Compass Diversified Secures Extended Forbearance and Increased Credit Facility Amid Subsidiary Investigation

Compass Diversified (NYSE: CODI) has announced a significant development in its financial restructuring efforts, securing a second forbearance agreement with its lender group. This agreement, effective from July 25, 2025, extends the forbearance period until October 24, 2025, providing the company with additional time to address financial and accounting irregularities identified at its subsidiary, Lugano Holdings, Inc. ("Lugano").

In a move that underscores the lenders' confidence in CODI's financial stability, the available amount on the company's $100 million revolving credit facility has been increased from $40 million to $60 million during the forbearance period. This adjustment enhances CODI's liquidity and operational flexibility as it navigates through the ongoing investigation into Lugano's financing, accounting, and inventory practices.

The investigation, which was initiated following the discovery of irregularities, is progressing as expected. CODI is diligently working to finalize the necessary financial restatements, with the focus solely on Lugano and not affecting any of CODI's other subsidiaries. Elias Sabo, CEO of CODI, emphasized the company's commitment to maintaining strong performance across its eight other subsidiary companies, which continue to operate normally and contribute to the company's cash flow.

Sabo also highlighted the solid liquidity position of CODI, bolstered by the increased access to capital through the revolving credit facility. The CEO expressed appreciation for the ongoing support from the company's banking partners and bondholders, reaffirming CODI's priority to maximize value for all stakeholders during this period of adjustment and investigation.

This development is crucial for investors and industry observers, as it reflects CODI's proactive approach to addressing financial challenges while ensuring the stability and growth of its broader portfolio. The extended forbearance and enhanced credit facility provide CODI with the necessary resources to resolve the issues at Lugano without disrupting its overall operations, signaling a resilient financial strategy in the face of adversity.