Cloud 9fin Restructuring reflections with Chris Schubert, Alcentra
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Feb 29, 2024 Chris Schubert from Alcentra discusses his insights on the distressed market, lessons from restructuring Ideal Standard, challenges of whitelists, and nuances of the German distressed market. Topics include sector focus, real estate challenges, distressed debt strategies, liability management, and the impact of white lists on restructuring processes.
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Impact of Rising Rates and Maturities
- Higher base rates have doubled the cost of debt, putting liquidity strain on companies with eroding earnings.
- Upcoming €300bn maturity wall to 2026 demands creative refinancing solutions amid market volatility.
Ideal Standard Restructuring Example
- Ideal Standard faced a bond maturity refinancing challenge and chose a below-par exchange offer with 99% bondholder support.
- The deal avoided formal restructuring and led to a successful sale of the company.
Crucial Lessons in Restructuring
- Approach restructurings clearly knowing your creditor position, motives of all parties, and have contingency plans.
- Avoid 'kicking the can' deals that only postpone fundamental issues like over-leveraged balance sheets.