Course Overview

A two-day workshop to demonstrate the key analytic, structuring and restructuring lessons to be learned from deteriorating / failed credits.

Course Objectives

Specifically participants will be equipped to:
• Understand the role of covenants in credit management and crisis situations: covenant structures and the implications of breaches, waivers and amendments on the company and on all classes of creditors
• Understand the process for managing exposures to a company in distress
• Evaluate the business and operational decisions required by the company in order to place its business on a more solid foundation
• Assess the available options to lenders / investors, benchmarking likely recovery against other alternatives and the current market price of the company’s debt, where applicable
• Identify the restructuring alternatives, evaluate the possible choices and select the most appropriate restructuring solution, exit and / or workout options for companies in distressed situations.

Course Content

Day 1

Problem Recognition
Credit Culture
Credit Process
Delegation of Authority
Team Effort
Accountability vs Blame
Real life examples

Early Warning Signals
Financials
Industry Trends
Promoter Losing Focus
Discusses Scam deals
Bank Guarantee Structures etc
Key people leaving

Senior Management to take views on Industry wide recession and Sector related issues. (Early bird catches the worm.)

Common Themes
Excessive Growth
Over-concentration
Volatile earnings
Asset and Liability mismatches
Unstable Funding Sources

Signs of Distress
Financial
Non-Financial
Market/Industry indicators

Events of Default
Potential Event
Covenant Breach
Mark to Market
Stress Testing
Portfolio Analysis

Reaction to Default
Facing up to the situation
Syndicated Loan
Multi Banked Loan
Multi layered relationship for eg Equity, Underwriting and Lending
Knee jerk or going by the book results in greater damage

Day 2

Different approaches
Good Bank - Bad Bank
Credit takes over
Marketing continues to manage

Case Study Example: Restructuring of $180 million debt provided by 6 banks to a agriculture based company which had presence from Latin America to Asia.

Funding Structure
Covenants
Effect on operating performance
Effective triggers - MATs
Win-win situation protecting Lenders interests

Immediate Steps
Stabilise business
Working capital needs
Protecting the jobs and the value
Effective actions the banks should take
Focus on going forward
To minimise losses and future problems

Case Study: Actual steps taken to recapitalize the Company and restructuring the debt was just part of the efforts to restructure the operations and monitor the performance of the Company. Finally, the convertibles used t restructure the Company was used to convert the loan into shares which were sold in the market to recover the bad loan in full.

Securitised Transactions
REITS, Secured Bonds etc
What happens in a default
Who leads, nightmare or windfall for professionals?
Practical difficulties in co-ordinating a response
Secondary market trading of debt securities

Case Study: Actual steps taken to restructure the Secured Bonds whose primary recourse was the securitised receivables of number of buildings with long-term rental income. Restructuring the debt was the significant part of the effort in a situation with negative equity and no major bank or shareholder who had a vested interest in the project. Use of mezzanine, convertibles etc used to restructure the deal.

PDF of course outline- Please note that tailoring is possible


IF YOU HAVE ANY QUESTIONS ABOUT THIS SEMINAR PLEASE WRITE TO US AT post@redcliffetraining.co.uk

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