- 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
