.

In addition to the items noted for the quarter ended September 30, 2021, unrealized appreciation for the nine months ended September 30, 2021 was largely driven by the paydown of our investment in OPS 1st lien secured loan, full sale of our investment in Boardriders 1st lien secured loan, and partial sale of our investment in CPK common stock, for which we relieved approximately $4.2 million, $3.5 million and $2.9 million, respectively, of previously recognized unrealized losses.

In addition, we recognized unrealized appreciation of approximately $4.2 million on the increase in the fair value of CPK common equity still held as of period end.

Unrealized depreciation for the nine months ended September 30, 2021, includes decreases in fair value of $5.4 million and $3.9 million on our investments in Avanti 2nd lien secured bonds and PFS common stock, respectively.

In addition, we recognized unrealized loss of $1.2 million on our investment in Subcom 1st lien secured revolver due to the termination of the revolver and reversal of previously recognized unrealized gains, as noted under the discussion of realized gains above.

During the three months ended June 30, 2020, we recognized unrealized appreciation of approximately $2.0 million on our investment in ASP Chromaflo Technologies Corp.

2 nd lien secured loan, approximately $1.3 million on our investment in Finastra Group Holdings, Ltd.

2 nd lien secured loan and approximately $1.0 million on our investment in Greenway Health, LLC 1 st lien revolver, respectively.

We recognized unrealized depreciation of approximately $3.0 million and $1.6 million on our positions in CPK and Boardriders, Inc., respectively.

During the six months ended June 30, 2020, 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 approximately $5.0 million on our investment in Avanti 2 nd lien secured bond, approximately $3.3 million on our investment in Tru Taj common equity and approximately $5.7 million and $3.3 million on our investment in CPK 1 st lien loan and 2 nd lien loan, respectively.

In the table above, the presentation of gross unrealized appreciation and depreciation amounts for the three and six months ended June 30, 2020 has been updated consistent with the current year presentation which groups the funded and unfunded portion of revolvers together.

During the three months ended September 30, 2020, we recognized unrealized appreciation of approximately $2.0 million on our investment in Prestige Capital Finance, LLC common equity and approximately $1.1 million on our investment in APTIM 1st lien bond.

We recognized unrealized depreciation of approximately $1.2 million on our position in Boardriders.

During the nine months ended September 30, 2020, 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 approximately $4.8 million on our investment in Avanti 2 nd lien secured bond, approximately $3.6 million on our investment in Boardriders 1 st lien loan and approximately $5.2 million and $3.3 million on our investment in CPK 1 st lien loan and 2 nd lien loan, respectively.

Unrealized appreciation for the nine months ended September 30, 2020 was primarily due to the sale of Commercial Barge in February 2020, for which we realized approximately $6.3 million of previously unrealized losses.

In the table above, the presentation of gross unrealized appreciation and depreciation amounts for the three and nine months ended September 30, 2020 has been updated consistent with the current year presentation which groups the funded and unfunded portion of revolvers together.

As discussed under “—Recent Developments”, we cannot predict the duration of the COVID-19 pandemic and the resulting impact to our individual portfolio companies or the broader market.

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This “—Liquidity and Capital Resources” discussion should be read in conjunction with the discussion of COVID-19 under “—Recent Developments—COVID 19”.

At June 30, 2021, we had approximately $59.8 million of cash and cash equivalents.

At June 30, 2021, we had investments in 42 debt instruments across 36 companies, totaling approximately $155.7 million at fair value and 171 equity investments in 118 companies, totaling approximately $53.7 million at fair value.

At September 30, 2021, we had approximately $20.6 million of cash and cash equivalents.

At September 30, 2021, we had investments in 46 debt instruments across 40 companies, totaling approximately $185.7 million at fair value and 212 equity investments in 122 companies, totaling approximately $61.0 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 June 30, 2021, we had approximately $24.6 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, 2021 balance sheet to satisfy the unfunded commitments.

For the six months ended June 30, 2021 , net cash used for operating activities was approximately $36.5 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 by purchases and proceeds from sales of investments was approximately $ 9 .

