FAQ on Compass Diversified's Extended Forbearance Agreement

What is the main announcement from Compass Diversified?

Compass Diversified announced a second forbearance agreement with its lenders, extending the forbearance period until October 24, 2025, and increasing the revolving credit facility from $40 million to $60 million.

Why did Compass Diversified enter into a forbearance agreement?

The agreement was entered into following an investigation into financial and accounting irregularities at its subsidiary, Lugano Holdings, Inc., to allow time for the completion of the investigation and financial restatements.

How does the extended forbearance agreement affect CODI’s financial situation?

The agreement provides CODI with increased access to capital through its revolving credit facility, enhancing its liquidity position during the forbearance period.

Who is affected by the financial irregularities at Lugano Holdings, Inc.?

The investigation focuses solely on Lugano Holdings, Inc., and does not involve any of CODI’s other subsidiaries, which continue to operate normally and generate significant cash flow.

When was the original forbearance agreement entered into?

The original forbearance agreement was entered into on May 22, 2025, following the discovery of financial irregularities at Lugano Holdings, Inc.

What is CODI’s priority during this process?

CODI’s priority is on completing the investigation, finalizing necessary financial restatements, and maximizing value for all stakeholders, while ensuring strong performance across its other subsidiaries.

How has the lender group responded to CODI’s situation?

The lender group has shown support by entering into a second forbearance agreement and increasing the availability on CODI’s revolving credit facility, indicating ongoing collaboration.

What should stakeholders know about CODI’s current operations?

Stakeholders should know that CODI’s eight other subsidiary companies continue to operate normally, maintain healthy balance sheets, and collectively generate significant cash flow, despite the issues at Lugano Holdings, Inc.