Alternatieve bronnen en vormen van financiering

Transcription

1 Alternatieve bronnen en vormen van financiering 9 november 2012 DACT Treasury Beurs

2 Today s speakers Thijs Alexander (Partner, Corporate) Hein Tonnaer (Counsel, Finance) Pieter van Welzen (Partner, Capital Markets) 9 november

3 Approach Background and introduction Case example Options Questions 9 november

4 Introducing Clifford Chance Amsterdam Established in Amsterdam in legal advisers, including 22 partners and 18 counsels Broad commercial practice with focus on corporate and finance work Well established in the local market with ties to key players Part of an unrivalled global network 9 november

5 Scale of the refinancing wall Estimates vary, but S&P calculate global nonfinancial corporate debt requirements at US$43-46trn to Incremental debt (US$13-16trn) as well as refinancing requirement Debt originally incurred in in benign credit environment Europe particularly affected by wholesale funding model 1 The Credit Overhang: Is a $46 Trillion Perfect Storm Brewing? 9 May november

6 Refinancing sources market constraints The refinancing wall is not matched by refinancing resources Eurozone debt crisis Regulatory squeeze Market constraints Difficult economic conditions Fewer sources of funds/less recycling of capital (CLOs) Banks constrained 6

7 What should a borrower to do? Just as they have always done? Tap alternative markets and funders for capital? Manage their existing financing? A combination of the above? Fund early and fund long (an old saying but still true) John Grout, Policy & Technical Director of The Association of Corporate Treasurers 9 november

8 Noordwijk Industries Shareholder Shareholder Parent Real estate Trade receivables Procurement organisation Strategic projects Current profile, assets and activities 9 november

9 Refinancing wheel of options 9 november

10 Refinancing sources - The Funding Gap Borrowers may need to move to a more flexible capital structure with a wider range of financing Forward starts Corporate Loans Amend and extends Revolving credit facilities Receivables financing Liquidity facilities Trade finance Letters of credit PXF Corporate bonds MTN programs Commercial paper Currency hedging Traditional financing contracts Synthetic loans Local loans Unitranches Private placements Retail products FX High yield Equity /equity linked 9 november

11 What are the options? Asset finance Equity capital markets Refinancing Financing options Debt capital markets Project finance/ project bonds Supply chain finance 9 november

12 Choices and strategy - preparation is key Documentation Impact on organisation Maturity Which options match your funding profile? 9 november

13 Credit rating Investment grade loans complete loan refinancing Typical Investment grade lending terms in today s market Lender Credit Protection Financial Covenants MAC/ Limited MAC Ratings Margin Grid Cross Default/ Acceleration Acquisitions Disposals Indebtedness Guarantee from Operating Cos Negative Pledge Change of Control Mandatory Prepayments AAA AA- No No Maybe Maybe No No No No Maybe Maybe No A+ A- No No Maybe Maybe No Maybe Maybe No Yes Maybe No BBB+ BBB- Maybe Maybe Maybe Yes Maybe Maybe Maybe Maybe Yes Yes Maybe BB+ BB- Yes Yes Yes Yes Maybe Yes Yes Maybe Yes Yes Yes 9 november

14 Investment grade loans - complete loan refinancing (continued) Current themes and trends Negative LIBOR LIBOR floor Eurozone concerns Mitigate sovereign default risk: o Governing law, court jurisdiction, currency and place of payment Increased costs Carve in/out Basel III Gross up risk for FATCA (US tax) If US lender, costs of implementing Dodd Frank US sanctions if US nexus Comfort from Borrower on compliance (Note: potential conflict with other legislation eg to protect equality) 9 november

15 Alternative lenders shadow banking Alternative lenders: a wide range - from investment funds, pension funds, hedge funds and credit funds to corporates Relevant expertise (sectors) Industrial competitors Conflicts Loan size and type Speed Revolving and capex facilities v term debt Bilateral v syndicated Simple v complex credit Capital call notice periods New or extended financing? Reinvestment periods Constitutional and investment criteria restraints Future financing Considerations Direct cost Reduced returns for ancillary business? (bank model) Relationship investor? Loan management Public/non public information Flexibility during life of loan Tax Hidden costs Indemnities Regulatory costs Financial transaction costs and bank levies The unexpected (FATCA etc, and repayment/substitution rights) 9 november

16 Debt capital markets Bonds Nature: Public (listed) Private (private placements) Considerations: Rating Covenants Liquidity Difference with facilities Structured products Conduit securitisation: Trade receivables Inventory Financing via commercial paper Own securitisation vehicle: various funding sources Liquidity providers Use the capital markets to finance loans on limited recourse basis: Funds (equity or debt funded) Securitisation (CLO s) Bonds Role of the bank (arranger, servicer) Borrower position (counterparty) 9 november

17 What is a private investment in public equity (PIPE)? Investment in newly issued shares, mostly for: Financing for acquisition or specific project Restructuring/balance sheet repair Provide certain financing: Can be more certain than a volume underwritten share issue Flexibility in terms of instruments (ordinary or preferred shares; convertible notes or prefs) Pricing 9 november

18 Private investment in public equity (PIPE) Key considerations Execution issues Fairly simple to document Shareholder approval needed? Other approvals (eg for underlying acquisition) Response shareholders: sufficiently compelling rationale? Due diligence access Prospectus Governance issues Board seat? Limitation on exercise of voting rights? Other cooperation with the investor? Control issues Mandatory offer at 30% of votes in AGM Standstill required? Exit considerations Lock up required? Effects of financing to the investor 9 november

19 Conclusion? It is about: Strategy Clear profile Funding in place 9 november

20 Questions? Thijs Alexander Jelle Hofland Hein Tonnaer Pieter van Welzen 20 9 november 2012

21 Alternatieve bronnen en vormen van financiering Clifford Chance, Droogbak 1A, 1013 GE Amsterdam, PO Box 251, 1000 AG Amsterdam Clifford Chance LLP 2012 Clifford Chance LLP is a limited liability partnership registered in England and Wales under number OC Registered office: 10 Upper Bank Street, London, E14 5JJ. We use the word 'partner' to refer to a member of Clifford Chance LLP, or an employee or consultant with equivalent standing and qualifications. Clifford Chance LLP is registered in The Netherlands with the commercial register of the Chambers of Commerce under number For our (notarial) third party account details, please see