7 million , reflecting payments for additional investments of $ 5 0 .

2 million , offset by proceeds from principal repayments and sales of $ 59.9 million .

As of September 30, 2021 , we had approximately $31.3 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 September 30, 2021 balance sheet to satisfy the unfunded commitments.

In addition, we have the ability to draw on our revolving line of credit to manage cash flows.

For the nine months ended September 30, 2021, net cash used for operating activities was approximately $73.1 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 used by purchases and proceeds from sales of investments was approximately $71.1 million, reflecting payments for additional investments of $164.8 million, offset by proceeds from principal repayments and sales of $93.7 million.

Such amounts include draws and repayments on revolving credit facilities.

For the six months ended June 30, 2021, net cash provided by financing activities was $43.1 million consisting of $48.3 million in proceeds from the issuance of the GECCO Notes on June 23, 2021, net of offering costs paid, offset by $4.9 million in distributions to stockholders and $0.3 million in deferred financing costs related to the revolving line of credit.

For the nine months ended September 30, 2021, net cash provided by financing activities was $40.5 million consisting of $55.3 million in proceeds from the issuance of the GECCO Notes and $13.2 million in proceeds net of offering costs paid from the issuance of common stock offset by $7.2 million in distributions to stockholders.

In addition, we repaid $30.3 million on the GECCL Notes in July 2021 and drew $10 million on our revolving credit facility in September 2021.

Contractual Obligations

A summary of our significant contractual payment obligations as of June 30, 2021 is as follows:

A summary of our significant contractual payment obligations as of September 30, 2021 is as follows:

(in thousands)

Contractual Obligations

Revolving Credit Facility

We have certain contracts under which we have material future commitments.

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Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices, as of and for the three months ended June 30, 2021.

There were no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices, as of and for the three months ended September 30, 2021.

On May 5, 2021, we entered into a Loan, Guarantee and Security Agreement (the “Loan Agreement”) with City National Bank (“CNB”).

1 unchanged sentence

We may request to increase the revolving line in an aggregate amount not to exceed $25 million, which increase is subject to the sole discretion of CNB.

The maturity date of the revolving line is the earlier of (i) May 5, 2024 and (ii) May 15, 2022 if the Company’s 6.50% notes due 2022 are not refinanced on or prior to such date.

The maturity date of the revolving line is May 5, 2024.

Borrowings under the revolving line bear interest at a rate equal to (i) the LIBOR plus 3.50%, (ii) a base rate plus 2.00% or (iii) a combination thereof, as determined by us.

As of June 30, 2021, there were no borrowings outstanding under the revolving line.

As of September 30, 2021, there were $10 million in borrowings outstanding under the revolving line.

Borrowings under the revolving line are secured by a first priority security interest in substantially all of our assets, subject to certain specified exceptions.

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In addition, the Loan Agreement contains financial covenants requiring (i) net assets of not less than $65 million, (ii) asset coverage equal to or greater than 160% and (iii) bank asset coverage equal to or greater than 300%, in each case tested as of the last day of each fiscal quarter of the Company.

Borrowings are also subject to the leverage restrictions contained in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

Borrowings are also subject to the leverage restrictions contained in the Investment Company Act.

In October 2021 the Loan Agreement was amended to require an asset coverage equal to or greater than 150%.

Notes Payable

On September 13, 2017, we sold $28.4 million in aggregate principal amount of 6.50% notes due 2022 (the "GECCL Notes").

On September 29, 2017, we sold an additional $4.3 million of the GECCL Notes upon full exercise of the underwriters’ over-allotment option.

The aggregate principal balance of the GECCL Notes outstanding as of June 30, 2021 was $30.3 million.

On June 23, 2021, we caused redemption notices to be issued to the holders of the GECCL Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding GECCL Notes.

On September 13, 2017, we issued $28.4 million in aggregate principal amount of the GECCL Notes.

On September 29, 2017, we issued an additional $4.3 million of the GECCL Notes upon full exercise of the underwriters’ over-allotment option.

