Arena Investors Demands Increased Transparency from Terra Trust

Arena Investors Calls for Enhanced Transparency from Terra Property Trust

Arena Investors, LP, acting on behalf of its investors, has sent a formal letter to the Board of Directors of Terra Property Trust, Inc. expressing significant concerns regarding the company's recent downgrade of its debt notes due in 2026. In this letter, Arena outlines the lack of response from Terra concerning requests for vital information, highlighting a troubling neglect of responsibilities owed to investors.

Concerns Over Downgrades and Communication

The letter emphasizes the depreciation of the rating of Terra's 6.00% notes from BBB- to B, as assessed by Egan-Jones Rating Company. This decline raises alarms among investors, particularly as it coincides with an alarming increase in non-performing loans, escalating from $89 million in mid-2023 to $192 million just a year later. Arena's attempts to engage with Terra for nearly a year have been consistently met with a lack of communication.

Forming a Group of Noteholders

Given the disregard for investor inquiries, Arena Investors is now contemplating the formation of an ad hoc group of noteholders. This group aims to protect their interests and assess necessary courses of action in light of the insufficient transparency displayed by Terra.

A Timeline of Events

Despite Arena's multiple requests for clarity surrounding the company's performance and financial conditions, there has been little to no productive engagement from Terra. Since late 2023, the only two communications from Terra have been brief calls, both of which firmly rebuffed further investor questions.

Impact on Investor Confidence

This ongoing lack of transparency has the potential to severely undermine investor confidence. The situation calls for immediate rectification to reinforce trust and restore Terra’s credibility in the market.

Recommendations for Improvement

Arena urges Terra's leadership to adopt a more transparent approach in its engagements with investors. By doing so, Terra can provide crucial information that will allow investors to evaluate the company's current situation thoroughly. Establishing a framework for better communication will not only safeguard investor trust but also bolster Terra's overall financial stability.

About Arena Investors, LP

Arena Investors, LP is an institutional asset manager, founded in collaboration with The Westaim Corporation. With about $3.5 billion in invested assets and a robust team operating globally, Arena specializes in providing financial solutions for businesses in unique situations that traditional financial institutions may not adequately serve.

Frequently Asked Questions

What sparked Arena Investors’ concerns about Terra Property Trust?

The concerns were triggered by Terra's consistent lack of communication regarding the downgrading of its debt notes, coupled with alarming increases in non-performing loans.

What is Arena considering to address these issues?

Arena is contemplating forming an ad hoc group of noteholders to protect their interests and evaluate further actions stemming from the lack of transparency from Terra.

How has Terra responded to investor inquiries?

Terra has largely declined to address the inquiries, restricting communications and refusing to answer questions posed by Arena Investors over nearly a year.

What are the risks if transparency is not improved?

Failure to enhance transparency could significantly harm investor confidence and damage Terra's standing and credibility in the financial markets.

How can Terra rebuild trust with its investors?

Terra can rebuild trust by engaging more openly with investors and providing timely, comprehensive information regarding its financial health and operational strategies.

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