Eastern Light Nordic Subsea Project Becomes A Distressed Asset
The private credit company P Capital Partners has ousted this ambitious project's founders and seized control. It appears P Capital extended a loan to finance Eastern Light back in 2021. As is standard, the debt covenants probably included the right to oust management and become the company's owner if certain conditions were not met. The new owners specialize in offering high interest rate, loans so that companies can avoid equity dilution. According to the company's press release, prior management was unable to meet the key requirement of new equity financing. Hence they were fired. It is important to understand how these greenfield projects work. Generally, founders invest money in the project as equity. Since these projects are unlikely to generate cash flow for many years, equity is the appropriate financing. The project is high risk and can only be justified if there are high returns. Banks and other credit providers generally finance projects that already are genera