Good day ladies and gentlemen and welcome to the Great Elm Capital Corp. Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I will now like to hand the call over to Mr. Adam Yates. You may begin.

Thank you, Amanda and good morning everyone. Thank you all for joining us for Great Elm Capital Corp.'s fourth quarter 2018 earnings conference call. As a reminder, this webcast is being recorded on Wednesday, March 13th, 2019. If you'd like to be added to our distribution list, you can email investorrelations@greatelmcap.com or you can sign up for alerts directly on our website. The slide presentation accompanying this morning's conference call and webcast can be found on Great Elm Capital Corp.'s website www.greatelmcc.com under Financial Information, Quarterly Results. On the website you can also find a copy of our earnings release, Form 10-K, and the link to the webcast. I'd 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 a 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 the SEC filings please visit Great Elm Capital Corp.'s website under Financial Information, SEC filings or by visiting the SEC's website. Hosting the call this morning is Peter Reed, Great Elm Capital Corp.'s President and Chief Executive Officer. I will now turn the call over to Peter.

Thank you, Adam. Good morning and thank you everyone for joining us today. I'm joined this morning by our President and COO, Adam Kleinman; Portfolio Manager, Adam Yates; and SEC Reporting Manager, Keri Davis. Where relevant, in our prepared remarks, we will point you to the corresponding slide number in the deck that Adam referenced which is available on our website as well as through the webcast. Please turn to Slide 3 for an overview of GECC. GECC is an externally managed special situations-focused BDC. GECC seeks to generate both current income and capital appreciation from its portfolio of investments comprised of secured loans and bonds sourced in the secondary market as well as in originated transactions. As of December 31st, 2018, GECC had total assets of approximately $281.6 million, a portfolio fair value of $184.2 million, and a net asset value of $110.1 million equating to $10.34 per share. The weighted average current yield on our debt holdings is approximately 12%. GECC placed an $0.083 per share base monthly distribution that equates to approximately $1 per share on an annual basis. Importantly, greater than 20% of GECC's shares are held between Great Elm Capital Group Inc., Great Elm Capital Management Inc.'s employees, and GECC's Board of Directors creating a very clear alignment of interest between management and you, our shareholders. Let's turn to Slide 4 to go over a few highlights and recent achievements. I'm proud to report that GECC's net investment income has covered its declared distributions every quarter since inception in 2016. In total in 2018, GECC paid $1.24 in distributions. Based upon December 31st NAV and closing market price that equates to an annual distribution yield of 12% and almost 16% respectively. During the quarter, we deployed capital at a weighted average price of 92% of…

Thank you [Operator Instructions] Our first question comes from the line of Scott Buck of B. Riley FBR. Your line is open.

Good morning, guys. I was hoping you could expand a little bit on the new investment opportunities, just the environment in general in terms of the number of good opportunities you're seeing in the market versus historical levels and maybe what the competitive environment is like in looking at those deals? Thanks.

Hi, Scott. Thanks and good question. So I'd probably subset our opportunity set into originated loans the syndicated loan market and the high-yield bond market. For originated loans in particular, we continue to view the market as very competitive generally. The syndicated loan and high-yield bond market both in the fourth quarter of the year as well as the beginning of this year from our vantage point we're offering up more compelling opportunities than was the market for originated transactions. And so that's where we have been deploying capital. I'd say that generally speaking, the markets have become a little bit less attractive as we have passed through a big chunk of the first quarter. But we're still finding a pretty compelling opportunity set of under-followed and potentially misunderstood opportunities particularly in the leverage loan market.

Great. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Nat Stewart of N.A.S. Capital. Your line is open.

Hey, guys. Thanks for taking my question.

Sure. Thanks. Good morning, Nat.

Good morning. Yeah. I was very intrigued by the Prestige transaction that looks very interesting. It looks like you got equity at a great price relative to the earnings. Particularly, my question is related to the participation and factoring. I kind of wanted to see if you guys could talk a little bit about the magnitude of that opportunity. Could this be a substantial platform for you guys? And also, if you thought, they're kind of teaming up with you guys or being acquired by you would be able to accelerate their own growth. Perhaps, you guys are able to finance them a little better than what they have in the past or something like that?

