Delt.ai Loan due July 8, 2023 : Restructuring Update

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TrueFi Community,

I’m Bill Wolf, CIO of Archblock. I’m posting to the TrueFi forum to share an update on the delt.ai (the “Company”) loan in the tfUSDC TrueFi DAO pool (the “Pool”). The current loan to delt.ai has an outstanding principal balance of $5.5MM and $0.2MM of accrued interest; the loan is scheduled to mature today, Saturday, July 8, 2023.

While delt.ai has been performing well across both its payments and corporate credit businesses, the current financial markets backdrop has not been conducive to the Company finding new financing to repay the existing loan in a timely manner (which provides balance sheet support for its profitable and strategic corporate credit business) and is therefore unable to pay the full outstanding principal and interest balance due on July 8. Archblock, acting as agent for the Pool lenders, has been working with delt.ai to develop a plan to optimize the return of capital to the tfUSDC Pool while not impairing the Company’s business.

In that regard, we are pleased to announce that Archblock and delt.ai have come to an agreement on terms for a restructured loan. Below is a summary of the agreed upon terms:

  • Principal and Interest Payments

delt.ai will repay $1.1MM (20% of the outstanding principal balance) in the next several days following the original maturity date of July 8, 2023. In addition, the Company will pay the accrued interest due on the most recent 90 day loan period of approximately $0.2MM. Archblock will airdrop the principal and accrued interest payments to Pool lenders on a pro rata basis as soon as practicable given engineering work on the smart contracts that control the loan.

  • Remaining Balance Maturity and Interest Rates

The maturity date for the remaining principal balance has been extended by one year. Interest payments are due on a quarterly basis and the interest rate is scheduled to increase each quarter to incentivize early repayment. delt.ai has the intention to repay principal during the course of the subsequent term as it is able to do so and as the Company raises new and more efficient debt funding.

We have agreed to these restructured loan terms in the interest of the Pool lenders. Extending the maturity date will allow delt.ai to continue operations and repay the outstanding principal balance plus interest under the restructured loan terms. The restructured loan also allows the Company to continue to pursue strategic opportunities, which will further strengthen delt.ai and hence facilitate the repayment of the loan. We believe that restructuring the loan will materially improve the credit of the borrower and ultimately facilitate recovering the full principal and interest amounts due given that their business is strong and profitable, but creating a balance sheet on its own has taken considerably more time than expected given the constraints on capital available for deployment.

USDC lenders are encouraged to submit questions to this forum post.

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Hello, Sir

1: When exactly will the repayment of the $1.1 million principal and $200,000 interest be made to TrueFi? The dates mentioned in the post are quite vague.

2: What is the interest rate of the new financing agreement? What is the exact interest rate for each quarter?

Thank you and look forward to your reply

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Hi,

Good questions, I’m looking forward to hearing more too.

4

Hello,

Please see below for responses to your questions:

  1. We received the principal repayment of $1.1MM and $0.2MM of accrued interest yesterday and are working on setting up the airdrop. We will let you know when the principal and interest payments will be airdropped to Pool lenders as soon as possible.

  2. Period I (July 8, 2023 to October 6, 2023): 19%;
    Period II (October 6, 2023 to January 4, 2024): 20%;
    Period III (January 4, 2024 to April 3, 2024): 21%;
    Period IV (April 3, 2024 to July 2, 2024): 23%

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Hi - please see below for our response to Tru111’s questions:

  1. We received the principal repayment of $1.1MM and $0.2MM of accrued interest yesterday and are working on setting up the airdrop. We will let you know when the principal and interest payments will be airdropped to Pool lenders as soon as possible.

  2. Period I (July 8, 2023 to October 6, 2023): 19%;
    Period II (October 6, 2023 to January 4, 2024): 20%;
    Period III (January 4, 2024 to April 3, 2024): 21%;
    Period IV (April 3, 2024 to July 2, 2024): 23%

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USDC Lenders - please see this link for airdrop instructions: delt.ai loan: Interest airdrop claiming instructions - TrueFi Docs

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Hi,

that link was for the previous period.

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Excellent strategic testing for the protocol, providing a comprehensive real-world approach to thoroughly assess all aspects of it.

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Hi - apologies for the confusion here. The link has been updated: delt.ai loan: July 2023 airdrop claiming instructions - TrueFi Docs.

The contract address is: 0xfBc33285d9f58d34fE239bFA3732036d5c53a166(ProxyWrapper | Address 0xfBc33285d9f58d34fE239bFA3732036d5c53a166 | Etherscan)

The redeem deadline is: Sun Jan 21 2024 15:46:40 UTC

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Hello Sir/Madam,

I noticed that the deadline for redeeming shares of the interest airdrop was July 8, 2023. As we have now passed this deadline, I’m curious about what will happen to the remaining funds. The document mentioned that TrueTrading would recover the remainder of the funds after this date. Could anyone provide more details on how these funds will be utilized? Any clarification would be greatly appreciated.

