UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13G
(Under the Securities Exchange Act of 1934)
(Amendment No.2)*
GSE Systems, Inc.
------------------------------------------------------
(Name of Issuer)
Common Stock
---------------------------------
(Title of Class of Securities)
36227K106
-----------------------
(Cusip Number)
February 28, 2009
_______________________________
(Date of event which requires filing of this statement)
Check the appropriate box to designate the rule pursuant
to which this schedule is filed:
[X] Rule 13d-1 (b) Babson Capital Management LLC
[X] Rule 13d-1 (c) Cobbs Wharf Master Fund, L.P.
[ ] Rule 13d-1 (d)
*The remainder of this cover page shall be filled out for a
reporting person's initial filing of this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided in
a prior cover page.
The information required in the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act, but shall be subject to all
other provisions of the Act (however, see the Notes.)
[Continued on the following page(s)]
Page 1 of 8 Pages
CUSIP No 36227K106 Page 2 of 8 Pages
______________________________________________________________
1. Name of reporting person
S.S. or I.R.S. identification no. of above person
Babson Capital Management LLC
51-0504477
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2. Check the appropriate box if a member of a group
(a)( )
(b)( X )
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3. SEC use only
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4. Citizenship or place of organization
Delaware
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5. Sole Voting Power
0
Number of -----------------------------
shares 6. Shared Voting Power
beneficially
owned by 1,600,000
each -----------------------------
Reporting 7. Sole Dispositive Power
person
with 0
-----------------------------
8. Shared Dispositive Power
1,600,000
---------------------------------------------------------------
9. Aggregate amount beneficially owned by each reporting person
1,600,000 (1)
---------------------------------------------------------------
10. Check if the aggregate amount in row (9) excludes certain shares*
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11. Percent of class represented by amount in row 9
10.02% (2)
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12. Type of Reporting person
IA
1) Babson Capital Management LLC (Babson Capital) serves as investment
adviser to Cobbs Wharf Master Fund, L.P., a Cayman Islands limited
partnership, which is the registered holder of 1,600,000 of the shares
reported as beneficially owned by Babson Capital.
(2) Based on 15,965,346 shares of GSE Systems, Inc. common stock
outstanding as reported in the issuer's Quarterly Report on Form
10-Q, for the period ending September 30, 2008.
CUSIP No 36227K106 Page 3 of 8 Pages
______________________________________________________________
1. Name of reporting person
S.S. or I.R.S. identification no. of above person
Cobbs Wharf Master Fund, L. P.
----------------------------------------------------------------
2. Check the appropriate box if a member of a group
(a)( )
(b)( X )
----------------------------------------------------------------
3. SEC use only
----------------------------------------------------------------
4. Citizenship or place of organization
Grand Cayman
----------------------------------------------------------------
5. Sole Voting Power
0
Number of -----------------------------
shares 6. Shared Voting Power
beneficially
owned by 1,600,000
each -----------------------------
Reporting 7. Sole Dispositive Power
person
with 0
-----------------------------
8. Shared Dispositive Power
1,600,000
---------------------------------------------------------------
9. Aggregate amount beneficially owned by each reporting person
1,600,000 (1)
---------------------------------------------------------------
10. Check if the aggregate amount in row (9) excludes certain shares*
----------------------------------------------------------------
11. Percent of class represented by amount in row 9
10.02% (2)
----------------------------------------------------------------
12. Type of Reporting person
PN
1) Babson Capital Management LLC (Babson Capital) serves as investment
adviser to Cobbs Wharf Master Fund, L.P., a Cayman Islands limited
partnership, which is the registered holder of 1,600,000 of the shares
reported as beneficially owned by Babson Capital.
(2) Based on 15,965,346 shares of GSE Systems, Inc. common stock
outstanding as reported in the issuer's Quarterly Report on Form
10-Q, for the period ending September 30, 2008.
CUSIP No 36227K106 Page 4 of 8 Pages
______________________________________________________________
SCHEDULE 13G
ITEM 1(A): NAME OF ISSUER:
GSE Systems, Inc.
1(B): ADDRESS OF ISSUER'S PRINCIPAL EXECUTIVE OFFICES:
1332 Londontown Blvd., Suite 200
Sykesville, MD 21784
ITEM 2(A): NAME OF PERSON FILING:
(i) Babson Capital Management LLC (Babson) as investment adviser.
