International Loan Restructuring Training Course

With billions of dollars of toxic debt sitting on balance sheets all over the world, it is clear that restructuring the associated loans is a big priority. Yet it is has been some time since major financial institutions have had to worry about restructuring bad debt. This practical loan restructing course will help you understand where the risks are in your portfolio and provide you with practical insights as to the various restructuring options you might have.

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The Current Corporate Restructuring Climate

• Review of the current problem sectors
  - What are the recurrent themes?
  - Sector specific problems involving restructuring
• Suggested solutions for different sectors
• Restructuring framework
  - Proactive
  - Defensive
  - Distress
• Typical financial structures and products used to finance companies in leveraged transactions
• Review of the key issues in corporate restructuring
  - Liquidity or viability problem?
  - Identification of key stakeholders
• Leveraging and deleveraging
  - Optimising the leverage structure
  - Adjusting the cost of debt and equity for leverage
  - Recaps, debt and equity buybacks

Group exercise: calculating the optimum leverage and debt capacity

• What can we learn from previous economic downturns?
• Syndication problems
  - Monitoring performance as a syndicate member
  - Rights to act under the syndication agreement
  - Problems of agent bank versus syndicate members
  - Non repayment events and dividend issues regarding facilities

Case Study: Case study example: a step-by-step approach to the restructuring of a multinational corporate during recessionary conditions and the resolution of problems which arose during this process

The Leveraged Loan Fallout

• Product features of leveraged loan structures and restrictions this places on restructuring options
  - ABC notes, second lien, PIKs
  - Warrantless and warranted mezzanine debt
  - High yield bonds
  - Warrants and equity enhancement
• Covenant problems
  - Covenant loose, or hybrid covenant deals
  - The growth of non-bank lenders in leveraged deals
  - Underlying concept of a "restricted" group
  - Mulligans, snooze or lose and yank the bank clauses
  - Incurrence
  - Standstill agreements and role of syndicate members
  - Traditional leveraged senior deal change of control triggers versus a classic high yield bond deal

Case Study: Case study example: identifying the restructuring options for a US leveraged transaction in the current economic climate

What are Distressed Corporate Assets Worth?

• Market price versus future value
• Review of main valuation methods and identification of the most useful methods for distressed assets
  - Cash flow methods
  - Multiples and relative value
  - Option based approaches

Case Study: Case study example: valuation of a current distressed asset situation in Europe

Matching the Solution to the Problem

• Solving the financing
  - Debt-equity swap, restructure debt, sell assets, raise new equity
• Change the business
  - Sell businesses
  - Outsource
• Change the management
  - Change of control or ownership – what premium is there?
• Bankruptcy and reorganisation
  - Liquidation, sale or debt restructure
  - Legal reorganisation
  - Role of vulture funds
  - Impact of legal jurisdiction upon reorganisation options

Case Study: Case study example: identifying the problems in an international restructuring and proposing a plan to solve the key issues

Legal Issues in International Restructuring

• Documentation requirements
• Gaps in documentation
• Legal options
  - Differences across different regimes
         * Review of EU legislation
         * Chapter 11 process
         * Creditor friendly regimes versus debtor friendly ones
  - Legal reorganisation
  - Stakeholders with special interests – suppliers, pension trustees, leaseholders, etc
  - Liquidation, sale or debt restructure
  - Role of vulture funds

Managing the Debt Problems

• Identifying solvency problems as opposed to liquidity issues
  - Stakeholder objectives
  - Restructuring framework; proactive, reactive and distress
  - What have we learnt from previous economic downturns?
  - What are the recurrent themes?
  - Non performing lenders in RCFs
  - Obligation to pay commitment fees to non-performing lenders

Remedial Business Plan

• What are the distressed assets worth?
• Addressing the operating problems
• Obstacles to a financial restructuring
• Objective of parties in a restructuring – London Rules
• Cash management – headroom in a revolving credit line, providing cash to continue tradin

Exit options

• Sale of debt in the secondary loan market
• Buy back of debt
• Equity rights issues
• Use credit default swaps to hedge exposure
• Conversion of debt to equity using swaps
  - Valuation of equity in a distressed situation
  - Allocating equity to creditors

Case Study: Case study example of selecting an appropriate exit option in a restructuring situation

This highly practical course will enable you to:

• Understand the current corporate restructuring climate and examine possible restructuring frameworks for the future
• Analyse leveraged loan structures and their restrictions
• Establish what distressed corporate assets are worth
• Develop strategies to match the right solution to your company’s restructuring issues
• Understand the legal issues surrounding international loan restructuring
• Manage debt problems successfully for the future