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The right finance at the right time
When times are hard, cash is king. Commentators suggest that the companies who emerged from the last recession as sector leaders had typically an average net debt-to-equity ratio about half that of their less successful competitors before the downturn hit. The winners also held more cash on their balance sheet than the losers.
In the current climate, companies could be forgiven for thinking that their chances of refinancing their debt are slim but debt funding is still available to businesses with a well thought out plan and a robust cash position.
Case Study
UK food producer
After suffering a 40% decline in sales and with temporary finance arrangements frozen at £25m, PwC was appointed to advise on a financial and operational restructuring this UK food producer.
The role initially entailed establishing a stable financial platform by leading a £55m debt re-financing, which doubled debt facilities and significantly reduced interest costs. Subsequent phases have involved helping the company to identify potential cost cutting and revenue enhancement opportunities, introducing a Chief Restructuring Officer and assisting him in the implementation of an operational restructuring.
© 2008 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
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