debt & capital advisory · 2017-12-01 · pwc debt & capital advisory –can assist you in...

Debt & Capital Advisory


December 2017

Introduction to PwC Debt & Capital Advisory

1

PwC

December 2017

PwC Debt & Capital Advisory is a team of specialist providing independent financial advisory services to clients in debt financing or capital raising

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1 PwC Debt & Capital Advisory

Carl-Wilhelm LevertDirector - Head of Debt & Capital AdvisoryStockholm

Christoffer AdrianSenior Manager – Debt & Capital AdvisoryStockholm

Christer BoisDirector – Debt & Capital AdvisoryStockholm

Henrik BorgfeldtAssociate – Debt & Capital AdvisoryStockholm

Daniel JohanssonSenior Manager – Debt & Capital AdvisoryStockholm

Assist in competitive capital raising

process

Deal structuring

Investment presentation

Support in dialogue with debt and

capital markets

Quick process to market

Competitive through wide range of

financing sources

PwC

PwC

December 2017

Borrowers may face financing situations such as…



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Expansioncapital

Buyouts

RefinancingAsset

financing

Recap-italization

Procurementof financing

Acquisitionfinancing

Cash out

Financing situations

Cash out

You want to recapitalize in order to pay out dividends. Additional proceeds raised through a

debt raising process will be paid out to shareholders

Buy outs

You are aiming to buy out one or more owners in a take-private transaction or to gain further control and ease decision making processes in

the company

Expansion capital

You have growth plans that for example include expansion or restructuring of operations, product development or entering a new market

Acquisition financing

You are aiming to acquire a business and need additional capital to meet your acquisition aspiration. The acquisition can be new or a follow on acquisition

Refinancing

You want to replace an existing debt obligation and attain a change in terms

Recapitalization

You want to change the company’s capital structure. The aim can for example be to stabilize or implement an exit strategy

Asset financing

You are aiming to finance large capital expenditure and seeking to obtain best

possible terms and conditions on asset-backed financing

Procurement of financing

You are running a competitive financing process with various lenders and need support to manage

process, maintain dialogue with financiers and compare and analyse offers

PwC

December 2017

Questions we regularly hear from our clients and can help with

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I keep reading about alternative lenders and funds - who are they, what do they do and how do I reach them?

My long-term relationship banks have hit their exposure limits - who should I go to now?

What is the most efficient way to fund growth in my business?I'm running close to

covenants and my lenders are making noises - what's my best course of action?

I've always sourced financing from the banks. Is it time to access the bond markets?

What is the best way of returning capital to shareholders?

Would a credit rating help me access cheaper funding? How do I go about this?

Should we fix interest at current rates?

How do I know that I’m getting the best deal?

How do I protect my business and best position it for future recovery?

Swedish debt & alternative credit market

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PwC

December 2017

Development in Swedish capital markets

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2 Swedish Debt Market

04

01

02

03

• Historically the majority of Swedish non-financial corporations debt financing from bank loans – typically relationship lending

• Strong banking sector

Strong corporate lending market

• Basel III banking regulations are expected to increase the price on bank loans to corporations and to decrease the supply

• Swedish banks and financial institutions anticipate a growing demand for Swedish corporate bonds.

New regulation

• Large corporates benefitting from attractive lending and strong demand in bond markets

• Reduced bank lending to SMEs due to stricter regulation

• Funding gap

Funding gap for SMEs

• SMEs turning to new sources of financing and alternative debt financing options

• Growing direct lending market

Increased use of alternative lending

PwC

December 2017

Development in Swedish capital markets (cont.)

