CNL Strategic Capital Enhanced Liquidity Plan Fails Supermajority Vote

Shareholders of CNL Strategic Capital voted last week to reject the company’s proposed enhanced liquidity plan. The vote fell short of the two-thirds supermajority required to approve a structured share repurchase program that would have offered investors their most significant liquidity mechanism since the middle-market private equity fund, which had approximately $1.46 billion in total assets at the end of February, was formed in 2018.

Of the more than 36.3 million shares eligible to vote as of the Jan. 27 record date, approximately 21.6 million were voted at the reconvened special meeting. The proposal received roughly 20.1 million votes in favor – approximately 55% of all eligible shares – against approximately 510,000 opposed and 925,000 withheld. Passing would have required approximately 24.2 million affirmative votes.

The board put the enhanced liquidity plan to shareholders after concluding earlier this year that continuing CNL Strategic Capital as a perpetual-life vehicle was in the best interests of the company and its shareholders — a decision that effectively ruled out a near-term listing or full liquidity event. The enhanced liquidity proposal was framed as a structured alternative: the company would repurchase shares during the first four full calendar quarters following approval, up to a percentage to be established by the board after the vote passed.

With the vote concluded, the company said it will continue administering its existing share repurchase program under its current terms, which cap annual repurchases at up to 10% of the company’s aggregate net asset value per calendar year. The company said the existing program has been sufficient to meet all proper repurchase requests to date, including during the period when the proxy vote was being pursued.

Concurrent with the vote results, the company disclosed that its wholly owned subsidiary CNL Strategic Capital B, Inc., entered into a third amendment to its loan agreement with Valley National Bank, extending the maturity of its $50 million revolving credit facility to Aug. 15, 2026. The amendment also permits the line of credit to be used to finance share repurchases up to 90% of the company’s trailing six months of new net investment proceeds, excluding reinvested distributions. The company paid Valley National Bank a $62,500 amendment fee in connection with the transaction.

CNL Strategic Capital has now extended the same revolver three times, each time by a matter of months. The prior extension, disclosed in February, set a maturity date of May 15, 2026, before this latest amendment pushed it to August.

The vote followed a months-long solicitation effort that had already produced two adjournments. As AltsWire reported in May, the special meeting was initially called to order March 30 but adjourned without a quorum, then reconvened April 30 but again fell short of sufficient votes on the underlying proposal. Shareholders approved the authority to adjourn a second time by 18,490,603 votes for, 566,537 against, and 943,272 withheld.

The failure to pass reflects a broader pattern among nontraded alternative investment programs struggling to assemble retail proxy support for structural liquidity ballot items, though the proposals at issue differ. Bluerock Private Real Estate Fund initially fell short of the votes needed to list on the New York Stock Exchange in a September 2025 special meeting before securing approval at a reconvened vote later that month and ultimately listing on the NYSE in December 2025.

CNL Strategic Capital’s outcome was different: a second adjournment produced more votes but not enough to cross the supermajority threshold, and the company concluded the meeting without a third extension.

The board had previously said it would consider a liquidity event for shareholders on or before Nov. 1, 2027 – a deadline tied to the six-year anniversary of the termination of the company’s initial public offering in November 2021. The company’s current public offering is separately scheduled to expire on the same date. The board said it will continue to evaluate capital raise options beyond that offering, without specifying what form a future liquidity mechanism might take.

CNL Strategic Capital acquires controlling equity stakes in combination with loan positions in middle-market businesses. It is externally managed by CNL Strategic Capital Management LLC and Levine Leichtman Strategic Capital LLC, an affiliate of Los Angeles-based Levine Leichtman Capital Partners.

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