We redeemed all of the issued and outstanding GECCL Notes on July 23, 2021 at 100% of the principal amount plus accrued and unpaid interest thereon from April 30, 2021 through, but excluding, the redemption date, July 23, 2021.

On January 11, 2018, we sold $43.0 million in aggregate principal amount of 6.75% notes due 2025 (the “GECCM Notes”).

On January 19, 2018 and February 9, 2018, we sold an additional $1.9 million and $1.5 million, respectively, of the GECCM Notes upon partial exercise of the underwriters’ over-allotment option.

The aggregate principal balance of the GECCM Notes outstanding as of June 30, 2021 is $45.6 million.

The GECCM Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness.

The GECCM Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries.

We pay interest on the GECCM Notes on March 31, June 30, September 30 and December 31 of each year.

The GECCM Notes will mature on January 31, 2025 and can be called on, or after, January 31, 2021.

Holders of the GECCM Notes do not have the option to have the GECCM Notes repaid prior to the stated maturity date.

The GECCM Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

On June 18, 2019, we sold $42.5 million in aggregate principal amount of 6.50% Notes due 2024 (the “GECCN Notes”), which included $2.5 million of GECCN Notes sold in connection with the partial exercise of the underwriters’ over-allotment option.

On July 5, 2019, we sold an additional $2.5 million of the GECCN Notes upon another partial exercise of the underwriters’ over-allotment option.

The aggregate principal balance of the GECCN Notes outstanding as of June 30, 2021 is $42.8 million.

The GECCN Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness.

The GECCN Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries.

We pay interest on the GECCN Notes on March 31, June 30, September 30 and December 31 of each year beginning September 30 , 2019.

The GECCN Notes will mature on June 30, 2024 and can be called on, or after, June 30, 2021.

Holders of the GECCN Notes do not have the option to have the GECCN Notes repaid prior to the stated maturity date.

The GECCN Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

On June 23, 2021, we sold $50.0 million in aggregate principal amount of 5.875% notes due 2026 (the “GECCO Notes” and, together with the GECCL Notes, GECCM Notes and GECCN Notes, the “Notes”).

On July 9, 2021, we sold an additional $7.5 million of the GECCO Notes upon full exercise of the underwriters’ over-allotment option.

The GECCO Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness.

The GECCO Notes are effectively subordinated, or junior in right of payment, to any future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries.

We pay interest on the GECCO Notes on March 31, June 30, September 30 and December 31 of each year beginning September 30, 2021.

The GECCO Notes will mature on June 30, 2026 and can be called on, or after, June 30, 2023.

Holders of the GECCO Notes do not have the option to have the GECCO Notes repaid prior to the stated maturity date.

The GECCO Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

On January 11, 2018, we issued $43.0 million in aggregate principal amount of 6.75% notes due 2025 (the “GECCM Notes”).

On January 19, 2018 and February 9, 2018, we issued an additional $1.9 million and $1.5 million, respectively, of the GECCM Notes upon partial exercise of the underwriters’ over-allotment option.

The aggregate principal balance of the GECCM Notes outstanding as of September 30, 2021 is $45.6 million.

On June 18, 2019, we issued $42.5 million in aggregate principal amount of 6.50% Notes due 2024 (the “GECCN Notes”), which included $2.5 million of GECCN Notes issued in connection with the partial exercise of the underwriters’ over-allotment option.

On July 5, 2019, we issued an additional $2.5 million of the GECCN Notes upon another partial exercise of the underwriters’ over-allotment option.

The aggregate principal balance of the GECCN Notes outstanding as of September 30, 2021 is $42.8 million.

On June 23, 2021, we issued $50.0 million in aggregate principal amount of 5.875% notes due 2026 (the “GECCO Notes” and, together with the GECCM Notes and GECCN Notes, the “Notes”).

On July 9, 2021, we issued an additional $7.5 million of the GECCO Notes upon full exercise of the underwriters’ over-allotment option.