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Strong relationship lending market in Sweden1 Growing bond financing market2

Corporate Funding Mix - Reliance on bank loans

US EU Sweden

Low High

• Traditionally strong banking relationships/spheres of influence with designated “house banks” supplying funding at attractive terms to corporates

• Limited tradition of corporates (SMEs) seeking and obtaining credit rating

• Large Swedish multinationals have moved into the international bond markets directly

• Non-financial companies’ borrowing on the fixed-income market has increased to one-fifth of the non-financial companies loan-based funding

• Majority of funding (approximately 70%) still provided by commercial banks

Source: Swedish Central Bank, PwC analysis

817 812 768 753 741 802 796 761 801 794

685 747 821 937 1,0351,105

1,2411,159

1,223 1,26791

115196

298290

290297

372

509 538

1620

21

1818

18

30 40

6389

120117

143

164169

188

192 210

283330

7181

90

8871

78

94 70

115

136

-

500

1 000

1 500

2 000

2 500

3 000

3 500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

bn

SE

K

Issuers on the Swedish bond market (bn SEK, 2005-2014)

Central government Mortgage institutions

Banks Municipalities & county councils

Non-financial corporates Other credit market corporates

PwC

December 2017

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Trends in the alternative credit market

01 Increased liquidity

• Credit funds and direct lenders supply liquidity back to mid-market

• Larger funds are increasingly able to operate in the upper mid-market

• Loan volumes are recovering

• Lenders are increasing their lending targets

Intensified competition

• The use of alternative lenders are increasing in Europe

• Competition increase between both lenders and debt products02

Improved

borrowing terms

03• Increased competition between lenders improve borrowing terms

and bring a range of new products to the market.

• Erosion of covenant packages

• Alternative debt products provides significantly more leverage

PwC Debt Advisory

3

PwC

December 2017

PwC Debt & Capital Advisory – can assist you in obtaining appropriate, long-term sustainable financing for your business

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3 PwC Debt Advisory

We find the best solution for you with no bias toward the product or financing parties to be used

Our independence means we provide objective and expert advice on optimal debt structures

Why PwC?

We know how to ‘frame the ask’

We have experience of presenting to lender credit committees. We know how lenders think

Our expertise and resource allows you to run your business while we arrange your financing package

We are a well resourced international team, providing us with the experience of driving a financing process and ensure we deliver the best terms, on time

We will access the relevant sector experience in our global network to address your specific transaction issues and create value for you

We consider all options available to drive the most appropriate funding options and solutions for you

We have expertise across a range of products including senior and subordinated debt loans, hybrid products, high yield bonds, private placements and real estate

We place high priority on developing sustainable financing structures that help you achieve your financing objectives within appropriate debt market parameters

We have access to a diverse investor community of over 200 global investors, which provides current market liquidity and pricing guidance

We tailor our approach to the financing requirements of our clients and target the right lenders for each opportunity

PwC

December 2017

PwC can assist you in every phase of the investment lifecycle

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3 PwC Debt Advisory

Inv

estm

ent

life

cycl

e

Investment

• Acquisition debt finance raising• Capital expenditure programme and

working capital finance raising• Construct financing solutions

appropriate to the business and assets being funded

• Advice through public/private bond issuance, including rating advisory

Growth

Maturity

• Solve upcoming debt maturity issues• Debt market assessment to optimise finance costs• Identify and structure alternative non-bank

sources of capital • Sell-side staple finance raising• Debt discovery exercise to confirm

market appetite and underpin price• Recapitalisation and equity release

• Options assessment, liquidity solutions and covenant renegotiation• Modelling of sustainable debt capacity in the business• Stakeholder management and facilitation of consensual solutions• Investigate alternative sources of fresh capital• Restructure debt to stabilise the business and preserve value

Negotiate commercial

loan documentation

Analyse and advise you on optimum offer

Run competitive debt process to optimise offers

Identify appropriate

lenders / investors

Identify best solution /

product

Understand financing

issues / need

~1-3 weeks ~3-6 weeks~1-2 weeks

Our typical process

Realisation Realisation

Distress/ restructure

PwC

December 2017

Helping clients to make confident debt decisions throughout the cycle

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3 PwC Debt Advisory

Lifecycle stage Your objective How PwC is able to support

Distress/ Restructure

“How do I protect my business and best position it for future recovery?”

• Sustainable debt capacity and options analysis, including covenant renegotiation

• Stakeholder management and facilitation of consensual solutions

• Investigate alternative sources of new capital

• Restructure debt to stabilise the business and preserve value

“What is the most efficient way to fund growth in my business?”