Thank you

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Hi there,

Users will have until a deadline of January 21, 2024, to redeem your shares of the interest airdrop.

Apologies for the confusion here - I posted the link/instructions for the previous period on Jul 24 but subsequently posted the updated link on July 25.

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Hello,

I appreciate your previous responses. However, I would like to clarify my question further. I understand that the deadline for redeeming the interest from the previous airdrop was July 8, 2023, and the deadline for redeeming both the principal and interest from the current airdrop is January 21, 2024. My question pertains to what happens to the remaining funds after these deadlines have passed. The document mentioned that TrueTrading would recover the remaining funds. Could anyone provide more details on how these remaining funds, both from the previous and the current airdrops, will be utilized after the respective deadlines? Any clarification would be greatly appreciated.

Thank you.

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The unclaimed funds that remain after each airdrop deadline are held in Archblock’s treasury wallet. These funds may be used to cover potential legal and operational expenses incurred while repaying a loan, if necessary. If you have any unclaimed funds and missed the airdrop deadline, please reach out to our team.

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On August 3, 2023, Albo, a leading neobank in Mexico, announced its acquisition of delt.ai for US$20 million. This strategic move will see the founder and CEO of delt.ai join Albo as the COO (Chief Operating Officer). The Archblock team will continue to work closely with the newly combined company as they repay the remaining principal and interest of the restructured loan from July 8, 2023.

In a proactive step towards full repayment from the borrower, the Archblock team is withholding $200,034.25 in interest payments, covering the period from January to April. This reserve is earmarked for potential legal expenses that may arise until the full principal is recovered. As of now, no outside counsel legal expenses have been incurred. Should the fund remain unused, it will be distributed along with future principal and interest payments to the lenders.

Please refer to the official press release for further details:

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Will my balance of tfUSDC stay the same until all this is sorted out? Because it is currently kind of affecting the portfolios apps like Zerion. Let’s put aside the interest accrued (which is fine if it appears in my portfolio).
I have now:

  • my original tfUSDC balance which is priced at the USDC value. So, if I have e.g 10’000 tfUSDC, Zerion will add to my portfolio $10’000
  • i have now received the 20% of it via the airdrop, which is 2’000 USDC.

So, my Portfolio will say that I have 12’000 while in reality, I have $10’000.
Is there any way you can adjust this? Maybe by burning the already claimed tfUSDC from users or something like that.

Also, how is the interest now being accrued? If I have claimed my 20% principal, that means that from now on I’m receiving yield on the remaining 80%? Or still on the 100% principal?

Thanks!

cc @Monica

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Hi @fede - because of the Delt.ai loan restructuring, the economic value of tfUSDC has changed and 1 tfUSDC token should not be assumed to be equal to 1 USDC. The 5.5MM USDC principal balance is past due relative to the original maturity date, but because the loan was restructured prior to the maturity date, Delt.ai did not default on the loan. If the loan were in default, deficiency tokens would be minted to represent the recoverable principal amount that would be returned to lenders. However, there is no smart contract function to indicate on-chain that the loan has been restructured.

Additionally, the issue is further complicated by the fact that Delt.ai is repaying the principal amount and interest on a different schedule than the original loan terms, wherein the full principal and interest accruals were due on one maturity date. Based on the restructured loan terms, Delt.ai is making partial principal payments on an intermittent basis, and lenders are receiving their pro rata shares as we receive these payments.

We took a snapshot of the proportional ownership of the tfUSDC pool at the time of the restructuring, and are disbursing money to lenders accordingly. Below is an example of the mechanics for the loan, assuming no principal prepayment is made:

Delt.ai example
Delt.ai example1426×1202 223 KB

With respect to the interest accruals, interest is accrued on the outstanding principal balance. Based on the restructured loan terms, the interest rate will increase each quarter and the accrued interest amount will be calculated based on the current interest rate and outstanding principal balance.

Please let us know if you have any additional questions. Thank you.

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Maybe Truefi Protocol could potentially consider this as a future development? Or maybe already has…

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Hello,

I have a query regarding the acquisition of delt.ai by Albo. Post-acquisition, has the debt of delt.ai with Archblock been transferred to Albo? If so, will Albo continue to honor and fulfill the repayment obligations that delt.ai previously had? I appreciate your clarification on this matter.

Thank you!

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Can anyone answer this question ?

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I’d be curious about this as well. Which are the next steps?