The core event that moved this previously successful collaboration into status “suspended” arose from the currency risk that materialized for Wowwo after the Turkish Lira saw a major decrease in value against the Euro in December 2021. Wowwo is issuing loans in Lira, while on Mintos investors are investing in these loans in Euro. Without currency hedging in place, Wowwo is facing a situation where they have a significantly greater cost to buy the needed amount of Euros to make payments due to Mintos investors. This drove the lending company to a decision to disconnect its API communication with Mintos, and stop making repayments to investors while negotiating proposals to deal with the currency losses.
In our conversations, the lending company had suggested that instead of transfering due amounts in Euro, it would transfer borrower’s repayments in Turkish Lira at the current exchange rates, which would lead to a loss for investors in Wowwo loans on Mintos. We respectfully denied this proposal.
Wowwo not making payments that are due and not delivering the required information about the portfolio performance is a breach of the Cooperation Agreement.
Mintos has sent Wowwo a notice about a material event of default, accelerating the total exposed amount of €18.5 million and stating Wowwo’s obligation to repurchase all loans within a few business days after this notice. Not adhering to this request would be a breach of contract on Wowwo’s part.
Our credit risk committee worked to propose solution alternatives, and we shared them with Wowwo. We came to a solution for restructuring that we believe will achieve the best outcome for investors on Mintos. Our position is that investors shall receive due amounts in Euro in full, restructured to account for the company’s challenging situation due to their currency exchange position.
We continue our work to achieve the best possible results for investors, in the least given time. In most of the recovery cases, the best results are achieved with negotiations. We won’t make assumptions about the possible outcomes of the following developments in negotiations with Wowwo, but we do promise investors that we’re fully engaged to exercise all options. If it turns out that negotiations don’t lead to a satisfactory agreement, we will follow the next steps described in the Mintos recovery process which also entails the legal route.
We will inform you as soon as we have news to share. In the meantime, you can follow this topic on the Mintos Community, share your questions and comments. We hear you and include your insights into our approach.
Thank you for your understanding and patience.