Specialist restructurings

Acquisition finance

When a business that has been the subject of a debt-funded acquisition encounters trading difficulties, depending on the severity of those difficulties, this is likely to result in one or more of the following:

1. •

   a relaxation and/or waiver by the lenders of the financial covenant requirements in the financing documents

2. •

   amendments to or waivers of the financing documents to permit actions that would otherwise be restricted by the general covenants

3. •

   the equity holder injecting additional equity into the business to provide more funds for the business to operate, to de-lever and/or cure or pre-empt actual or potential financial covenant breaches, or

4. •

   the need to significantly restructure the financing arrangements of the business (ie implement a 'restructuring')

Amendments and waivers requested in connection with any of the above are likely to require consent fees, increases in margin and/or other accommodations to be given by the company to their financiers in return for granting the relevant amendments and waivers. Certainly, if a restructuring is required, then the pre and post-restructuring capital structure...