Elizabeth Holmes the Chief Executive Officer and Founder of Theranos Incorporated is attempting to raise capital from investors of in the company in order to stave off the potential default on their $65 million loans they acquired in December 2017 from Fortress Investment Group. Theranos is a research and development company seeking a cure for Zika virus and various other technologically efficient cures for various other diseases that are plaguing society. The company was having financial difficulty and slow resolutions in there research and development operations and needed financial backing in December 2017 that was accomplished by the loan from Fortress. However, this agreement requires them to maintain a threshold of $3 million in continuous liquidity for the loan to stay in effect. As of recently, Theranos has begun hovering around that $3 threshold and is on the verge of falling below that amount which will initiate a default on their $65 million loans with Fortress. As a result, Holmes has solicited her current investors at Theranos to invest more money within the company at a discounted rate that will translate into a significantly high return-on-investment once the Zika cure is formulated and approved.
Investors are extremely skeptical of potential positive results from the research and development and the strategic direction employed by Theranos leadership currently and are slow to provide the necessary resources to continue their hopes of a positive financial result. Fortress is evaluating the situation but they also have all of the cards stacked in their favor because no matter what happens with Theranos they have the opportunity to capitalize extremely heavily from the continued execution of the cure for Zika or the default of the loan and ultimate acquiring of the company that they can then sell off for an extremely lucrative profit margin. Fortress specializes in investing in companies such as Theranos where they can provide the necessary loan structuring to assist a company in their time of need and if the loan defaults they can acquire the company and reap the benefits from the sale of the assets. Fortress Investment Group provides the loan agreement for distressed companies such as Theranos and always receives profitable returns from the loan agreement.
Fortress Investment Group is continuing to provide the necessary leadership and guidance for the company even after the sale of Fortress Investment Group to SoftBank Group a global technology company that has begun investing in the alternative asset arena. Fortress Is still led by the extremely talented and respected Co-CEO partnership of Peter Briger and Wes Edens who are also two of the founders of Fortress Investment Group. Randall Nardone also provides high-level leadership for the organization and he was also one of the co-founders of the company in 1998. Fortress currently has more than $35 billion in assets under management and is continuing to thrive as a global investor in alternative asset categories that are distressed and underperforming. The distressed $65 million loan to Theranos is on the verge of default by Fortress if Elizabeth Holmes is unsuccessful in her efforts to raise money to continue her efforts to accomplish a cure for Zika and pay back the loan as agreed.