Arena Calls for Pelorus Management Group to Explain Undisclosed Replacement of Collateral for Its Bonds

• Arena publishes letter sharing concerns with Pelorus neglecting to disclose the replacement of collateral underlying its senior unsecured notes due 2026
• Since 2023, Arena has noted a decline in the quality of the prior collateral and unexplained decreases in Pelorus' unencumbered assets
• Without the Company's disclosure of its financial performance, Arena will be forced to act under the assumption Pelorus has defaulted on its affirmative and negative covenants

NEW YORK, Sept. 5, 2024 /PRNewswire/ -- Arena Investors, LP ("Arena") on behalf of its investors, holders of $5 million in aggregate principal amount of 7.00% senior unsecured notes (the "Notes") issued by Pelorus Fund REIT, LLC and guaranteed by Pelorus Fund, LLC and Pelorus Solutions, LLC (collectively "Pelorus" or the "Company"), today sent a letter to Pelorus expressing concerns with the Company's lack of disclosure regarding its replacement of the collateral underlying the bonds as well as previously shared incomplete and inaccurate financial information related to the Notes.

As referenced in the letter, Arena purchased the Notes based on a review and assessment of the underlying collateral and collateralized loans in September 2021. Despite multiple requests made by Arena, including but not limited to outreach made through April, May and July 2024, Pelorus has not provided Arena with information that would allow them to assess the state of the underlying portfolio. Furthermore, on July 26, 2024, Arena was made aware that Pelorus had replaced the collateral underlying the bonds but would not provide any information on the new collateral.

Arena notes that if Pelorus fails to provide a complete disclosure as to the state of the Company's financial performance, including background on the new collateral and an explanation for the sudden replacement of the collateral underlying the bonds, Arena will be forced to speculate as to whether the Company has already defaulted on its affirmative and negative covenants under Sections 9 and 10 of Note Purchase Agreement dated September 21, 2021, and take appropriate action.

The full text of the letter follows:

September 4, 2024

Pelorus Fund REIT, LLC
Pelorus Fund, LLC
Pelorus Solutions, LLC
124 Tustin Ave., Suite 200
Newport Beach, CA 92663
Attn: Pelorus Management Group, LLC

Dear Pelorus Management Group, LLC:

We write for Arena Investors, LP on behalf of its investors ("Arena" or "we"), holders of $5 million in aggregate principal amount of 7.00% Senior Unsecured Notes due 2026 (the "Notes") issued by Pelorus Fund REIT, LLC and fully and unconditionally guaranteed by Pelorus Fund, LLC and Pelorus Solutions, LLC (collectively "Pelorus" or the "Company").? We are compelled to issue this public letter given Pelorus' continued refusal to provide Arena with critical financial information related to the Notes, including but not limited to information on the collateral underlying the bonds that Pelorus replaced without prior notice to its investors.?

On September 21, 2021, Arena purchased the Notes based on a review and assessment of the underlying collateral and collateralized loans.? Since 2023, there has been a marked decline in the quality of the collateral and unexplained decreases in unencumbered assets.? During this same period, Pelorus has provided incomplete and inaccurate information regarding the loan count, balances, carrying value for the portfolio, and the collateral underlying the bonds.? Pelorus has further ignored Arena's repeated requests for specific information that would allow Arena to assess the underlying portfolio, including but not limited to Arena's outreach to Pelorus on the following occasions:

• April 16, 2024
• April 18, 2024
• May 9, 2024
• May 29, 2024
• July 26, 2024.

On July 26, 2024, Arena learned for the first time that Pelorus replaced the collateral altogether and yet will not provide us with information regarding the new collateral. This lack of disclosure, combined with the sudden revelation of the replacement of collateral, is deeply distressing.? Arena is therefore considering organizing an ad hoc committee of noteholders to protect the rights of all investors.?

Absent prompt and complete disclosure as to the state of Pelorus' financial performance, investors will be forced to speculate as to whether the Company has already defaulted on its affirmative and negative covenants under Sections 9 and 10 of Note Purchase Agreement dated September 21, 2021, or other of its other obligations to its noteholders

We fear Pelorus may be in perilous financial condition and urge you to immediately rectify these failures and respond to Arena's information requests.? ??

Best regards,
Lawrence Cutler, COO

About Arena Investors, LP:
Arena Investors, LP is an institutional asset manager founded in partnership with The Westaim Corporation (WEDXF) . With $3.5 billion of invested and committed assets under management as of June 30, 2024, and a team of over 180 employees in offices globally, Arena provides creative solutions for those seeking capital in special situations, alongside operational capabilities to manage and improve businesses. The firm brings individuals with decades of experience, a track record of comfort with complexity, the ability to deliver within time constraints, and the flexibility to engage in transactions and business operations that cannot be addressed by banks and other conventional financial institutions. See www.arenaco.com for more information.

Contact:
Prosek Partners:
Joshua Clarkson
pro-arena@prosek.com

Arena Investors and its affiliates:
Parag Shah
ir@arenaco.com

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SOURCE Arena Investors, LP