- Arena publishes letter outlining concerns with Terra's
downgraded notes due 2026
- Letter outlines how Terra has neglected to respond to
requests for information, failing to uphold its responsibilities to
investors
NEW
YORK, Sept. 6, 2024 /PRNewswire/ -- Arena
Investors, LP ("Arena") on behalf of its investors, holders of
$5 million in aggregate principal
amount of 6.00% notes due 2026 of Terra Property Trust, Inc.
("Terra") (NYSE: TPTA), today sent a letter to the Terra Board
of Directors expressing its concerns with the lack of response to
questions around the repeated downgrades of the Notes.
As referenced in the letter, at the time of the initial offering
and Arena's purchase in June 2021,
the Notes were rated BBB- by Egan-Jones Rating Company
("Egan-Jones"). As of May 31, 2024,
the Notes are rated B by Egan-Jones. Arena has attempted to engage
with Terra for nearly one year, having made multiple requests for
additional information on the deterioration in Terra's performance,
all of which went unaddressed by Terra.
As noted in the letter and in response to a lack of engagement
by Terra, Arena is considering forming an ad hoc group of
noteholders to protect their rights and evaluate further necessary
action.
The full text of the letter follows:
September 4, 2024
Board of Directors
Terra Property Trust,
Inc.
205 West 28th Street, 12th
Floor
New York, NY
10001
Dear Members of the Board of Directors:
We write for Arena Investors, LP on behalf of its investors
("Arena" or "we"), holders of $5
million in aggregate principal amount of 6.00% notes due
2026 (the "Notes") of Terra Property Trust, Inc. ("Terra" or the
"Company"). We are deeply concerned with the continuous downgrades
of the Notes and the significant lack of transparency that we have
encountered from Terra in our attempts to obtain information from
you regarding the Notes.
Arena is a global institutional asset manager that provides
creative solutions for those seeking capital in special situations,
including for those who cannot be served by conventional
institutions. At the time of the initial offering and Arena's
purchase in June 2021, the Notes were
rated BBB- by Egan-Jones Rating Company ("Egan-Jones"). As of
May 31, 2024, the Egan-Jones rating
is B. During this same period, there has been an alarming increase
in Non-Performing Loans from $89
million in June 2023 to
$192 million in June 2024. This deterioration in performance is
distressing and necessitates immediate and comprehensive
disclosure. Instead, Terra has wholly failed to uphold its
responsibilities to its investors by denying Arena access to
critical information on the Company's performance.
For nearly one year, and on several occasions, Arena has
attempted to gather sufficient information to permit it to evaluate
the state of the portfolio. On each occasion, Terra has declined to
answer any of Arena's questions or respond to Arena's requests for
information. Since November 20, 2023,
Terra has also refused to take any further one-one-one investor
calls, alleging such calls are restricted due to ongoing
evaluations of a direct listing or conversion to a non-traded REIT.
Yet nearly a year has passed with no tangible progress or updates
on these matters.
Since November 20, 2023, the
only information Terra has provided to investors has been two brief
conference calls held on May 21,
2024, and August 26, 2024,
during which the Company refused any and all investor questions.
This lack of engagement is not only unacceptable, it also severely
undermines investor confidence. In response, Arena is considering
forming an ad hoc group of noteholders to protect our
rights.
Maintaining your current approach is detrimental to investor
trust and could have severe repercussions for Terra's credibility
and financial stability. We urge you to rectify this situation
promptly by engaging more transparently and providing investors
with the necessary information to evaluate the state of the
Company.
Best regards,
Lawrence Cutler, COO
cc: U.S. Bank National Association, as Trustee
About Arena Investors, LP:
Arena Investors, LP is an
institutional asset manager founded in partnership with The Westaim
Corporation (TSXV: WED). With $3.5
billion of invested and committed assets under management as
of June 30, 2024, and a team of over
180 employees in offices globally, Arena provides creative
solutions for those seeking capital in special situations,
alongside operational capabilities to manage and improve
businesses. The firm brings individuals with decades of experience,
a track record of comfort with complexity, the ability to deliver
within time constraints, and the flexibility to engage in
transactions and business operations that cannot be addressed by
banks and other conventional financial institutions. See
www.arenaco.com for more information.
Contact:
Prosek Partners:
Joshua Clarkson
pro-arena@prosek.com
Arena Investors and its affiliates:
Parag Shah
ir@arenaco.com
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SOURCE Arena Investors, LP
