Chesswood Group Limited is providing a further 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) and on its plan to remedy its previously announced non-compliance with its minimum borrowing base covenants under its $300,000,000 syndicated revolving credit facility (the Credit Facility).

Strategic Review

The Committee, with the assistance and participation of its financial advisor, has continued to engage in discussions and negotiations for potential sales of key operating subsidiaries and considerations for how best to maximize value of the Company's large portfolios of lease and loan receivables for the Company's shareholders while also seeking to ensure that the interests of other key Company stakeholders are served.

A number of potential opportunities and strategies are being evaluated. While there can be no assurance as to the timing of finalizing negotiations or entering into definitive transaction documents, or that any such transactions will ultimately be agreed to, the Committee is working to complete its evaluations and settle definitive documents in the coming weeks – in conjunction with formalizing, and receiving any required lender approvals for, the Company's action plan to remedy the existing breach of the Credit Facility (described below).

Credit Facility Action Plan

After receiving the initial waiver in respect of the Credit Facility breach on June 14, 2024, the Company has been pursuing near-term funding that can allow it to reduce the amounts outstanding under the Credit Facility. The initial waiver provided by the lending syndicate under the Credit Facility expires on July 15, 2024, and the Company is focused on arrangements that will allow it to provide sufficient progress towards remedying the existing non-compliance such that an extension of the waiver may become available from the lending syndicate under the Credit Facility in order to complete the negotiation and settlement of definitive arrangements and documents for its Credit Facility action plan.

As a result of Chesswood's capital constraints, the Company's subsidiaries Pawnee Leasing Corporation and Rifco National Auto Finance suspended originations other than those that had been previously committed.

The Company continues to engage in co-operative discussions with the lending syndicate under the Credit Facility.

There can be no assurance that any extensions to the waiver will be obtained or further advances under the Credit Agreement will be made. Further, there can be no assurance as to the timing for completion of any 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.

Management Changes

The Company also announced Ryan Marr has resigned as the President and Chief Executive Officer, and as a director of the Company.

Tobias Rajchel, who has been the company's Chief Financial Officer, has been appointed as the Company's President and Chief Executive Officer. Aiwei (Ivy) Sun, who has been the Company's controller, has been appointed as the Company's Chief Financial Officer.