Pink meshes with HLOD volumes

We upgraded from 4.25.3 to 4.25.4 (tag: oculus-4.25.4-release-1.55.0-v23.0)

We are using HLOD volume in order generate proxy meshes, but the tool which is used to generate this is buggy in 4.25.4. When we check merge materials options, the combined texture we get from merging is pink. So whenever Proxy mesh gets activated according to screen percentage we see pink meshes. This is happening in editor and when we run on device, when we are up close to the objects they appear normal but when we move away from the objects they turn pink.

Been searching and haven't found an answer yet. Has anyone else seen this and know how to fix?