CNL Strategic Capital sells Resolution Economics stake to sub-manager affiliate for $29.2M

CNL Strategic Capital sold its minority stake in Resolution Economics for about $29.2 million in net cash proceeds to a buyer owned by an affiliate of its sub-manager, the fund said Oct. 7. AltsWire, which first reported the sale, identified the buyer as REG Investco LLC, owned by an affiliate of Levine Leichtman Strategic Capital together with Resolution Economics management and other existing owners.

The sale of the fund's about 7.8% indirect ownership interest closed Oct. 2 as part of a recapitalization that also repaid its about $2.8 million second-lien debt investment.

The fund carried the equity stake at a fair value of $27.4 million as of June 30, so the net cash proceeds came in about 6.6% above its most recent mark. CNL invested about $7.1 million in Resolution Economics common equity in January 2020; that check plus the repaid $2.8 million of debt comes to about $9.9 million, near the $10 million the fund cites for its original co-investment.

CNL said the terms of the purchase and sale agreement were negotiated among related parties and not at arm's length with unaffiliated persons. Lincoln International gave an opinion on the fairness of the consideration, and a majority of the fund's disinterested directors, including a majority of its independent directors, approved the sale.