Hi @JeremyKim - we expect the path to a resolution will be via the Tugende Uganda repaying the intercompany loan to Tugende Kenya. This will put Tugende Kenya back in compliance with its covenants. The other options you mentioned are on the table, but the Tugende team is fairly confident they will be able to cure this breach via a loan repayment before the end of Q2.
And no, this loan does not follow the borrowing base concept.
Hi @DAD_RUSSIA - As Tugende is in the middle of negotiations for additional capital, they would like to limit the specific financial information shared via public channels. That said, they have begun work to cure this breach, most likely happen via the repayment of the inter-company loan made to Tugende Uganda. They expect this to be resolved by the end of Q2.
In my opinion, the proposal lacks some data for an informed decision.
describes the violation of covenants as of December 2022, but does not say about the current situation (worsened or improved and how much);
there is no quantitative information on how much the considered indicators deviated from the threshold values. For example, for the first of these covenants, there is a big difference between 81%, 99% and >100%, which will require the adoption of radically different decisions;
it does not describe (in brief) possible solutions that Tugende and Warbler Labs will follow to jointly solve the problem that has arisen. The ideal option would be to assess the probabilities of indicators returning to standard values in the case of three scenarios: negative, standard, positive in case of choosing different strategies and taking into account the macroeconomic situation;
whether or not the terms of its termination are specified in the loan agreement between Goldfinch and Tugende and how close the current situation is to these conditions.
However, from the description given in the proposal, it can be seen that Tugende is ready to cooperate in order to bring the indicators to the normative values.
I believe that the Warbler Labs team has the necessary competencies to resolve the current situation (if it is solvable at all). And it will really set a precedent for how people with the necessary qualifications from other organizations help in solving certain problems (in this case, problems with violations of financial covenants).
At the same time, if the situation worsens further, the possibility of terminating the contract with Tugende and returning the outstanding part of the loan should also be considered.
Hi @P_T - Thanks for your comments here. Because Tugende is in the middle of negotiations for additional capital, they have requested that we limit the specific financial information shared via public channels. That said, Tugende has begun work to cure this breach. This cure will most likely happen via the repayment of the inter-company loan made to Tugende Uganda before the end of Q2.
Thanks for your response!
Yes, I have already seen similar information in your responses to other members of the Goldfinch community. And I understand that some indicators of economic activity should not be disclosed publicly. It’s just that I’m used to working with numbers to get a reasonable result, and this is the reason for one of the points of my comment.
I will vote “Yes”.
I worked in Africa for 7 years - (rice) yield farming - and could really see first-hand the positive power of capital in transforming mobility in these markets, moving people and goods in the supply chain. So commendable the work being done by Goldfinch and Tugende.
Whilst this is an unfortunate event, it is quite expected… and the team already drew the lesson:
We believe that such a standard will benefit everyone, ultimately lowering the cost of borrowing for the motorcycle taxi drivers. The community could work with untangled or any other parties but this is the direction of travel in DeFi RWA.
I believe Warbler Labs should be able to prove its ability to handle this/these issues. Furthermore, I believe that utmost transparency is very important at this stage for the people to put their trust in Warbler Labs. This is a very important step that you can use it to double or triple checked with the public ensuring that the solution will have a higher chance of working and is agreed upon with the public.
Also, this will allow more people to become more of an expert in the field of taking on these problems if at some point Warbler labs doesn’t have time for any reason.
So if Warbler Labs is planning to keep this process public to the extent that is possible. I will vote yes.