MSP Recovery Inc. ( MSPR ) shares surged on Friday morning. On Thursday, the company entered into a strategic term sheet with Hazel Partners, Virage Capital and affiliates to execute a series of restructuring initiatives.

Why It’s Important: The plan includes cost reduction via a new servicing entity, converting key debt into equity, thereby eliminating $1.2 billion in guaranteed debt.

Also, MSP is aiming to reduce its liability to principals John H. Ruiz and Frank C. Quesada by approximately $144 million, contingent on the full conversion of the related debt into equity.

Transaction Details: Hazel Partners has agreed to provide up to $9.75 million in bridge funding to the company, of which $6.5 million remains available through July 2025.

This transaction brings Hazel Partners’ total funding under the facility to $25.75 million.

The company also intends to provide up to $25 million in working capital for the new servicer and shift its operational focus back to MSP Law recoveries.

This will be funded in tranches of up to $1.75 million per month, subject to meeting certain milestones beginning on September 2025 and has a maturity date of June 30, 2027.

Apart from this, MSP Recovery ( MSPR ) plans to launch a dedicated servicing operation focused solely on recovering claim rights.

While the New Servicer will handle operations under the leadership of an independent CEO, MSP Recovery ( MSPR ) will retain full ownership of its developed intellectual property, which it will license to the new entity.

In return for a 43% equity stake in MSP Recovery ( MSPR ), Virage Capital agreed to waive all claims and release all liens tied to the about $1.2 billion VRM Full Return as of March 31, 2025.

Yorkville has also extended the company's debt maturity to Nov. 30, 2026, in support of its restructuring efforts.

Furthermore, Yorkville waived both the Volume Threshold and Maximum Advance Amount restrictions, enhancing the company's ability to raise capital through stock sales over time.

The restructuring is expected to close by April 30, 2025.

MSPR Price Action: MSP Recovery ( MSPR ) shares are up 116.41% at $2.78 premarket at publication Friday.

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