Arena Investors Calls for Greater Transparency from Terra Property Trust and Seeks Explanation for the Company's Downgraded Debt
In This Article:
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Arena publishes letter outlining concerns with Terra's downgraded notes due 2026
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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.