Growth/Investment

• Deliver a competitive financing process to get the best deal for you

• Raise finance for bolt-on or transformational acquisitions

• Raise capital expenditure or working capital facilities

• Leveraged buyout financing for financial sponsors

Maturity“How do I know that I’m getting the best deal?”

• Solve upcoming debt maturity issues

• Optimise finance costs

• Identify and structure alternative non-bank sources of capital

• Advise through public/private bond issuance and credit ratings process

Realisation“What is the best way of returning capital to shareholders?”

• Optimise working capital, operating costs and EBITDA ready for sale

• Return of capital to shareholders via dividend recapitalisations

• Implement pre-arranged ‘staple’ financing packages for potential buyers

• IPO financing packages

PwC

December 2017

Overview of financing options

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3 PwC Debt Advisory

Bank loan

Large liquidity on the market

Provides confidence to other lenders

× Demands amortization for highly leveraged businesses

× Relatively high demands on the borrowers financial position

Bond/Private

placement

Lower regulatory demands on the issuer

Lower interest

Possibility of a longer maturity with fixed interest rate

Control is kept within the company

× Interest rate is dependent on the credit rating of the bond

× Low flexibility in regards to interest payments

Preferred stock

Has no maturity

Classified as equity

No voting rights contrary to common stock

Can be bought back to a pre-determined offer

× Dividend is made with taxed capital

× The company can not cancel dividends, unless it is also cancelled for common stock, and doing so entails a fee

Convertible debt

Low coupon

Interest rate tax deductible

The debt “disappears” if converted

× Uncertain if convertibles are to be payed back or converted

× If converted, equity is diluted

New share issue

No interest rate payments

Classified as equity

Improves financial ratios

With a directed issue the process can be simplified and faster

× Equity is diluted

× Can give the impression that the share price is over-valued

× If a directed issue, exclusion of investors

Alternative credit market (mezzanine/unitranche)

Can lend to businesses not suited for bank loan

Offers a high flexibility in the design of the instrument

× Can include restrictive covenant, that also could restrict how the capital is used

× More expensive than more senior loans

PwC

December 2017

PwC has built an extensive network of financiers including…

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3 PwC Debt Advisory

Commercial banks Multilateral banks etc Bond arrangers Credit funds

PwC offers an extensive network of lenders. We maintain a close relationship with key market players enabling us to provide a competitive landscape for debt financing. By leveraging our extensive network of lenders as an independent advisor we ensure the most optimal financing solution for borrowers

http://www.ingbank.nl/

http://www.ingbank.nl/

PwC

December 2017

PwC Debt & Capital Advisory has an unrivalled global presence…

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3 PwC Debt Advisory

PwC Debt & Capital Advisory has unrivalled global presence. Every local PwC team has unique access to local liquidity but it is the interconnectivity within the global PwC firm that makes it truly powerful when put to use for our clients

Carl-WilhelmLevert

OwenLewis

PiotrZdrojewski

SoerenKviewgaard

John Williams Ard

Burgers

Daniel Judenhahn

HervéColson

StephenOldfield

GianandreaPerco Aykut

Tasel

MatthewWilde Girish

Sahajawalla

Diego A.Martinez

AntónioRodrigues

Stephanie Hogue

ShoichiOka

MatthewSantoro

JoseBraga

This publication has been prepared for general guidance on matters of interest only, and does not

constitute professional advice. You should not act upon the information contained in this publication

without obtaining specific professional advice. No representation or warranty (express or implied) is given

as to the accuracy or completeness of the information contained in this publication, and, to the extent

permitted by law, Öhrlings PricewaterhouseCoopers AB, its members, employees and agents do not

accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else

acting, or refraining to act, in reliance on the information contained in this publication or for any decision

based on it.

© 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms,

each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details.

www.pwc.se/en

debt & capital advisory · 2017-12-01 · pwc debt & capital advisory –can assist you in...

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