Compass Diversified (NYSE:CODI) ("CODI" or the "Company"), an owner of leading middle-market businesses, today announced that it has entered into a Settlement Agreement and Mutual Release and a related Plan Support Agreement (together, the "Settlement") in connection with the Chapter 11 proceedings of Lugano Diamonds & Jewelry Inc. and its affiliated debtors ("Lugano"). The Settlement, reached with Lugano and its official committee of unsecured creditors and other parties in interest, will be incorporated into Lugano’s proposed Plan of Liquidation and establishes the framework for CODI's recovery from the Lugano estate.

"This settlement is an important step forward," said Larry Enterline, Chairman of the Board of CODI. "It accelerates the resolution of the Lugano bankruptcy, allowing the estate to move efficiently toward confirmation of a plan of liquidation. It also enables more timely cash recovery for CODI and reduces the ongoing costs and uncertainty associated with the bankruptcy proceeding. With CODI's claims in the Lugano bankruptcy now resolved, the Company can keep its full attention on its strategic priorities to drive long-term value for shareholders: deleveraging the balance sheet, enhancing our businesses’ operations, and closing the gap between CODI's trading price and the intrinsic value of its businesses."

Under the Settlement, CODI has agreed to support Lugano's proposed plan of liquidation, which incorporates the settlement terms. The Settlement is designed to accelerate the resolution of Lugano's bankruptcy, facilitate an orderly liquidation of Lugano's assets, allow for a timely distribution of recoveries, and provide greater certainty of recovery than continued litigation.

Subject to creditor approval and bankruptcy court confirmation of the plan of liquidation, CODI will be entitled to certain recoveries from the Lugano estate. This includes proceeds from the disposition of Lugano's inventory, tax refunds, insurance, and litigation claims pursued through a liquidation trust. Additionally, in exchange for releases granted by CODI and its related parties, CODI and its related parties will receive a release of claims from the Lugano estate. The terms of the Settlement are described in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 24, 2026.