Peter Christiansen: Sure. Sure. Thank you very much. Super helpful.
Sanjay Datta: Thank you, Pete.
Operator: And our next question is going to come from Rob Wildhack from Autonomous Research. Please go ahead.
Rob Wildhack: Hi guys. I wanted to ask about the $300 million loan sale to Ares. Could you comment on the terms associated with that sale? What was the execution price? And if there’s any risk or loss sharing associated with that?
Sanjay Datta: Yes, hi Rob. Yes, we don’t have anything, I think, right to announce on the terms other than I think we’re very excited about that partnership and where we can take it. I think it was a good deal for both sides. I think it’s kind of a structure in which we will sort of have an ongoing relationship in terms of the performance of the collateral. And hopefully, over time, we can convert that into — this is a first step into a much broader relationship.
Rob Wildhack: Okay. And then, Sanjay, maybe one for you or another one for you. Unrestricted cash, it was almost $400 million at the end of the period, but also finished I think as low as it’s been since March 2021. So, how do you think about the cash needed for “run the business” purposes? And then how should we think about cash generation going forward in the context of the new outlook for negative adjusted EBITDA and earnings in the first quarter?
Sanjay Datta: Sure. Yes, thanks for the question, Rob. I guess First of all, just in thinking about our balance of cash, again, I think it was probably a little bit low and loans on our balance sheet were a little bit high compared to normal as a result of this transaction. And subsequent to the close of the year, we executed the transaction and loans on our balance sheet are now lower and cash is higher. And I think we’re in a pretty good range right now with respect to the cash we have on hand. With respect to the operating sort of future of the business, we have guided a negative EBITDA for Q1. I think some of that, consistent with the guide itself, some of that is seasonal. We are in the seasonal trough of the year. So, we expect some of that to rebound.
Beyond that, there’s also — the fair value is the one part of our EBITDA that is noncash, but it does impact EBITDA. And so I think some of our guide for Q1 is impacted by the, let’s call it, the delinquency trends we referred to in the primary segment of the borrower base which is affecting our fair value marks. And so some of the EBITDA is seasonal, some of it is noncash. And I guess I’d say more generally, I think we’ve always demonstrated a history of being bottom-line focused and running the business responsibly, and our intention is to get back to EBITDA breakeven/positive as quickly as possible. So, I think if we can accomplish that, then certainly the cash balance we have on hand certainly, post the transaction that we announced with Ares are comfortable.
Rob Wildhack: Okay. Thank you.
Operator: And our next question is going to come from Simon Clinch with Redburn Atlantic. Please go ahead.
Simon Clinch: Hi guys. Thanks for taking my question. I wanted to follow-up on the question about committed capital actually. And just if we take a step back and think about the announcements you’ve made, the relationships you’ve built, how should we think about the current and the potential I guess, quarterly cadence of committed capital that you can build? Because I think the original case was that you were looking to build enough committed capital on a sort of run rate basis, on a regular basis to allow you to be breakeven whatever the cycle. So, I was just wondering, could you just update on that with some figures around it, please?
Sanjay Datta: Sure. Hey Simon, this is Sanjay. So, yes, I think — I’ll reiterate what we said in prior cycles, which is I think a rough rule of thumb for run rate, if half of our origination volume was supported by committed capital, we think that’s a good start. And I think that’s roughly where we are right now, obviously, our levels of originations over the past couple of quarters and guiding into next have not grown substantially, so that the capital we have on hand is sufficient to create that sort of foundation. Obviously, as we rescale the business as we would hope to this year, we’re going to have to scale the committed capital base in accordance. And I think that we’re pretty optimistic we’ll be able to do that. I think that just in terms of the shape and texture of the deals, as Dave said, I’ll just reiterate, I think we view this as having a relatively small number of large sort of committed bilateral relationships that we can grow into and grow with as the business grows.
And I think the kinds of names we’ve talked about with respect to the deals and transactions we’ve done, are the kinds of partners we can grow into overtime as the models prove out and as the partnerships mature. So, I think some of this is doing additional deals, but some of this will be growing the size of those deals as long-term partnerships over time as the business sort of regains its prior scale.
