The parent company of TikTok rival Triller, which debuted as a publicly traded firm in October, has been sued by a creditor for allegedly failing to pay back a high-interest loan on which it owes $35.5 million.
In documents filed with the Supreme Court of the State of New York on November 26, lawyers for a hedge fund owned by investment manager Yorkville Advisors alleged that Triller Group had defaulted on its debt to the hedge fund, and is now required to pay the full amount plus interest.
In a filing with the Securities and Exchange Commission (SEC), notifying the regulator of the lawsuit, Triller Group said the company “intends to defend itself vigorously” against the legal action.
The debt originates with Agba, the Hong Kong-focused financial services firm that merged with Triller earlier this year as part of Triller’s plan to go public.
Agba borrowed $33.5 million from Yorkville Advisors’ hedge fund YA II PN Ltd., in two installments earlier this year, in order to cover operational costs as the company headed into the merger.
According to court documents filed by the hedge fund, Agba issued convertible notes to the hedge fund, i.e., bonds that can be converted to stock. The notes came with an 18% interest rate, and interest charges on the debt are accumulating at $16,525 per day.
The debt agreement required Agba to complete its merger with Triller by August 12, 2024, the hedge fund states, and to file a registration statement with the SEC to ensure proper accounting of any stock issued to the hedge fund under the deal.
The hedge fund alleges that, because the Triller-Agba merger was only completed in October, and because Triller Group also missed the deadline to register with the SEC, it’s in default on the debt and has to pay back the full amount. Including interest, which came to around $35.5 million as of the end of November.
“Triller Group and the [debt] guarantors have offered no explanation for their failure to honor their contractual obligations,” Yorkville Advisors Global Partner Troy J. Rillo said in a sworn statement to the court, which can be read in full here.
The hedge fund has asked the court to set a deadline of January 27, 2025, for Triller Group to respond to the lawsuit.
Triller Group began trading on the NASDAQ exchange in mid-October. Had the company’s stock risen, Yorkville Advisors’ hedge fund may have been able to convert its notes from Agba for shares in Triller Group that would have been worth more than the amount it had lent the company.
However, Triller’s stock took a dive on the first day of trading and has stayed well below its opening price of $5.60 per share since then. It closed at $3.56 per share on Wednesday (December 4).
When Triller and Agba announced their planned merger this past spring, they predicted the combined company would be worth $4 billion. However, the company’s market cap on Wednesday was $551.8 million.
Prior to its merger with Agba, Triller suffered financial difficulties of its own, facing lawsuits from both Sony Music Entertainment and Universal Music Group over non-payment of licensing fees for music used on the social media platform.
In an SEC filing earlier this year, the company revealed it owed $23.6 million in outstanding music licensing fees.
As part of the merger plan agreed to by shareholders in September, the newly merged Triller Group has set aside 50 million shares of company stock to be “applied toward future settlement of certain Triller legal and financial obligations.”
At the current share price, those shares are worth $178 million.Music Business Worldwide
