Nuveen Churchill Direct Lending (NCDL) risk factors, FY2025 10-K

Other

1. 01We are subject to risks related to our business and structure42% rewritten
2. 02We are subject to risks related to our operations
3. 03We are subject to risks relating to an investment in our unsecured notes49% rewritten

Risks Related to our Business and Structure

1. 04We are currently operating in a period of significant market disruption and economic uncertainty, which may have a negative impact on our business, financial condition and operations. An extended disruption in the capital markets and the credit markets could negatively affect our business83% rewritten
2. 05loans and increased uses of PIK features; and (iii) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issuesNew
3. 06Our financial condition and results of operations depend on our ability to manage our business effectively25% rewritten
4. 07We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses
5. 08Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies, which may, in turn, impact the valuation of such portfolio companies
6. 09General interest rate fluctuations may have a negative impact on our investments and our investment returns and, accordingly, may have a material adverse effect on our investment objective and our net investment incomeNew
7. 10We are exposed to risks associated with hedging transactions
8. 11We may experience fluctuations in our quarterly operating results
9. 12The effect of global climate change may impact the operations and valuation of our portfolio companies
10. 13Environmental, social and governance factors may adversely affect our business or cause us to alter our business strategy32% rewritten
11. 14The data we use to make ESG-related determinations may not guarantee that our investments satisfy applicable ESG criteria
12. 15Downgrades of the U.S. credit rating, impending automatic spending cuts or government shutdowns could negatively impact our liquidity, financial condition and earnings49% rewritten
13. 16U.S. policy changes may adversely affect our businessNew
14. 17Global economic, political and market conditions may adversely affect our business or cause us to alter our business strategy32% rewritten
15. 18New or modified laws or regulations governing our operations could adversely affect our business
16. 19We cannot predict how new tax legislation will affect us, our Advisers, our investments, or our shareholders, and any such legislation could adversely affect our business67% rewritten
17. 20Changes to U.S. tariff and import/export regulations may have a negative effect on the operations of our portfolio companies and, in turn, negatively impact us87% rewritten
18. 21The Board may change our investment objective, operating policies and strategies without prior notice or shareholder approval, the effects of which may be adverse
19. 22Terrorist attacks, acts of war, global health emergencies or natural disasters may affect any market for our shares, impact the businesses in which we invest and harm our business, operating results and financial condition31% rewritten
20. 23In addition, the ongoing conflicts in Europe and the Middle East and escalating tensions in the region may create volatility and disruption of global markets57% rewritten
21. 24The failure of cybersecurity protection systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning, could impair our ability to conduct business effectively48% rewritten
22. 25The portfolio companies in which we invest are subject to similar risks, and any cybersecurity failures or breaches by such portfolio companies, or any of their third-party service providers, could adversely affect the portfolio company’s results of operations and financial condition, as described aboveNew
23. 26We may be subject to risks associated with artificial intelligenceNew
24. 27Our business is dependent on bank relationships and any strain on the banking system may adversely impact us25% rewritten
25. 28If the Advisers or the Administrator are unable to maintain the availability of their electronic data systems and safeguard the security of their data, their and our ability to conduct business may be compromised, which could impair liquidity, disrupt business, damage their and our reputation and cause losses
26. 29We may incur lender liability as a result of our lending activities
27. 30We may incur liability as a result of providing managerial assistance to our portfolio companies
28. 31Churchill may not be able to achieve the same or similar returns as those achieved by our senior management and investment personnel while they were employed at prior positions
29. 32Soft dollars and research received and conducted on our behalf will be shared by others30% rewritten
30. 33There are significant financial and other resources necessary to comply with the requirements of being an SEC reporting entity, and non-compliance may adversely affect us

Risks Related to Our Operations and Investments

1. 34Economic recessions or downturns could impair our portfolio companies and harm our operating results
2. 35Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and harm our operating results
3. 36Our investments in leveraged portfolio companies may be risky, and we could lose all or part of our investment
4. 37We typically invest in middle market, privately owned companies, which may present a greater risk of loss than loans to larger companies
5. 38We are subject to risks associated with our investments in senior loans
6. 39We are subject to risks associated with our investments and trading of liquid assets, including broadly syndicated loans
7. 40We are subject to risks associated with our investments in junior or subordinated debt securities
8. 41We are subject to risks associated with our investments in unitranche secured loans and securities
9. 42We are subject to risks associated with “covenant-lite” loans
10. 43We are subject to risks associated with syndicated loans
11. 44We are subject to risks associated with our investments in equity-related securities
12. 45The loans we make in portfolio companies may become non-performing26% rewritten
13. 46The lack of liquidity in our investments may adversely affect our business
14. 47Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our NAV through increased net unrealized depreciation
15. 48Our portfolio companies may prepay loans, which may reduce stated yields if capital returned cannot be invested in transactions with equal or greater expected yields
16. 49We are subject to risks associated with our investments in special situation companies
17. 50We may be subject to risks associated with our investments in the business services industry
18. 51Our investments in the healthcare sector face considerable uncertainties
19. 52Any investments in life sciences-related companies may be subject to extensive government regulation, litigation risk and certain other risks particular to that industry
20. 53Our investment strategy focuses on technology-related companies, which are subject to many risks, including volatility, intense competition, shortened product life cycles, changes in regulatory and governmental programs and periodic downturns
21. 54We are exposed to risks associated with any OID income and PIK interest required to be included in taxable and accounting income prior to receipt of cash representing such income
22. 55We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited by the 1940 Act with respect to the proportion of our assets that may be invested in securities of a single issuer
23. 56We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings
24. 57Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio
25. 58We may not be able to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies, which could decrease the value of our investments
26. 59Defaults by our portfolio companies will harm our operating results
27. 60Our portfolio companies may incur debt that ranks equally with, or senior to, the loans and other investments we make in such portfolio companies
28. 61The disposition of our investments in private companies may result in contingent liabilities
29. 62We may be unsuccessful in syndicating our co-investments, which may cause us to have more exposure to an investment than was originally intended

