Efrain Soza

The proposed DCG & Creditor terms are out. I can see why @cameron was concerned creditors may not have enough time to assess the deal. My insta reactions: - This looks like a great deal for DCG and a bad deal for creditors. No wonder they dropped this the last week of summer… - DCG is still on the hook to pay $1.1 Bn. But instead of 10 years, payments are made earlier - 7 years. There is no market based interest rate like we saw in the Feb deal - On the $630 MM May Payments, it looks like there is Principal Forgiveness. I don’t see how the payment plan sums up to the $630 MM. Why is DCG not responsible for paying back what it owes plus a penalty rate of interest? - DCG pays a Forbearance fee of 0.375%. That’s egregious. DCG gets to avoid Ch 11 by paying a nominal fee. That fee is less than a new loan origination fee… Why isn’t there a penalty rate of interest? DCG pays a fee and gets to waive principal in excess of the fee - and gets a below market rate of interest? - DCG is defaulting on a loan obligation, pays a small one-time fee, and gets to refinance its loans at below market rate - The Term Sheet Proposal from Feb was better. In that deal, creditors had an equity stake in DCG OR could insist on debt repayment. - The distributions to Genesis creditors do not provide adequate compensation for the Time Value of Money. Getting to a 90% distribution in 7 years with rates at 5% is similar to getting a distribution of 50% when you account for the opportunity cost of capital - There is no DCG ‘kicker’ contemplated here. This is framed as ‘DCG Contributions’ - it is really a refinancing of DCG. I don’t see what DCG has contributed that is incremental to what they contractually owe. Disclaimer: I spent all of 5 mins looking at the terms while on holiday. I figured a quick reaction may have some value and enable crowdsourcing to focus. Here’s what I would ask Moelis and the other bankers to do: 1) Show a side-by-side of the payouts by creditor class comparing this deal and the Feb deal 2) Confirm DCG is not offering any ‘kicker’ such as equity upside in DCG 3) What are the implied interest rates DCG is paying on these loans? Confirm that DCG is not paying 10%+ interest on the $1.1 Bn note (only the maturities were brought in) Is DCG paying back less than the total amount it borrowed from Genesis 4) What ‘kicker’ is Gemini Earn contributing above and beyond what’s stated in the proposal? 5) Release the findings of the Cleary Gottlieb internal investigation. It was due in March… 6) Offer a Public Q&A session I an disappointed that this is the result of endless mediation extensions. Then they drop this in the last week of Summer to avoid public scrutiny? tl;dr I would be pissed as a Genesis creditor What am I missing? tinyurl.com/bde8wt6k