Chesswood Group Limited provided an update on its previously announced evaluation of the strategic direction of the company being supervised by a special committee of its board of directors (the Committee).

Over the course of its review to date, the Committee has come to the view that, based on a variety of factors, including the challenging economic conditions facing specialty finance companies, together with ongoing capital constraints of the company, it is in the best interests of the company to actively pursue a sale of one or more of its business units or the company as a whole, and failing such sale or sales, to commence an orderly winddown of one or more of its business units.  During this process, several parties have indicated an interest in acquiring the company or certain of its business units, although the current macro-economic environment has dampened valuations from what may be achievable in the future once interest rates are lowered and other performance issues are resolved.

Recently, it came to the company's attention that, after properly adjusting for a system error, the company is not in compliance with its minimum borrowing base covenants under its U.S. $300,000,000 syndicated revolving credit facility (the "Credit Facility"). The system error does not affect the calculation of the Company's receivables and other assets or the liabilities reported in its financial statements and related MD&A.

Chesswood has received a waiver from its syndicate of lenders under the Credit Facility for the period to July 15, 2024, which will permit it to pursue transactions to remedy the breach, all while allowing its day-to-day operating activities to substantially continue. This waiver will need to be revised and extended as Chesswood executes on its plans that will bring it back into compliance with the terms of the Credit Facility.

The company's intention is to continue negotiations with the various parties that have expressed an interest in the company or its business units while at the same time, augmenting its capital position through various initiatives, including capital-raising activities.

While the company has obtained an initial waiver in relation to the Credit Facility covenant breach, there can be no assurance that any required changes or extensions to the waiver will be obtained. Further, there can be no assurance as to the timing for completion of any other capital raise or sale transaction for the company or one or more of its business units.  As such, no undue reliance should be placed on any expectations as to the occurrence of any of the foregoing and any impact on the company or shareholder value arising therefrom.