Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bankers and lawyers prepare for spate of company rescues as coronavirus bites

EconomyMar 17, 2020 14:05
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Abhinav Ramnarayan and Karin Strohecker

LONDON (Reuters) - Law firms and banks are scrambling to retrain senior staff in restructuring so they can help dozens of companies looking to raise emergency funds and rearrange debts as the coronavirus pandemic eats into corporate cash.

Lawyers and bankers said companies mainly in the transport, travel and retail sectors had made the first approaches but in the next few months there could be a far wider range of firms as lockdowns and social distancing measures hit economies hard.

World stocks suffered their worst run since the 2008 financial crisis last week on fears the pandemic could wreak havoc on the global economy, and spell disaster for many firms.

"It has been pretty much non-stop," said a partner at a major U.S. law firm, who has been on calls all day since Friday and had four deals closing on Monday alone.

"These have been pre-arranged deals but the timing has been accelerated with people being concerned that some will get cold feet - and they involved very large sums of money," said the partner, who declined to be named.

"We are reassigning people from other areas to help our restructuring business ... we are rolling out a bunch of virtual training sessions to our whole UK office," he said.

A lawyer who normally works on stock market listings, or initial public offerings (IPOs), at a firm in London said he had been tasked with focusing on the rising demand for rescue deals.

"We've been working all weekend on a balance sheet fund-raise and received another couple of RFPs (request for proposal) for rescue rights issue-type transactions," the lawyer said.

British luxury carmaker Aston Martin (L:AML) announced new terms for a rescue rights issue last week and South African chemicals and energy firm Sasol (J:SOLJ) announced a rights issue on Tuesday as part of a $6 billion package to address challenges from COVID-19 and a drop in oil and chemical prices.

Japan's biggest steelmaker Nippon Steel Corp (T:5401) also said on Tuesday its joint venture with ArcelorMittal (AS:MT) had signed a $5.15 billion loan deal with Japanese banks to refinance their acquisition of ArcelorMittal Nippon Steel India.

SCRAMBLE FOR CASH

Several other firms are close to announcing plans to raise funds to fend off a cash crunch, bankers and lawyers told Reuters, saying they had been fielding dozens of calls.

"Financial distress caused by the coronavirus is going to have the biggest impact on those companies that may be struggling already or are in sectors that are already facing challenging headwinds," said Joel Ferguson, a partner in Allen & Overy's global restructuring group based in London.

Many bankers also reported being inundated with pitches for rescue deals, while regular fundraising is being accelerated as firms try to grab cash while they can.

"We are very busy with a chunk of rescue rights issue RFPs and mandates - I spent most of the weekend looking at several new potential deals," said one banker who heads equity capital markets for a major investment bank in London.

Bankers said much of the work was trying to figure out how to tweak and repurpose existing plans to find the missing pieces in the funding puzzle - and keep the financing coming in.

"The traditional advisory stuff has come to a complete halt and transactions are getting pulled and delayed. The discussions even our traditional bankers are having are around what kind of measures can be taken preventatively," said one restructuring expert at an investment bank.

"The speed of the events is kind of the biggest challenge. The situation is changing day by day, hour by hour, this is the biggest difficulty for any kind of broad solution."

The scramble for cash bears echoes for many of the financial crisis fallout. Then it was real estate firms hitting the skids, keeping lawyers busy redrafting documentation prepared for stock market launches to allow for rights issues instead.

As of now, most firms are focussing on internal cost-cutting solutions and drawing down credit facilities, two lawyers said.

But they said this was just the first stage and it was only a matter of time before announcements of large distressed, restructuring and rescue deals start hitting the screens.

Bankers and lawyers prepare for spate of company rescues as coronavirus bites
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email