Thanks, all good questions. So the first on the participation, while we certainly aspire to be doing that in a meaningful way given what we think are a, attractive returns and b, limited sort of fundamental credit risk those are going to be episodic opportunities. Prestige is primarily participating larger transactions where it doesn't want to hold the whole amount for sort of portfolio risk management. And while we maintain, a very active dialogue with the team there, I'm not expecting that we in the near-term will be deploying a lot of capital into those opportunities although it certainly would be a pleasant surprise, if that were to change. So it's really sort of dependent upon their -- what happens -- the nature of the deals working through their pipeline. On the second part, it's still early days, but we do think that there are some benefits from having an institutional investor with deeper capital pockets to the team. But as to whether that leads to a more rapid rate of portfolio growth, I think it's too early to say. But we think that there's merit in thinking that that could cause or help to cause portfolio growth. Q – Nat Stewart: Okay. Yes I had -- that's good. I had kind of one more kind of comment/question. It looks to me like you guys have put together a really solid track record with your own strategy that to me looks really compelling. And it's kind of been as you know a bit overshadowed with mark-to-market losses in Avanti and this quarter-end you had kind of a difficult mark-to-market. I've looked into the Avanti independently, looked at the collateral values. I mean, I think the story with Kyle, I spoke with him is really compelling what they're doing there. I'm…

Thank you. Our next question comes from the line of Lee Crocket, a private investor. Your line is open. Q – Unidentified Analysts: Thank you. Peter, GECC has borrowed a couple of times in the -- what you referred to as the baby bond market. I assume that market was pretty soft at the end of 2018. Has that market opened up back to you? And if so, do you plan of going back to that market? And what impact does that have on your returns on equity? A – Peter Reed: Sure. Hi Lee. Thanks for the question. We do have a N-2 registration statement on file with the SEC staff and so we are interested in re-approaching the baby bond market. And I do think that speaking here today that is a -- that has a much higher probability of a transaction that we would like than if we were having this conversation in December or January. At the moment, we think, we have an attractive pipeline of investments that could be funded with the proceeds of one of those offerings. We will be updating our resale registration statement with the -- with our recent results. And if that statement goes effective in a timely fashion and the markets are still open and we still have an interesting pipeline of investments to fund, I would imagine that we would seek to do another transaction.

Okay. And can I get a question on Avanti. The comments on your slides seem to indicate that liquidity is not an issue at Avanti. The second lien notes are picking and the first lien notes I assume you have -- the Company has plenty of liquidity to carry that until the operating numbers look stronger. Is that a fair statement, or can you comment on that?

I think we believe and the Company believes it's got sufficient liquidity to execute on its business plan.

Thank you.

Thank you. And our next question comes from the line of Tim Chatard of Quantum Capital. Your line is open.

Hi. I've got a couple of questions on Prestige, if that's okay?

Sure. Good morning, Tim.

Good morning. How did the liabilities work in the business?

Sure. So, the liabilities in that business typically are two-fold. One is most of the factoring businesses that we're familiar with utilize a secured line of credit to help fund the receivables that they're purchasing from their clients. That frequently is a pretty attractive low cost capital -- low cost of capital, especially as compared to the high unleveraged returns that businesses like Prestige are generating from their factoring clients. And then a second source of liability, if you're looking at the balance sheet, is most factoring businesses with which we're familiar, at least on a spot factoring basis, are typically funding, I'll call 70% of the receivable is paid in cash and the remainder is paid when the receivable is collected from the account debtor. So, between that residual liability as well as their line of credit that typically would represent the bulk of the liability structure for a factoring business like Prestige.

And can you help me understand what industries you're dealing with? What's the typical client for the type of business they're doing?

Sure. So, the industry for Prestige, and I can't speak to all factors, but I can certainly speak to Prestige. The industry exposure is pretty diversified on purpose. But a decent profile of a Prestige client is a rapidly growing business frequently where the rapid growth is accompanied with challenged profitability. And so, it's tough for banks to underwrite for NAV alone, but that credit challenge is offset by receivables from high quality very creditworthy customers. So, in an effort to get cash to fuel the growth of their businesses, Prestige is providing capital where really the bulk of your credit support you're deriving from the very creditworthy, very large counterparties. Does that make sense?

Yeah. Rapidly growing businesses, I've been struggling to like -- I mean is that a food company? Is it a drug company? Is that a trucking company? Is that a...?

Well, all of the above. I think portfolio -- as part of portfolio risk management, I think Prestige is pretty focused to not have large industry concentration. I expect that you could find factoring businesses where that's not the case, but part of the attraction of Prestige to us is the focus on risk management, the team has in place for 20 years. So, it's a pretty diversified pool of industries and all of the above that you described would potentially be in there.

Okay. And the transaction itself, how did it come to you?

This was a transaction process run by Janney Montgomery Scott who we're familiar with. And in our baby bonds Janney's helped us with both of those.

Okay. Thank you.

Welcome.

Thank you. And at this time, I'm showing no further questions. I'd like to turn the conference back over to Mr. Adam Yates for the closing remarks.

Thank you again for joining us this morning. We look forward to continued dialogue and please let us know if we can be helpful with anything in follow-up. Have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.