SCHEDULE: Avenue Capital Group Boosts XBP Global Holdings Stake

Avenue Capital Group and its affiliates have significantly increased their stake in XBP Global Holdings, Inc. to 10.30% following a debt-for-equity exchange and new financing in a Chapter 11 restructuring.

Summary

• Reporting Persons, led by Marc Lasry, now beneficially own 12,107,907 shares of XBP Global Holdings, Inc. common stock, representing 10.30% of the outstanding shares.
• This acquisition resulted from the Chapter 11 restructuring of Exela Technologies BPA, LLC and its affiliates, which became effective on July 29, 2025.
• Reporting Persons exchanged $120,923,191 principal amount of 11.5% senior secured notes for 10,461,180 shares of common stock.
• They also received 1,448,038 shares of common stock as a backstop fee for providing new money loans under the debtor-in-possession (DIP) facility.
• Additionally, they received $47,621,506 principal amount of 12.000% First-Priority Senior Secured Notes due 2030 in exchange for their DIP facility claims.
• Reporting Persons funded $1 million under the company's $46 million exit financing agreement.
• As part of the Plan, an ad hoc group of creditors, including the Reporting Persons, designated four new directors to the Issuer's board: Regina Paolillo, Robert D. Pryor, Sanjay Srivastava, and Randal T. Klein.
• Randal T. Klein is a Senior Portfolio Manager at Avenue Capital Management II, L.P., one of the Reporting Persons.
• The Issuer entered into a Registration Rights Agreement, granting the Reporting Persons rights to register their common stock for resale.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the underlying event is a bankruptcy, the reporting persons, as creditors, have successfully converted their distressed debt into a significant equity stake and new secured notes in the reorganized entity. They also gained board representation and registration rights, indicating a favorable outcome for their investment in the restructuring process. The future performance of the company remains a key variable.

Positives

• Significant equity stake (10.30%) in the restructured company, providing substantial influence.
• Appointment of four new board members, including a representative from Avenue Capital Management II, L.P., enhancing oversight and strategic input.
• Receipt of registration rights, facilitating potential future liquidity for their common stock holdings.
• Conversion of distressed debt into equity and new secured notes, indicating a successful restructuring outcome for the creditors.

Negatives

• Investment stems from a company's bankruptcy, indicating prior financial distress.
• The value of the new equity and notes depends on the future performance of the restructured entity.
• The filing does not provide specific financial projections for the restructured entity, making future performance uncertain.

Risks

• Future performance of XBP Global Holdings, Inc. is subject to the success of the restructuring plan and ongoing business operations.
• The value of the common stock and new notes could fluctuate based on market conditions and company-specific factors.
• The ability to liquidate shares via registration rights depends on market demand and the Issuer's compliance with filing requirements.

Future Outlook

The Reporting Persons acquired the securities for investment purposes and intend to review their investment based on various factors including the Issuer's business, financial condition, and market conditions. They may engage in discussions with management and the board regarding business, operations, board composition, management, strategy, or control and future plans. They may also dispose of some or all of their shares in the future.

Management Comments

• The Reporting Persons acquired the securities reported herein for investment purposes.
• In his role as a director of the Issuer, Mr. Klein will engage, and the Reporting Persons may engage, in discussions, including, without limitation, with management of the Issuer, its board of directors, other shareholders of the Issuer and other relevant parties concerning the business, operations, board composition, management, strategy or control and future plans of the Issuer.
• The Reporting Persons from time to time intend to review their investment in the Issuer on the basis of various factors, including Issuer's business, financial condition, results of operations and prospects, general economic and industry conditions, the securities markets in general and those for the Common Stock in particular, as well as other developments and other investment opportunities.
• Based upon such review, the Reporting Persons will take such actions in the future as they may deem appropriate in light of the circumstances existing from time to time, which may include disposal of some or all of the shares of Common Stock currently owned by the Reporting Persons or otherwise acquired by them pursuant to conversion of debt or in privately negotiated transactions.

Industry Context

This filing reflects a common outcome in corporate bankruptcies where creditors, particularly those holding senior secured debt, convert their claims into equity and new debt instruments in the reorganized entity. This allows them to recover value and potentially influence the company's future direction, aligning with trends of distressed asset investment and restructuring.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Existing shareholders (prior to the restructuring) likely experienced significant dilution due to the debt-to-equity conversion. New shareholders (Reporting Persons) gain a substantial stake and board representation.
• Creditors: The Reporting Persons, as former creditors, successfully converted their debt into equity and new secured notes, indicating a recovery of their investment. Other creditors under the Plan would also be impacted by the terms of the reorganization.
• Management: The new board composition may lead to changes in strategic direction and oversight for management.
• Company (XBP Global Holdings, Inc.): The restructuring provides a path forward from bankruptcy, potentially stabilizing its financial position and operations.

Next Steps

• Reporting Persons will review their investment in XBP Global Holdings, Inc.
• Reporting Persons may engage in discussions with management, the board, and other shareholders regarding the Issuer's business, operations, board composition, management, strategy, or control and future plans.
• Reporting Persons may dispose of some or all of their shares in the future.
• The Issuer is required to file and maintain effective shelf registrations (Form S-3 or Form S-1) to allow resale of the common stock.

Key Dates

Recommendation

The filing indicates a significant ownership change and board representation for a major investment group following a bankruptcy restructuring. While the restructuring provides a path forward for XBP Global Holdings, Inc., the long-term success of the reorganized entity is still uncertain. The new ownership and board influence could be positive, but the company's underlying business performance post-bankruptcy needs to be evaluated before a stronger recommendation can be made. Investors should hold to observe the execution of the new strategy and financial performance.

Keywords

XBP Global Holdings, Schedule 13D, Avenue Capital Group, Bankruptcy Restructuring, Debt-to-Equity Conversion, Corporate Governance, Board Appointments, SEC Filing, Investment Fund, Shareholder Stake, Distressed Debt, Registration Rights