Brian Bergin

Restructuring

Dublin Chamber of Commerce 27 January 2010

PwC
PwC
Types of restructuring

Restructuring

Operational Financial

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Operational

•Attack vs. Defence

•
•Preparation in advance of Financial Restructuring
•
•Quick wins
•
•Looking deeper

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 Operational - examples

Fast moving consumer goods

Retailer

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Example 1 – FMCG

•Completed first stages

•
•Root & branch review from the bottom up
•
•Old well established contract identified
•
•Quantitative & Qualitative business case for change
•
•Dilemma

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Example 1 – FMCG Insights

1.Look deep and challenge

2.
3.Don’t spare any sacred cows
4.
5.Retain your focus and vision

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 Operational - examples

Fast moving consumer goods

Retailer

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Example 2 – Retailer

1.Rapid expansion
2.
3.Initial restructuring plan
4.
5.Unreliable and incomplete data
6.
7.Process evolved into wider plan
8.
9.Bank support
10.
11.Transformational change

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Example 2 – Retailer Insights

1.Importance of reliable information

2.
3.Evolving process
4.
5.Maintain the support of your lenders / other stakeholders
6.
7.Impact of Change on People

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Operational – Key Takeaways

1.Need to look forensically at the business and challenge

2.
3.Quality of information
4.
5.People

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Types of restructuring

Restructuring

Operational Financial

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Financial

•Changing the funding structure

•
•Changing terms and conditions
•
•Applies to all businesses today…..

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Financial

Normal – no breach Distressed - in breach

•Requirement for •Reflects a lot of

renewal businesses
becoming more •Going concern is
stringent dependent on
•Possible issues ongoing bank
re forecast support
breach of
covenants

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Financial

Compa
ny Trust Lender

Upfront “No Surprises”

Communication Approach

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Financial - examples

Routine renewal of facilities

Amendment request

Distressed

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Example 1 – Routine Renewal of Facilities

•More challenging
•
•Plan well ahead in advance
•
•Detailed business plan
•
•Plan B

•Increased due diligence

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Example 2 – Amendment Request

•Wide range of triggers

•
•Prepare response plan – “Solution Orientated”
•
•Communicate with lenders
•
•Sharing the pain

•Understand the lender’s position of higher risk

•
•Due Diligence and amendment fees

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Example 3 – Distressed

•Already in breach
•
•Understand the bank’s options
•
•Importance of relationships
•
•Open to alternatives solutions.….

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Financial – Alternative Solutions

Refinance

•Limited in
current market
•More difficult for
distressed

Continued focus on operational restructuring to improve cash flow

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Financial – Alternative Solutions

Refinance

Raise new equity

•Limited in
current market
•More difficult for •Interest being shown
distressed from abroad
•Looking for cheap
deals
•Corporate finance
advisor

Continued focus on operational restructuring to improve cash flow

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Financial – Alternative Solutions

Refinance

Raise new equity

Debt for equity
•Limited in
current market
•More difficult for •Interest being shown
distressed from abroad •Confined to larger
•Looking for cheap deals to date
deals •Creative solution
•Corporate finance •Certain banks
advisor willing
•Advisor

Continued focus on operational restructuring to improve cash flow

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Financial – Alternative Solutions

Refinance

Raise new equity

Debt for equity
•Limited in
M&A
current market
•More difficult for •Interest being shown
distressed from abroad •Confined to larger
•Looking for cheap deals to date
•Timing
deals •Creative solution
•Planning
•Corporate finance •Certain banks
advisor willing •Advisor
•Advisor

Continued focus on operational restructuring to improve cash flow

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Financial – Key Takeaways

1.Importance of relationships
2.
3.Plan ahead and be prepared for negotiation
4.
7.Contingency planning & Mitigating Factors
8.
9.Understand the bank’s position

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Conclusion

1.Applies to all businesses

2.
3.Thorough review, bold well informed decisions and strong execution
4.
7.Importance of relationships
8.
9.Plan well in advance

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• Q&A
• pwc.com/ie/businessrestructuring

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Thank you
Thank You

PwC
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