Triterras Plunges as Creditor Pushes Key Client to Restructure

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Another company brought to market via a blank-check firm is plunging.

Shares of Triterras Inc. slid as much as 42% on Thursday to an all-time low, as investors were spooked by the possibility of trouble with a key client, Rhodium Resources.

Rhodium, which now flies under the name Antanium, started a restructuring process as demanded by a creditor, according to a filing submitted with the Securities and Exchange Commission on Thursday. Triterras has in the past counted on its relationship with Rhodium to deliver customers and drive traffic to its fledgling Kratos platform. Both companies were founded and are controlled by Srinivas Koneru.

Kratos is Triterras’s blockchain-enabled digital platform that connects commodity traders to lenders willing to finance their deals.

According to the filing, Rhodium says it has “sought a moratorium order from a Singapore court which will shield Rhodium from creditor actions” while it tries to restructure debts and “continue its business as a going concern.”

Triterras Plunges as Creditor Pushes Key Client to Restructure

Yet, with the majority of trade finance deals covered by credit insurance, the outcome of Rhodium’s restructuring may be “manageable”, according to B. Riley analyst Randy Binner. He initiated coverage on Triterras in November with a buy rating and a price target of $16, more than double the price of its shares on Thursday afternoon.

“This is clearly not welcomed news, but challenges that traditional trade finance platforms face are known,” he said in a note. Binner chalks up the Rhodium update to “headline noise” and affirmed his buy rating, citing attractive valuations relative to its growth potential.

While Rhodium was “instrumental” to the initial launch of the Kratos platform, Triterras has become “less dependent” on its business, the company said in a filing submitted to the SEC. As Kratos added users, sales from Rhodium and its subsidiaries declined to 15.5% for the six months ended in August from 26.5% of annual sales for its fiscal year ended in February.

Triterras expects Rhodium or its affiliates to honor all obligations, including $1.7 million of outstanding advances due from related parties as of Dec. 1, the filing said.

The company is under pressure from creditors just as a series of frauds and scandals in Asia and the Middle East have rocked the commodities trade finance sector as a whole. That includes the collapse of Singapore stalwart Hin Leong that left some 23 banks on the hook for as much as $3.5 billion in losses.

Some of the biggest banks in the sector including BNP Paribas SA and ABN Amro have scaled back or pulled out of the sector altogether. Societe Generale SA shuttered its commodity trade finance activities in Singapore.

The Singapore-based company debuted on U.S. exchanges after completing its reverse merger with blank-check company Netfin Acquisition Corp. last month. Netfin had initially signed a letter of intent to acquire Triterras Holdings, with ties to Rhodium, but later said it made a “strategic decision” to combine solely with Triterras Fintech and not its affiliated commodity trading business.

©2020 Bloomberg L.P.

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