Every workout and default is unique

August 22, 2022

As we look to try and find a resolution for [ ], the deal we currently have in workout, I thought it was important to highlight the differences in how we're approaching this deal versus other defaults we've had prior.

Unlike [ ] where the primary recourse has to be by going through the court system, [ ] is in a situation where they are struggling to sell the assets themselves and as a result, defaulted on our note. This was coupled with the fact that our note with them was fairly short duration, causing it to be challenging for them to pay the interest on a predictable basis. As a result, they've had to explore alternative financing solutions, including securing a new credit facility that would take out our notes. In a cascade of events, between the improvements in the supply chain and the war in Ukraine, the credit facility provider changed the terms on [ ] and required them to put up more capital in order to unlock the facility. They then had to work to secure this additional capital and they managed to find a solution from their supplier in order to make it possible.

This strategy took control away from [ ] though as they are now reliant upon their supplier in order to make all this possible and to date, this has been a challenge. In this instance though, given that the assets are real and stored inside a warehouse, we as Percent have the opportunity to help them sell their inventory as well given we have rights to the assets that collateralized our notes. The continued delays from [ ]’s supplier is causing us to be a bit more creative and we're engaging all the potential buyers in our network to generate some sales and pay down our notes.

The assets are verified, there's options available to [ ] to finance us out, and now it's just a matter of closing on their facility or selling inventory along the way to expedite the recovery process 💪