Steele Creek Capital Sells Off 75.8% of Its Portfolio, Moves Toward Full Liquidation
Steele Creek Capital Corporation has sold off 75.8% of its investment portfolio and will use the proceeds to retire its bank credit line, part of a deleveraging plan its board unanimously approved in anticipation of a likely full liquidation and dissolution, the nontraded business development company said in a letter to shareholders.
The company’s investment adviser, Steele Creek Investment Management LLC, sold 164 of the fund’s broadly syndicated loan investments – 75.8% of the portfolio at fair value as of June 30 – on Aug. 18 through a “Bids Wanted in Competition” secondary-market auction to more than 22 dealers. The sales generated gross proceeds of approximately $73 million and a net loss of $1.7 million, though the trades priced about $462,000 above the loans’ June 30 valuations, the company said.
Steele Creek will use approximately $65 million of the proceeds to fully repay borrowings outstanding under its revolving credit facility with Bank of America, which allowed the fund’s financing subsidiary, Steele Creek Capital Funding II LLC, to borrow up to $80 million, with an option to increase commitments to $130 million. The company has notified Bank of America of its election to terminate the facility ahead of maturity and said it will not incur early-termination penalties.
The board cited the fund’s sub-scale size, the difficulty of raising equity capital in the current environment, an expectation that assets will keep shrinking, the growing challenges of managing a smaller portfolio, the costs of maintaining BDC and public-reporting status, and the adviser’s desire to lock in gains from a strong run in the broadly syndicated loan market as reasons behind the deleveraging plan.
Over the next several weeks, the board said it will work with the investment adviser and third-party advisers to reach a final decision on a full liquidation and dissolution, including whether to suspend the fund’s quarterly repurchase program if a wind-down is approved. Any liquidation plan would require shareholder approval and, if approved, would trigger a proxy vote and immediate commencement of the wind-down under the company’s governing documents. Steele Creek said it hopes to complete the liquidation and distribute proceeds to shareholders by year-end, though timing depends on the sale and settlement of remaining investments and other factors outside its control.
The company has also indefinitely suspended sales of its shares until further notice.
Steele Creek’s net assets stood at $50.2 million as of June 30, down from $53.4 million at the end of 2025, with net asset value per share at $8.56, down from $8.65, according to unaudited pro forma financial statements. The fund reported net investment income of $1.7 million for the six months ended June 30 and a $4.1 million net realized loss on investments over the same period, offset by $3.3 million in net unrealized appreciation. Shares outstanding fell to 5.87 million from 6.18 million at year-end as the fund continued repurchasing stock.
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