MSP Recovery Announces Strategic Term Sheet Providing Prospective Liquidity and Working Capital Aimed at Driving Future Growth

Rhea-AI Summary

MSP Recovery (NASDAQ: MSPR) has entered into a non-binding term sheet for a secured term loan facility of up to $55 million with an undisclosed investor. The facility consists of two tranches: Tranche A up to $10 million and Tranche B up to $45 million, with a 36-month maturity and potential two-year extension.

The deal includes warrant issuance to the lender, potentially reaching 46% of fully diluted equity if fully drawn. The facility will be secured by first-priority interest in the company's assets and includes provisions for appointing a Chief Restructuring Officer and establishing a voting trust arrangement for certain shareholders.

Positive

• Secured term loan facility of up to $55 million providing significant working capital
• Investor commitment to pursue acquisition of additional assignor claim rights
• Potential for portfolio expansion through new claim acquisitions or servicing rights
• 36-month maturity with possibility of two one-year extensions

Negative

• Significant equity dilution potential with warrants covering up to 46% of fully diluted shares
• Term sheet is non-binding and subject to various conditions and approvals
• Requires first-priority security interest in substantially all assets
• May require appointment of Chief Restructuring Officer, indicating potential financial stress

Insights

Financial Restructuring Specialist

MSP Recovery secures potential $55M loan facility with significant dilution risk up to 46% of equity through warrant issuances.

MSP Recovery has entered a non-binding term sheet for a secured term loan facility of up to $55 million, structured in two tranches: Tranche A offering up to $10 million ($5 million at closing) and Tranche B providing up to $45 million post-closing. This financing comes with substantial strings attached - both tranches are subject to contingencies and the lender's "sole and absolute discretion," indicating considerable uncertainty about the full funding amount.

The financing structure raises serious dilution concerns. In exchange for advances, MSP must issue warrants with a nominal $0.01 exercise price, potentially giving the lender ownership of up to 46% of the company on a fully diluted basis. This represents significant potential shareholder dilution at extremely favorable terms for the lender. The warrant coverage varies by tranche, from 3% per $1 million initially to 0.35% per $1 million in later portions.

The 36-month maturity with potential extensions, first-priority security interest requirements, and provisions for appointing a Chief Restructuring Officer suggest this is a rescue financing package with strict oversight. Additional lender controls include customary fees, budget approvals, financial reporting requirements, and a voting trust arrangement for certain shareholders - all indicating the company's constrained negotiating position.

While management frames this as creating "strategic alignment with partners," the terms reflect challenging financial circumstances with potentially significant shareholder value implications. Nasdaq shareholder approval requirements for certain aspects of the deal highlight the material nature of these transactions on the company's capital structure.

MIAMI, Aug. 29, 2025 (GLOBE NEWSWIRE) -- MSP Recovery, Inc. (NASDAQ: MSPR) (the “Company”), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery and technology leader, announces it has entered into a non-binding term sheet for a new secured term loan facility of up to $55 million. The agreement, with one or more entities managed or advised by, or affiliated with an Investor with whom the Company has signed a non-disclosure agreement, would provide the Company and its affiliates significant working capital and additional operational funding aimed at driving future growth. Additionally, the Investor is committed to pursuing acquisition of additional assignor claim rights and working with the Company to expand its portfolio of assigned claims or provide the Company with servicing rights to claims acquired by the Investor.

Facility Structure
The Term Sheet provides for a potential first lien secured delayed draw term loan facility (the “Facility”) in an aggregate principal amount of up to $55.0 million, consisting of:

• Tranche A Loans: up to $10.0 million, of which $5.0 million is expected to be funded at closing, and up to $5.0 million may be advanced at the Lender’s sole and absolute discretion prior to satisfaction of a specified contingency.
• Tranche B Loan: up to $45.0 million, available after the closing date, subject to the same contingency and the Lender’s sole and absolute discretion.

