Dates                                                                          

12-13 April 2010
20-21 September 2010

Course Overview

This course focuses on the practical financial aspects and implications of corporate restructuring, especially bankruptcy, credit analysis, and leveraged and distressed restructurings as well as corporate expansion.

Financial modelling techniques allow business users to improve the reliability, quality and timeliness of their decision making. Its use in Corporate Restructuring is to provide a dynamic platform to be used in decision given the various outcomes during a corporate restructuring exercise.

With a model-by-model approach, this course will guide you through the various techniques, providing you with a comprehensive understanding of advanced modelling, covering such issues as scenario analysis, as well as how each technique can practically be applied through the use of Excel.

The course covers modelling the debt and equity of firms in distress and/or bankruptcy, incorporating financial restructuring, high yield bonds, spin-offs and other value creation methods, credit risk analysis, the lenders and equity participants’ perspectives, how models are used in the restructuring process, the effect of bankruptcy and expansion on firm valuation; and investment strategies relevant to distressed companies’ securities.

Each participant will be required to bring a laptop running Microsoft Office with CD-Rom to the seminar.

Course Content

Day 1: Corporate Restructuring

Analysing the Restructuring process
Financial Distress: causes, course and consequence
Defaults and bankruptcies in 2000-05 - worldwide and the UK
What causes bankruptcy
Major players in corporate restructuring work
Valuation theory in a distressed restructuring

Case Study: Examples of publicly explained bankruptcy cases

Legal, Business and Economic inputs to the Model
Historic and Forecast Cash Flows
Business Efficiency and Process
Management Input
Accountancy and Legal Issues
To factor decision tree based on legal outcomes

Case Study: Modelling the financial Operating Cycle

Modelling Credit Risk
Measurement of Credit Risk
Rating Agency Input
Modelling Credit Risk in the firm
Rating downgrade triggers
Credit risk from the bank perspective - Basel II and default recovery
Specific Issues for Corporate Restructuring

Case Study: Estimating inputs and analyzing results for a ratings model

Cash-Flow Crisis
Immediate action and crisis mentality
Cash flow focus and crisis stabilisation
Formulating a workable restructuring
The role of the model

Case Study: Modelling cash-flow under crisis conditions

Day 2: Modelling restructuring

Tactical Debt Restructuring
Wrongful and fraudulent trading - can the model predict?
Auditing the financial model
Impact of loan representations, warranties and covenants
Default, remedies, waivers and reserving rights
Cross default and cross acceleration
Rescheduling to Avoid Insolvency

Case Study: Building and Using a Corporate Debt model

Strategic Distressed Restructuring
Asset and liability restructuring
Valuing distressed debt
Linking theory with practice
Lessons from the 1980’s and 1990’s

Case Study: Trading distressed debt - vulture investing

Value Creation through Restructuring
Spin-offs, split-offs, split ups and carve-outs
Debt for equity swaps
Leveraged recapitalisations
Leveraged management buyouts
Deleveraging strategies

Case Study: Modelling the leveraged recapitalization of a takeover target

Turnarounds
Capital requirements
Developing the model
Management, bank and equity roles
Successes and Failures

Case Study: Developing and Using a Turnaround Model

Modelling expansion
Building blocks to the expansion model
Sources of finance
Debt priorities and waterfalls in the model
Sensitivity analysis, scenario modelling and Monte Carlo analysis for expansion

Cashflow Modelling
Creating a Loan Repayment Model
Effect of Restructuring on the Excel
Stress Testing the Financial Model
Sensitivity Analysis
Valuation of Distressed Asset

Real life study where the In-house Legal decided that the funds pledged was not properly pledged as the depositor name was changed from Borrower to his sister for tax reasons. “Past consideration” was cited as the reason to return pledged funds to Commercial Affairs (Police) as it involved Fraud. Events unfold and case law was shown to prove that past consideration does not relate to time the overdraft was established but to the time the funds were withdrawn.

Arriving at the cash flow model to arrive at the debt restructuring of a property portfolio given the pressures on rent renewals, increased construction costs and decreasing sales.

Shaking the Tree
Pro active approach
Understanding the problem
Agreeing on Strategy
Finding a Solution
Feedback and monitoring results

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

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 torestructure the Company was used to convert the loan into shares which were sold in the market to recover the bad loan in full.

Remedial Management
Process
Evaluating strategies
Ongoing management of Bad Loans
Valuing security
Making provisions

Lessons Learnt
Credit Risk taken
Factors taken to decide delegation of authority
Risk rating model – over-reliance on S&P, Moody
What could have been done
Skill sets to be developed
How to avoid one in future

IN ADDITION TO THE PUBLIC DATES ABOVE, THIS COURSE CAN ALSO BE TAILORED TO YOUR REQUIREMENTS AND DELIVERED IN-HOUSE FOR YOU.

PLEASE CIRCULATE THIS PDF AMONG YOUR COLLEAGUES!

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

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