GL and Creation reschedule Convertible Debenture repayment; GL expects to use financial flexibility to get through COVID-19 situation even stronger
Creation Investments held $20 million in convertible debentures (CD) due 30 March 2020. Earlier this month, Group Lease and Creation mutually agreed to reschedule the repayment over the course of this year instead of one lump sum payment. This will allow Group Lease more flexibly in managing cash flow during the Covid-19 epidemic, which besides affecting the economies in which Group Lease operates, has also resulted in delays in legal proceedings and court decisions. After a series of legal victories including in Singapore and Thailand, we were expecting further decisions during this year, however courts in both Singapore and Thailand will delay their decisions due to Covid-19.
We appreciate our partner Creation for continuing to work with us and giving us additional financial flexibility. We have had a professional relationship with them for many years and it is reassuring to have a business partner that can work with us during these challenging times.
As a result of Group Lease and Creation agreeing to a gradual repayment this year, Group Lease repaid $7.5 million in principal on 14 April 2020 plus interest due per the terms of the original CD agreement. Furthermore, Group Lease will repay $2.5 million in principal monthly starting May 2020, concluding the full repayment in September 2020. Interest will accrue at 7% per annum and will be due along with the final principal payment in September 2020.
While the impact of the COVID-19 epidemic on the global economy is currently unknown, we are maintaining full business operations in compliance with the current lockdowns in some of our markets. We have maintained full employment so far and anticipate no layoffs or business reduction due to the conservative approach we took during the 2018 and 2019 period. The cost efficiencies and reduction of our business size plus the additional flexibility from our agreement with Creation will put Group Lease in a better position to emerge stronger and better prepared from the COVID-19 impacts once the strictest economic restrictions have dissipated.
We have been fighting various issues for the last 2 years and while it has been difficult, it forced us to be more disciplined, focused and able to adapt to a changing environment. These lessons, have readied us to deal with the current COVID-19 environment and they will allow us to continue to fight, survive, and thrive.