Lender threatens to sweep MariaDB accounts over private equity bid

Publicity around offer breaches loan agreement, or so SEC filing alleges

MariaDB has been warned by a bank lender that it may "sweep" its accounts in retaliation for the publication of a private equity bid for the troubled database company.

Earlier this week, MariaDB confirmed a possible offer of $37.3 million from private equity company K1 Investment Management to take the recently troubled database vendor into private ownership. In the run-up to its 2022 IPO, the company's value was estimated at $672 million. MariaDB plc, which is separate from the MariaDB Foundation running the open source database project, told the markets it had received an "unsolicited non-binding indicative proposal to acquire the company's shares through K5 Private Investors," a fund controlled by K1. The DB company said at the time that its board was reviewing the offer and taking advice.

But early publicity around that offer has provoked a response from one of the company's lenders. A Securities and Exchange Commission filing [PDF] this week reported that RP Ventures, a Nordic early stage investment company that lent MariaDB $26.5 million in October last year, delivered a notice of default to the company.

According to the filing, the default arose "as a result of a third party publicly announcing" a non-binding bid for MariaDB of $0.55 per share on February 16. This relates to the same non-binding offer of $0.55 per share and same day of the statement from K1. MariaDB also released a statement about the potential bid, several days after K1's initial statement.

The SEC filing said MariaDB had received a notice from RP Ventures LLC that the "Event of Default" had "occurred and is continuing." The filing continued to state that this was in violation of a forbearance agreement made with RP Ventures dated February 5. A forbearance agreement can offer borrowers relief on debt repayments and ultimately help lenders recover the debt.

The SEC filing said RP Ventures had provided notice to MariaDB of "its election to sweep the cash in the deposit accounts of the issuer [MariaDB] located in the US that are subject to a control agreement between the applicable financial institution…leaving $1.5 million in such deposit accounts." A cash sweep can be used by lenders to pay down debt with funds from the borrower's accounts.

A MariaDB spokesperson said: "We are a publicly traded company subject to the requirements of the US securities laws and, as we are in an offer period, the Irish Takeover Rules, and I am not able to provide information beyond what has already been publicly disclosed."

The latest SEC filing is a 13D notice, which applies when a group acquires more than 5 percent of a voting class of a company's equity shares. The reporting person was venture capital firm Runa Capital, which made an unsolicited bid for MariaDB in September last year. ®

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