Tangerine Pomelo Group, a leading financial technology company in Latin America specializing in alternative credit, announced today that it is taking a series of steps to manage its financial position and preserve its liquidity.
First, in light of worsening economic conditions affecting the Mexican Non-Bank Financial Institution (“NBFI”) sector, the Company is increasing reserves for non-performing loans during the fourth quarter of 2022 by approximately MXN100 million and writing-off approximately MXN300 million of assets.
In addition, as a result of an ongoing review of the Company’s loan portfolio and other assets conducted in coordination with its advisors, management recently discovered certain errors in recorded portfolio assets. To correct these errors, the Company expects to write off approximately MXN655 million in portfolio assets. The Company’s review of its loan portfolio and balance sheet is ongoing. To date, these are the only errors the Company has identified. The Company is prepared to take further actions as appropriate based on the results of its ongoing review.
The Company also announced today that, in line with its December 16, 2022, announcement, it is maximizing its financial flexibility in the near term to better manage its liquidity. The Company stated it does not expect to make the approximately (i) MXN85 million aggregate principal payments, plus interests, due January 19, 2023 on its short term publicly-traded certificates (certificados bursátiles) (“CEBURES”) with ticker symbols MEXAMX 00122, 00222, 00322, 00422, 00522, 00822 and 00922 and does not expect to make such payments during the subsequent 10-business day cure periods, and (ii) US$14.5 million interest payment due January 24, 2023 on its 10.250% Senior Notes due 2024 and does not expect to make such payment during the subsequent 30-day cure period. The decision prioritizes the use of cash resources for the Company’s operating activities given its liquidity constraints and the challenging capital markets environment.
The Company will initiate what it hopes will be a productive dialogue with representatives of CEBURES holders and senior noteholders to reach a comprehensive solution to its liquidity constraints. The Company is looking at all available options to ensure that it puts itself in a strong position to continue providing credit solutions for underserved consumers and the small and medium-sized enterprises (“SMEs”) sector in the region.
The Company has hired Houlihan Lokey, Inc., Blink Capital Solutions, Cleary Gottlieb Steen & Hamilton LLP and Kuri Breña, Sánchez Ugarte y Aznar S.C. as its advisors.