13D Filing: MAST Capital and Great Elm Capital Group Inc. (GEC)

MAST Capital, as the investment manager of the MAST Accounts, may be deemed to beneficially own the 4,055,913 shares of Common Stock held by the MAST Accounts, representing approximately 17.5% of the issued and outstanding shares of Common Stock of the Issuer.  The foregoing does not include a warrant to purchase 54,733 shares of Common Stock from the Issuer, which was issued to MAST Capital on December 9, 2016 (the “Warrant”).  The exercise price of the Warrant is $0.01 per share.  The Warrant may not be exercised until the earlier of (a) the date when the revenue received by the Issuer pursuant to that certain Investment Management Agreement, dated September 27, 2016 by and between Great Elm Capital Corp. and GECM (the “GECM IMA”) during the period November 3, 2016 to November 3, 2021 reaches $40,000,000 and (b) November 3, 2021.  The number of shares of Common Stock underlying the Warrant shall be reduced proportionately based on the actual amount of such revenue received by the Issuer during such period.  The Warrant expires on November 3, 2026.

Mr. Steinberg directly holds 62,341 shares of Common Stock.  In addition, Mr. Steinberg, as the principal of MAST Capital, may be deemed to beneficially own the 4,055,913 shares of Common Stock which are beneficially owned (or may be deemed to be beneficially owned) by MAST Capital.  The total shares of Common Stock which Mr. Steinberg beneficially owns (or may be deemed to beneficially own) are 4,118,254, representing approximately 17.7% of the issued and outstanding shares of Common Stock of the Issuer.  The foregoing does not include an award of 220,923 performance-based restricted shares of Common Stock granted to Mr. Steinberg on November 3, 2016 (the “Restricted Shares”).  The Restricted Shares were issued pursuant to the Issuer’s 2016 Long-Term Incentive Compensation Plan and are subject to the terms thereof.  In addition, the Restricted Shares are subject to both performance-based vesting and time-based vesting.  Under the performance-based vesting, the Restricted Shares will vest based on the extent to which revenue received by the Issuer pursuant to the GECM IMA, during the period November 3, 2016 to November 3, 2021 reaches $40 million (or the proportionate amount of such goal which is actually reached) (with such amount of qualified Restricted Shares being the “Performance-Qualified Shares”).  Under the time-based vesting, 20% of the Performance-Qualified Shares will vest on November 3, 2017 and thereafter 5% of the Performance-Qualified Shares will vest on each February 3, May 3, August 3 and November 3 on which Mr. Steinberg is providing continuing services as a Senior Advisor to GECM, until fully vested.

MAST Capital and Mr. Steinberg disclaim beneficial ownership of the Common Stock held by the MAST Accounts except to the extent of their pecuniary interest therein.

(b) MAST Capital and Mr. Steinberg have the shared power to vote and dispose of the Common Stock owned by the MAST Accounts reported in this Schedule 13D.  Mr. Steinberg has the sole power to vote and dispose of the Common Stock directly owned by him reported in this Schedule 13D.

The filing of this Schedule 13D shall not be construed as admission that MAST Capital or Mr. Steinberg is, for the purposes of Section 13(d) or 13(g) of the Act, or otherwise, the beneficial owner of any of the 4,055,913 shares of Common Stock owned by the MAST Accounts. Pursuant to Rule 13d-4, MAST Capital and Mr. Steinberg disclaim all such beneficial ownership.

(c) There were no transactions in the Common Stock during the past sixty (60) days by the Reporting Persons.

(d) The 4,055,913 shares of Common Stock held by the MAST Accounts consists of the following amounts: (i) 2,108,178 shares of Common Stock held by Mast OC I Master Fund LP; and (ii) 1,947,735 shares of Common Stock held by Mast Admiral Master Fund LP.

(e) Not applicable.