Great Elm Capital Corporation (GECC), a BDC, will be selling a new issue of $25 Notes with a maturity in 2026.
The company will use the proceeds to call their 6.50% notes (GECCL) which mature in 2022. No harm comes to holders as they are trading at $25.14 now.
In addition to the issue being called the company has 2 other issues outstanding which can be found here.
The prospectus for the new issue can be found here.
Eugene was on top of this new issue.
Can someone comment on why this company is calling this issue, but not also calling GECCM at 6.75% which could have been called in January and preparing to call GECCN in June 21. Always trying to learn here. Seems to me a swap into GECCM which is trading under $25 makes sense, but wouldn’t you think the company would have wanted to shed itself of the 6.75% issue. I am working off of Tim’s list of their other issues above. Thanks. Steve
Skg – GECC is not what you might call a stellar credit….. They are still trying desparately to dig their way out of a whole created most likely by poor prior underwriting skills,,,, Their largest investment to date, Avanti, still remains as a troubled investment… The point is not in the details but in the overall position of GECC as a company not out of the woods…. That kind of company is much more interested in rolling over their shortest maturities to give themselves more time to work thru the problems than they are in calling in higher coupon issues that do not come due until later years.. Hence call of GECCL with it’s 2022 maturity instead of GECCM with its 2025 maturity… Remember calling is optional, dealing with paying off bonds at maturity is not… Thus the purpose of this issue is to extend a ’22 maturity until ’26 by calling it now when GECC is confident the market is strong enough to be willing to lend them more coins if the purpose is intended to call in another outstanding bond, thus not increasing total borrowings…
2white- that totally makes sense. Thanks for taking the time to explain that clearly. Steve
Any idea when the GECCL will be called?
It should be pointed out that the Great Elm Capital Corp has a III rating of D.
Hi Citadel—I should review that as it is an older rating and a quick glance earlier at their numbers show that payment reliability should probably be moved up to a C
Hi Citadel, I’m not familiar with that “III” acronym, could you clarify? Thanks.
III = Innovative Income Investor (this site)
My rating for just dividend/interest payment reliability.