(ii) Cobbs Wharf Master Fund, L.P. (Cobbs Wharf)
ITEM 2(B): ADDRESS OF PRINCIPAL BUSINESS OFFICE:
Babson Capital Management LLC
470 Atlantic Avenue
Boston, MA 02210-2208
Cobbs Wharf Master Fund, L.P.
470 Atlantic Avenue
Boston, MA 02210-2208
ITEM 2(C): CITIZENSHIP:
See Item 4 of Cover Page
ITEM 2(D): TITLE OF CLASS OF SECURITIES:
See Cover Page
ITEM 2(E): CUSIP NUMBER:
See Cover Page
ITEM 3: TYPE OF REPORTING PERSON:
This statement is filed pursuant to Rule 13d-l(b) (1) (ii) (E) for
Babson Capital.
ITEM 4: OWNERSHIP:
See each cover page.
CUSIP No 36227K106 Page 5 of 8 Pages
______________________________________________________________
ITEM 5: OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS:
Not Applicable
ITEM 6: OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON:
Cobbs Wharf Master Fund, L. P. 10.02%
ITEM 7: IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED
THE SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY:
Not Applicable
ITEM 8: IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP:
Not Applicable
ITEM 9: NOTICE OF DISSOLUTION OF GROUP:
Not Applicable
ITEM 10: CERTIFICATION:
BABSON CAPITAL MANAGEMENT LLC CERTIFICATION:
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and are held in the
ordinary course of business and were not acquired and are not held
for the purpose of or with the effect of changing or influencing the
control of the issuer of the securities and were not acquired and are
not held in connection with or as a participant in any transaction
having such purpose or effect.
SIGNATURE:
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Date: March 27, 2009
Babson Capital Management LLC
Signature: // James Masur //
Name/Title: James Masur
Chief Compliance Officer
Managing Director
CUSIP No 36227K106 Page 6 of 8 Pages
______________________________________________________________
COBBS WHARF MASTER FUND, L.P.CERTIFICATION:
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and are held in the
ordinary course of business and were not acquired and are not held
for the purpose of or with the effect of changing or influencing the
control of the issuer of the securities and were not acquired and are
not held in connection with or as a participant in any transaction
having such purpose or effect.
SIGNATURE:
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Date: March 27, 2009
Cobbs Wharf Master Fund, L.P.
By: Cobbs Wharf Management, LLC
Its General Partner
By: // James Masur //
Name: James Masur
Title: Chief Compliance Officer
Managing Director
CUSIP No 36227K106 Page 7 of 8 Pages
______________________________________________________________
JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned
that the amended Schedule 13G filed on or about this date and any
future amendments thereto with respect to the beneficial ownership
by the undersigned of common shares of GSE Systems, Inc. is being
filed on behalf of each of the undersigned in accordance with
Rule 13d-1(k)(1). This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
March 27, 2009
--------------------
Date
Babson Capital Management LLC
_____________________________
By: // James Masur //
Name: James Masur
Title: Chief Compliance Officer
Managing Director
Cobbs Wharf Master Fund, L.P.
_____________________________
By: Cobbs Wharf Management, LLC
Its General Partner
By: // James Masur //
Name: James Masur
Title: Chief Compliance Officer
Managing Director
CUSIP No 36227K106 Page 8 of 8 Pages
______________________________________________________________
March 27, 2009
Securities and Exchange Commission
Operations Center
Attn: Stop 0-7
6432 General Green Way
Alexandria, VA 22312-2413
Re: SCHEDULE 13G ON BEHALF OF GSE SYSTEMS, INC. FOR THE MONTH
ENDING FEBRUARY 28, 2009
Dear Sir or Madam:
Babson Capital Management LLC and Cobbs Wharf Master Fund, L.P.
are filing today an amended Schedule 13G through the EDGAR system
as required by Section 240.13d-1(b) and Section 240.13d-1(c) to reflect
beneficial ownership of greater than 10% of the outstanding stock of the
above-mentioned issuer.
Please note that the shares as to which this Schedule is filed are
owned by investment advisory clients of Babson Capital Management
LLC, which may be deemed a beneficial owner of the shares only by
virtue of the direct or indirect investment discretion it possesses pursuant
to the provisions of investment advisory agreements with such clients.
A copy of the Schedule 13G is being sent to the issuer as required by
Rule 13d-7.
Comments or questions concerning the above may be directed to the
undersigned at (617)761-3834.
Sincerely,
// James Masur //
James Masur
Chief Compliance Officer
Managing Director