Compass Diversified Secures Extended Forbearance Agreement Amid Subsidiary Investigation

Compass Diversified (NYSE: CODI) has successfully negotiated a second forbearance agreement with its lender group, extending the forbearance period to October 24, 2025. This development not only prolongs the timeline for addressing financial concerns but also enhances the company's financial flexibility by increasing the availability on its $100 million revolving credit facility from $40 million to $60 million during the forbearance period. The initial agreement, established on May 22, 2025, was a response to the discovery of financial and accounting irregularities at Lugano Holdings, Inc., a subsidiary of CODI.

The ongoing investigation into Lugano Holdings has preliminarily uncovered issues within the subsidiary's financing, accounting, and inventory practices. Despite these challenges, CODI is making steady progress in completing the investigation and finalizing the necessary financial restatements. It's crucial to highlight that the investigation's scope is limited to Lugano Holdings, with CODI's eight other subsidiaries unaffected and continuing their normal operations, thereby sustaining the company's cash flow.

Elias Sabo, CEO of CODI, has reassured stakeholders of the company's robust liquidity position and the cooperative dynamics with banking partners and bondholders. This strategic approach underscores CODI's commitment to navigating through this period with a focus on maximizing value for all stakeholders involved. The extended forbearance agreement and increased credit facility availability signal a proactive step towards stabilizing the company's financial standing while addressing the irregularities at Lugano Holdings.