Moelis-linked Steele Creek BDC to liquidate after 66.5% vote

Steele Creek Capital Corporation, a privately offered business development company managed by an affiliate of Moelis Asset Management, will liquidate after shareholders voted 66.5% in favor on Oct. 13, AltsWire reported.

The tally was 3.81 million shares out of 5.74 million outstanding on the Sept. 28 record date.

Shareholders also authorized the board to withdraw the fund's BDC election.

The plan takes effect Dec. 1, when Steele Creek stops operating as an investment company, sells its remaining assets, pays its liabilities and distributes the remainder to shareholders.

The company expects the final liquidating distribution by year-end.

The plan requires it no later than one day before the second anniversary of the effective date.

Liquidation costs are estimated at about $200,000, which the fund will pay.

Once the BDC election is withdrawn, the company plans to end its registration under the Securities Exchange Act of 1934 and stop filing periodic reports.

For anyone holding a non-traded BDC through a wind-down, public reporting ends with the Exchange Act deregistration, so the final distribution becomes the last reported value investors will receive.

Beneficial owners on the record date are paid from asset sales rather than from a negotiated sale of the whole fund, which the board said could have meant selling to a third party at a discount.

The shares had been sold privately through dealer manager S2K Financial LLC with upfront sales loads of up to 5.5%.

Directors approved the plan unanimously on Sept. 21, citing the fund's 'sub-scale size,' the difficulty of raising equity capital, an expected continued decline in assets, and the cost of maintaining BDC status and public reporting.

The board said it also considered converting Steele Creek into a nontraded, publicly offered BDC or an interval fund, and concluded those routes would likely add costs, risks and complications compared with an orderly liquidation.

Before the vote, the board approved a deleveraging plan on Aug. 17, and the next day the adviser sold 164 broadly syndicated loans through a 'Bids Wanted in Competition' auction.

Steele Creek has operated as a BDC since October 2020, invests primarily in fixed-income instruments including broadly syndicated bank loans, and had 190 beneficial owners as of the record date, an average of roughly 30,000 shares each.

Kenneth Moelis, Moelis & Company's executive chairman and founder, beneficially owned about 2.65 million shares, or 45.89% of the outstanding stock, as of the Sept. 28 record date.

Directors and executive officers as a group held 47.80%.

The company reported no votes against either proposal and no abstentions, leaving about a third of shares outstanding unvoted.

The affiliated block falls short of the 66.5% in favor, so at least a fifth of the outstanding shares behind the resolutions came from outside the insider group.

The tally did not separate affiliated from unaffiliated votes.