Under the exchange agreement transaction, the Company will exchange its existing term loan facility, which currently has an outstanding principal balance of $252.6 million and a maturity date in July 2027, and its existing revolving credit facility, which has a balance of $50.0 million and a maturity date in January 2027, for a new $150.0 million term loan facility maturing in January 2031 held by the Lenders, the issuance of shares to the Lenders of convertible preferred stock with an aggregate initial stated value of $39.3 million, subject to redemption in January 2031, and a one-time cash payment to the Lenders in the aggregate amount of approximately $31.4 million.

Issuance of the convertible preferred stock remains subject to approval by System1 shareholders, which approval is a condition to the closing of the transaction. The Company expects the transaction to close in the third quarter of 2026 following its annual shareholder meeting, the timing of which will be announced at a later date.

"We are grateful to our lender group for their partnership and constructive engagement throughout this process," said Michael Blend, Co-Founder, Chairman and Chief Executive Officer of System1. "This transaction materially strengthens our balance sheet and provides a long-term capital structure that supports the focus and discipline we are bringing to the business. We believe this agreement positions System1 to continue executing against our strategic priorities while creating long-term value for shareholders."

"Through this exchange we have delivered on our commitment to strengthening our capital structure and improving leverage over time," commented Tridivesh Kidambi, Chief Financial Officer of System1. "At the close of the transaction, we will have reduced our total indebtedness by over $160 million from the beginning of the year and extended our debt maturity cycle to 2031, with 100% lender participation. With the enhanced financial flexibility this transaction provides, we remain fully focused on executing on our strategic initiatives, driving meaningful growth and delivering long-term value to our shareholders."