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Debtor Advisory

Overview

Businesses that want to raise debt finance, refinance, or obtain waivers and amendments to existing finance arrangements, can face an unpredictable response from their lenders, even if their banking relationships have historically been strong.

From family owned businesses to multinational corporations, we have considerable experience helping companies in financial distress. Whether it’s dealing with the demands placed on them by their lenders, or coordinating and negotiating on their behalf with creditor groups, the ultimate objective is always to reach a workable solution with all concerned parties.

We work with management to deal with financial underperformance by stabilising the business, managing key stakeholder relationships and building a strong platform for the future. We can help you to focus on your working capital cycle to maximise liquidity and free cash flow.

We can introduce experienced turnaround professionals to take on executive or advisory roles, such as non-executive directors, advisors/mentors to boards and operations.

When companies are experiencing financial difficulties, we can help source potential investors and take a hands-on role should a formal insolvency proceeding such as Bankruptcy Administration or Bankruptcy Reorganisation be required.

Please refer to ‘Onshore-offshore distressed situations’ for more information regarding cross-border services and refer to ‘Debtor advisory’ for information regarding our debtor advisory services in Hong Kong.

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Potential issues

Whatever the cause of your challenges, if your business is confronted by any of these scenarios our debt advice expertise could help:

  • the company is trading at distressed levels.
  • a credit rating downgrade is looming.
  • a key stakeholder group has lost confidence in the existing team and is demanding repayment or change
  • you need to enter into discussions with your lenders to reschedule or refinance loans.
  • you lack the resources to cope with the additional pressures of managing the business in its current situation.
  • your board members or senior management have departed.
  • you want to raise funds, or refinance, by selling part of, or the entire share capital of a listed company.
  • as a stakeholder in a distressed business, you need to manage your exposure, both legal and financial.

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Support

We believe in working closely with senior management and the board as early as possible. That way we can help define and develop a comprehensive range of solutions. We can then work with you to assess each option and assist senior management when it comes to implementing the preferred solution.

 

Services for companies experiencing financial difficulty

  • Negotiating amendments to existing finance terms, including covenant amendments and waivers, and debt rescheduling.
  • Advising on the appropriate form and structure of the company’s debt restructure plan, with the aim of negotiating continued support from lenders.
  • Providing optimal value for corporates by disposing of, or reinvesting in, a non-core or under performing asset, or in a distressed business.
  • Leading the debt restructure and turnaround process and coordinating the work of all other professionals involved.
  • Acting as a link between the company and its lenders to enable the company’s senior management more time to focus on running the business.
  • Providing working capital benchmarking to identify potential improvement opportunities.
  • Performing diagnostic review to identify quick wins and longer-term working capital improvement opportunities.
  • Developing detailed action plans for implementation to generate cash and make sustainable improvements.
  • Implementing robust, efficient and collaborative processes to assist in the realisation of sustainable working capital reduction.

 

 

Debt restructure

  • Analysing the financial situation of the company and providing advice on the options for recovery.
  • If the entity is listed overseas, advising on any regulatory requirements of the Securities Regulatory Commission and the Stock Exchange.
  • Advising on any announcement(s) to be made in relation to the company’s current and future financial position, including liaising with the Stock Exchange and Securities Regulatory Commission on the company’s behalf (if a group is listed overseas).
  • Finding potential new investors and potential buyers of group assets/businesses and, if desired, negotiating with them on the company’s or shareholders’ behalf.

 

 

Interim management

  • Introducing new management to provide leadership to the business during the turnaround phase.
  • Managing stakeholder relationships while the CEO remains in control.
  • Providing operational support, such as building a business plan that is supported by actions including key performance indicators for short to longer-term strategies to achieve recovery and growth.

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Our experience

  • Acted as the interim general manager of a company in China to stabilise the business after prior mismanagement. New workplace policies introduced and operations streamlined to build a foundation for sustainable future improvement.
  • Reviewed the business of a China property developer to help its foreign shareholder, based in Macau, make more strategic decisions based on our debt advice.
  • Conducted a business review for a wind farm in Changchun, China, as part of the company’s efforts to negotiate the refinance of a loan.
  • Conducted a business review of a wholly-owned China subsidiary of a German engineering company, including a review of accounts receivables and inventories (over RMB600 million of book value in total). We also interviewed management about the internal control system and provided solutions on overdue payments.
  • Supported our UK colleagues on a capital diagnostic and improvement assignment involving the China subsidiary of a UK-based chemical manufacturing group. Our work included a short-term action plan to improve receivables performance and decision matrixes to help management prioritise initiatives. The exercise identified potential working capital improvements of RMB107 million to RMB265 million, ready to be realised in 12 to 18 months.
  • Together with PwC colleagues in Austria and Germany, we conducted capital management workshops for the top management and China team of an Austrian-based manufacturing group. The workshop led to process flow charts and RASI Schedules (Responsibility, Accountability, Stakeholder and Information); gap analysis between commercial invoiced and tax invoiced stock; and a top 10 customer AR action plan.
  • Acted as the financial adviser of a TV producer in Beijing, China. Successfully identified investors for all remaining assets, arranged for termination of remaining employees, and negotiated a settlement plan with suppliers.
  • Acted as the provisional liquidators of a PRC company listed on the stock exchanges of Hong Kong, Singapore and Taiwan. We preserved the assets of the company and invited interested parties to submit debt restructure and recovery proposals in order to resume trading of shares.
  • Acted as adviser to the provisional liquidator in Bermuda of a listed group engaged mainly in logistics and distribution of petrochemical products in Asia Pacific, especially in China. The group employed over 500 employees and had US$1 billion of debt.
  • Acted as the financial and interim management adviser to a government body on the debt restructure of a public bus operator with over 500 employees and 250 buses. Apart from providing debt advice, our wide involvement comprised takeover planning, sales of assets and introduction of new investors. Total investment by new investor: US$24 million.

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Contact us

Victor Jong

Victor Jong

Mainland China and Hong Kong Restructuring & Insolvency Leader, PwC Hong Kong

Tel: +[852] 2289 5010

Tim Guo

Tim Guo

Partner, PwC China

Tel: +[86] (21) 2323 2610

Christopher So

Christopher So

Partner, PwC China

Tel: +[852] 2289 2577

Chen Lau

Chen Lau

Partner, PwC China

Tel: +[86] (10) 6533 2208

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