SCHEDULE: Katapult Default Waived, Blue Owl Exits Term Loan

Katapult Holdings secured a default waiver and amended its loan agreement, leading to Blue Owl Capital's full repayment and exit from beneficial ownership.

Summary

• Katapult Holdings, Inc. received a waiver for existing defaults related to its "Minimum Trailing Three-Month Originations" financial covenant for periods ended August 31, 2025, September 30, 2025, and October 31, 2025.
• The Refinancing Agreement was amended to adjust future "Minimum Three-Month Originations" thresholds, increase the "Minimum Liquidity" threshold, and reduce the revolving loan advance rate.
• As a condition of the waiver, Blue Owl Capital Holdings LP received a full cash repayment of its Term Loan, totaling $35,215,438.09, on November 3, 2025.
• Warrants to acquire 646,264 shares of Katapult Common Stock, previously held by Blue Owl funds, were transferred for no consideration to HHCF Series 21 Sub, LLC.
• Following these transactions, Blue Owl Capital Holdings LP ceased to beneficially own 5% or more of Katapult's Common Stock and no longer has beneficial ownership reporting obligations.

Sentiment

Score: 4

Explanation: While the immediate default was waived, the underlying operational issues (failure to meet origination thresholds) persist, and the amended loan terms introduce stricter liquidity requirements and reduced access to revolving credit. The full repayment of the term loan to Blue Owl is positive for Blue Owl, but for Katapult, it signifies a restructuring under duress, indicating ongoing financial challenges.

Positives

• Katapult Holdings, Inc. secured a waiver for its existing defaults, avoiding immediate consequences of breaching loan covenants.
• The company successfully negotiated amendments to its loan agreement, providing a revised framework for future financial performance.
• The repayment of the Term Loan to Blue Owl Capital Holdings LP resolves a significant debt obligation with a key lender.

Negatives

• Katapult Holdings, Inc. failed to meet "Minimum Trailing Three-Month Originations" thresholds for three consecutive periods (August, September, and October 2025), indicating operational underperformance.
• The loan agreement amendments include an increased threshold for the "Minimum Liquidity" financial covenant, potentially placing greater pressure on Katapult's cash management.
• The advance rate under the revolving loan was reduced, which could limit Katapult's access to working capital.

Risks

• Katapult Holdings, Inc. faces an ongoing risk of failing to meet financial covenants, as evidenced by the recent defaults on "Minimum Trailing Three-Month Originations."
• The adjusted "Minimum Three-Month Originations" and increased "Minimum Liquidity" thresholds represent new or heightened financial performance hurdles that Katapult must achieve to avoid future defaults.
• A reduced revolving loan advance rate could constrain Katapult's operational flexibility and liquidity if not managed effectively.

Future Outlook

The loan agreement has been amended to adjust financial covenant thresholds for "Minimum Three-Month Originations" for periods ending on and after November 30, 2025, and to increase the "Minimum Liquidity" financial covenant threshold for certain future periods. This indicates a revised financial framework and potentially stricter requirements for Katapult Holdings, Inc. going forward.

Industry Context

This filing reflects a specific financial restructuring event for Katapult Holdings, Inc., a company operating in the point-of-sale lease-to-own industry. The default on origination thresholds suggests challenges in customer acquisition or sales volume, which could be indicative of broader pressures within the consumer financing or retail sectors, such as tighter consumer spending or increased competition. The lender's decision to waive the default and amend terms, while also exiting its term loan position, highlights the dynamic nature of debt financing for companies facing operational hurdles.

Corporate Governance

Related Party Transactions

• The Limited Waiver and First Amendment to the Refinancing Agreement and the subsequent Term Loan Payoff involved Katapult Holdings, Inc. and its lenders, including Blue Owl Capital Holdings LP, which was a significant beneficial owner and lender.
• The Warrant Transfer involved funds managed by Blue Owl Capital Holdings LP assigning warrants to HHCF Series 21 Sub, LLC.

Stakeholder Impact

• Shareholders: The default and subsequent restructuring could signal financial instability, potentially impacting share price and investor confidence. The exit of a significant beneficial owner (Blue Owl) might also be viewed with caution.
• Creditors: Existing lenders have waived a default but imposed stricter future covenants, indicating a cautious stance. The repayment of Blue Owl's term loan alters the debt structure.
• Management: Faces increased pressure to meet revised financial covenants and manage liquidity under potentially tighter credit terms.

Next Steps

• Katapult Holdings, Inc. must adhere to the adjusted thresholds under the "Minimum Three-Month Originations" financial covenant for periods ending on and after November 30, 2025.
• Katapult Holdings, Inc. must meet the increased threshold under the "Minimum Liquidity" financial covenant for certain future periods.
• Blue Owl Capital Holdings LP has no further beneficial ownership reporting obligations regarding Katapult Holdings, Inc.

Key Dates

Recommendation

The filing reveals Katapult's default on key operational metrics, which is a significant negative. While a waiver was secured, the underlying issues remain, and the new loan terms are more stringent (higher liquidity threshold, reduced advance rate). Blue Owl's exit as a significant beneficial owner and lender, while receiving full repayment, suggests a de-risking move from their perspective. For investors, this indicates ongoing financial challenges for Katapult. A "hold" recommendation is appropriate as the company has avoided immediate crisis but faces continued pressure to improve performance under tighter financial covenants. Further clarity on operational improvements and sustained compliance with new terms would be needed for a more positive outlook.

Keywords

Katapult Holdings, Blue Owl Capital, Schedule 13D/A, loan default, financial covenant, waiver, term loan, refinancing agreement, warrants, beneficial ownership, liquidity, originations