The Notes are our unsecured obligations and rank equal with all of our outstanding and future unsecured unsubordinated indebtedness.

The unsecured notes are effectively subordinated, or junior in right of payment, to indebtedness under our Loan Agreement and any other future secured indebtedness that we may incur and structurally subordinated to all future indebtedness and other obligations of our subsidiaries.

We pay interest on the Notes on March 31, June 30, September 30 and December 31 of each year.

The GECCM Notes, GECCM Notes and GECCO Notes will mature on January 31, 2025, June 30, 2024 and June 30, 2026, respectively.

The GECCM Notes and GECCN Notes are currently callable at the Company’s option and the GECCO Notes can be called on, or after, June 30, 2023.

Holders of the Notes do not have the option to have the Notes repaid prior to the stated maturity date.

The Notes were issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

We may repurchase the Notes in accordance with the Investment Company Act and the rules promulgated thereunder.

As of June 30, 2021, our asset coverage ratio was approximately 166.2%.

Under the Investment Company Act, we are subject to a minimum asset coverage ratio of 150%.

As of September 30, 2021 , our asset coverage ratio was approximately 163.8% .

Under the Investment Company Act, w e are subject to a minimum asset coverage ratio of 150%.

Recent Developments

Our Board authorized the distribution for the quarter ending December 31, 2021 at $0.10 per share, with the record and payment dates to be set by the officers of GECC pursuant to authority granted by our Board.

On July 9, we sold an additional $7.5 million of the GECCO Notes upon full exercise of the underwriters’ over-allotment option.

On July 23, we redeemed all of the issued and outstanding GECCL Notes at 100% of the principal amount plus accrued and unpaid interest thereon from April 30, 2021 through, but excluding, the redemption date.

In July 2021:

we purchased 250,000 shares of Equitrans Midstream Corp.

preferred stock for approximately $5.3 million.

we purchased $3.0 million in par value of Michael Baker International, LLC second lien notes at approximately 101% of par value.

we purchased $4.0 million in par value of CURO Group Holdings Corp.

first lien notes at approximately 100% of par value.

we sold $1.0 million in par value of CURO Group Holdings Corp.

first lien notes at approximately 101% of par value.

we purchased $1.5 million in par value of Viasat, inc.

receivable at 82% of par value.

we sold approximately $0.2 million of SPAC positions across eight companies.

Our Board authorized the distribution for the quarter ending March 31, 2022 at $0.10 per share, with the record and payment dates to be set by the officers of GECC pursuant to authority granted by our Board.

Since September 30, 2021:

$3.0 million in par value of Mitchell International, Inc.

(“Mitchell”) second lien term loan due 2025 was redeemed at 100% of par value.

the Company purchased $1.0 million in par value of Summit Midstream Holdings, LLC second lien notes at approximately 99% of par value.

the Company purchased $0.8 million in par value of Vantage Specialty Chemicals, Inc.

second lien term loan at approximately 97% of par value.

the Company purchased $1.0 million in par value of Mitchell second lien term loan due 2029 at 99% of par value.

the Company sold $1.0 million in par value of Mitchell second lien term loan due 2029 at approximately 101% of par value.

the Company sold 17,656 shares of Crestwood Equity Partners, LP Class A preferred equity units at an average of $10.21 per share.

the Company purchased $1.2 million in par value of Viasat, Inc.

receivables at 82% of par value.

the company sold approximately $1.3 million of SPAC positions across 11 companies.

The global outbreak of the novel coronavirus (“COVID-19”) pandemic has disrupted economic markets and the economic impact, duration and spread of COVID-19 is uncertain at this time.

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We are also subject to financial risks, including changes in market interest rates.

As of June 30 , 2021, approximately $100.4 million in principal amount of our debt investments bore interest at variable rates, which are generally based on LIBOR, and many of which are subject to certain floors.

As of September 30, 2021, approximately $103.9 million in principal amount of our debt investments bore interest at variable rates, which are generally based on LIBOR, and many of which are subject to certain floors.

In connection with the COVID-19 pandemic, the U.S.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis