德勤全球-Addressing最金融冲击的-COVID-19_1页_279kb

Summary: Addressing the Financial Impact of Covid-19

Core Content

The document discusses the financial challenges faced by companies due to the operational disruptions caused by the Covid-19 pandemic. These disruptions include staff quarantine, supply chain failures, inventory issues, and reduced customer demand, which have led to significant cash flow problems across various sectors. The focus is on identifying and implementing credit solutions to address urgent liquidity needs, especially for well-capitalised companies that are now experiencing financial strain due to the unprecedented nature of the crisis.

Main Points

• Operational Disruptions: The pandemic has caused widespread operational issues, including staff quarantine, supply chain failures, and reduced demand, leading to severe liquidity and working capital challenges.
• Financial Impact: Revenue lost during the crisis is often considered a permanent loss, putting pressure on companies' liquidity and working capital lines.
• Credit Solutions: Companies may need to seek temporary increases in credit facilities, covenant resets, or waivers from their banks. Some may require bespoke, short-term financing solutions.
• Collateral and Risk Management: There is a need for expertise in structuring collateralised and unsecured loans, as well as in managing working capital and identifying cost-out measures.
• Preemptive Planning: Even for companies not yet affected, it is advisable to secure new committed facilities as a contingency plan for prolonged disruptions.

Key Information

• Urgency of Funding: The need for financing is urgent, and traditional credit products may not suffice. Companies must be prepared to act quickly.
• Collateral Considerations: Companies may need to explore alternative sources of collateral, including property, inventory, receivables, and other unencumbered assets.
• Special Situations Funds: These funds are capable of deploying capital flexibly and creatively, and Deloitte has access to a network of over 200+ financing providers.
• Existing Lenders: Incumbent lenders are typically the best starting point for financing, and Deloitte can assist in formulating requests for support efficiently.
• Need for Expertise: The document highlights the importance of having focused teams with experience in credit structuring, liquidity initiatives, and working capital improvements.

Questions to Consider

• How much money do we need? For how long?

  • Companies should reforecast trading and cash flows, including revised assumptions and downside scenarios.
  • They should take rapid action to improve working capital and identify quick win self-help measures to enhance cash flow.

• How do we slot this new money into our existing capital structure?

  • Review existing facility and intercreditor documentation to understand borrowing capacity.
  • Identify potential collateral sources and explore innovative ways to value and transfer assets.
  • Seek consents as needed for new financing arrangements or collateral use.

• Who could we borrow from? What terms can we expect?

  • Consider both incumbent lenders and special situations funds.
  • Deloitte can help match companies with appropriate financing providers and produce term sheets tailored to the company's needs.

London Contacts