The Facility would mature 36 months following closing, subject to two potential one-year extensions at the discretion of Lender. The obligations of the Co-Borrowers would be secured by a first-priority security interest in substantially all of their assets, subject to inter-creditor arrangements with existing creditors.

In connection with advances under the Facility, the Company would issue to the Lender warrants to purchase shares of the Company’s Class A common stock equal to specified percentages of the Company’s fully diluted equity, with an exercise price of $0.01 per share and a term of ten years. The warrant coverage ranges from 3.0% per $1.0 million drawn under the initial portion of Tranche A to 0.35% per $1.0 million drawn under later portions of Tranche B, for a maximum potential coverage of approximately 46.0% on a fully diluted basis if the Facility is fully drawn.

The Term Sheet further contemplates customary fees, budgets, financial reporting requirements, oversight, and approval rights for the Lender, the potential appointment of a Chief Restructuring Officer, and a voting trust arrangement for certain existing shareholders. Certain extensions of credit and warrant issuances may be subject to shareholder approval under applicable Nasdaq rules.

MSP Recovery Founder and CEO, John H. Ruiz said, “The transactions contemplated in the term sheet agreement would pave the way for a capital infusion, aiming to create strategic alignment with partners who share our long-term vision. As we work to optimize the capital structure, our confidence in the company’s underlying claims and business model remains unchanged. We also remain steadfast in seeking justice for our healthcare clients through continuing litigation strategies, and committed to meaningful outcomes across the healthcare industry.”

About MSP Recovery, Inc.
Founded in 2014, MSP Recovery has become a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery leader, disrupting the antiquated healthcare reimbursement system with data-driven solutions to secure recoveries from responsible parties. MSP Recovery, Inc. innovates technologies and provides comprehensive solutions for multiple industries including healthcare and legal. For more information, visit: msprecovery.com

Forward Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “plan,” and “will” or, in each case, their negative, or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As a result, these statements are not guarantees of future performance or results and actual events may differ materially from those expressed in or suggested by the forward-looking statements.

Any forward-looking statement made by the Company herein speaks only as of the date made. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict or identify all such events or how they may affect it. MSP Recovery has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Factors that could cause these differences include, but are not limited to, the Company’s ability to capitalize on its assignment agreements and recover monies that were paid by the assignors; the inability of MSP Recovery to obtain financing and generate revenues sufficient to cover the cost of operations; the inherent uncertainty surrounding settlement negotiations and/or litigation, including with respect to both the amount and timing of any such results; the validity of the assignments of claims to MSP Recovery; the ability to successfully expand the scope of the Company’s claims or obtain new data and claims from the Company’s existing assignor base or otherwise; the Company’s ability to innovate and develop new solutions, and whether those solutions will be adopted by the Company’s existing and potential assignors; negative publicity concerning healthcare data analytics and payment accuracy; and those additional factors included in MSP Recovery’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed by it with the Securities and Exchange Commission. These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995.

For Media Inquiries:
media@msprecovery.com

For Investor Inquiries:
investors@msprecovery.com

FAQ

What is the size of MSP Recovery's new term loan facility?

The facility is structured for up to $55 million, divided into Tranche A ($10 million) and Tranche B ($45 million).

How much equity dilution could MSPR shareholders face from this deal?

The deal includes warrants that could result in up to 46% equity dilution on a fully diluted basis if the facility is fully drawn.

What are the key terms of MSPR's new loan facility?

The facility has a 36-month maturity with two possible one-year extensions, requires first-priority security interest in assets, and includes warrant issuance with exercise price of $0.01 per share.

How is the $55M loan facility structured for MSPR?

The facility consists of Tranche A ($10M with $5M at closing) and Tranche B ($45M available after closing), both subject to lender discretion and specific contingencies.

What corporate governance changes are included in MSPR's term sheet?

The term sheet includes provisions for appointing a Chief Restructuring Officer, establishing a voting trust arrangement, and implementing lender oversight and approval rights.