Compass Diversified Secures Extended Forbearance Amid Subsidiary Investigation
Compass Diversified extends its forbearance agreement with lenders to October 24, 2025, while increasing its revolving credit facility availability to $60 million, amidst ongoing investigations into financial irregularities at subsidiary Lugano Holdings, Inc.
Compass Diversified (NYSE: CODI) has announced a second forbearance agreement with its lender group, extending the forbearance period until October 24, 2025. This agreement also sees an increase in the availability on the Company's $100 million revolving credit facility from $40 million to $60 million during the forbearance period. The initial forbearance agreement was established on May 22, 2025, following the discovery of financial and accounting irregularities at its subsidiary, Lugano Holdings, Inc. The ongoing investigation has preliminarily identified issues within Lugano's financing, accounting, and inventory practices.
The Company is diligently working towards completing the investigation and finalizing the necessary financial restatements. It is important to note that the investigation is confined to Lugano and does not affect any of CODI's other subsidiaries. Elias Sabo, CEO of CODI, emphasized the Company's strong performance across its eight other subsidiaries, which continue to operate normally and generate significant cash flow. Sabo also highlighted the Company's solid liquidity position, bolstered by enhanced access to capital through its revolving credit facility, and expressed appreciation for the support from banking partners and bondholders during this period.