Risks Related to our Advisers and Their Affiliates

1. 63The recommendations that Churchill gives to us may differ from those rendered to its other clients45% rewritten
2. 64Each investment team or each Investment Committee may, from time to time, possess material nonpublic information, limiting our investment discretion
3. 65Our management and incentive fee structure may create incentives for Churchill and certain of its investment professionals that are not fully aligned with the interests of our shareholders
4. 66In addition, certain investment professionals share directly in the management fee. Such professionals would face similar conflicts when considering investments for and making decisions on behalf of us
5. 67Our incentive fee may induce Churchill to make certain investments, including speculative investments
6. 68TIAA has made a significant investment in us, which may present certain conflicts of interest
7. 69Our ability to enter into transactions with our affiliates is restricted, which may limit the scope of investments available to us83% rewritten
8. 70Additionally, we, the Advisers and certain other funds and accounts sponsored or managed by the Advisers and their affiliates have been granted the Order by the SEC, which permits the Company to participate in joint transactions with the foregoing affiliates subject to the conditions of the OrderNew
9. 71Each Adviser and Nuveen Asset Management can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations
10. 72Our access to confidential information may restrict our ability to take action with respect to some of our investments, which, in turn, may negatively affect our results of operations

Risks Related to Business Development Companies

1. 73Our ability to enter into transactions involving derivatives and unfunded commitment transactions may be limited
2. 74If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC, which would have a material adverse effect on our business, financial condition and results of operations
3. 75Many of our portfolio investments will be recorded at fair value as determined in good faith by the Adviser, as the Valuation Designee, subject to the oversight of the Board, and, as a result, there may be uncertainty as to the value of our portfolio investments
4. 76We will be subject to U.S. federal income tax imposed at corporate rates on our earnings if we are unable to qualify or maintain our qualification as a RIC under subchapter M of the Code57% rewritten
5. 77We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income75% rewritten
6. 78Regulations governing our operation as a BDC affect our ability to and the way in which we raise additional capital
7. 79If we are not treated as a “publicly offered regulated investment company,” certain shareholders will be treated as having received certain income and their allocable share of expenses, which may not be deductible

Risks Related to Our Existing and Future Indebtedness

1. 80When we use leverage, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us. Leverage also may adversely affect the return on our assets, reduce cash available for distribution to our shareholders, and result in losses
2. 81Our asset coverage requirement was reduced from 200% to 150%, which could increase the risk of investing in the Company84% rewritten
3. 82the Company’s initial shareholder) approved a proposal to adopt an asset coverage ratio of 150% in connection with the organization of the Company, which became effective on December 26, 2019. Incurring additional indebtedness could increase the risk of investing in the CompanyNew
4. 83Provisions in our credit facility may limit our investment discretion
5. 84Any defaults under a credit facility could adversely affect our business
6. 85We are subject to risks associated with our debt securitizations, which, along with any future CLOs, may subject us to certain structured financing risksNew
7. 86The Notes and membership interests that we hold that were issued in our debt securitizations are subordinated obligations of the respective CLO and we could be prevented from receiving cash from such CLO
8. 87We may be subject to conflicts of interest caused by our role as a collateral manager in CLO transactions33% rewritten

Risks Related to an Investment in our Common Stock

1. 88We cannot assure you that the market price of our common stock will not decline below our NAV. The market value of our common stock may be volatile and fluctuate significantly
2. 89Our shareholders may experience dilution20% rewritten
3. 90Investors in our common stock may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital
4. 91We are not required to make any distributions to shareholders other than in connection with our election to be treated as a RIC under subchapter M of the Code, the requirements of which are described above
5. 92We may choose to pay a portion of our dividends in our own shares, in which case you may be required to pay U.S. federal income taxes in excess of the cash you receive
6. 93Investing in our shares may involve an above-average degree of risk
7. 94Provisions of the MGCL and our Charter and Bylaws could deter takeover attempts and have an adverse effect on the price of our shares
8. 95Our Bylaws include an exclusive forum selection provision, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other agents

Risks Related to an Investment in our Unsecured Notes

1. 96The 2030 Notes are unsecured and therefore are effectively subordinated to any existing and future secured indebtedness, including indebtedness under the Revolving Credit Facility
2. 97The 2030 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries, including the term debt securitizations
3. 98The optional redemption provision may materially adversely affect your return on the 2030 Notes31% rewritten
4. 99If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the 2030 Notes
5. 100We may not be able to repurchase the 2030 Notes upon a Change of Control Repurchase Event26% rewritten
6. 101While a trading market developed after issuing the 2030 Notes, we cannot assure you that an active trading market for the 2030 Notes will be maintained28% rewritten