Decision at the Right RESTRUCTURING Time Transforms a Business Restructuring by BIG.pdf · How the Right Decision at the Right Time Transforms a Business Prepared by BIG Strategic

How the Right Decision at the Right Time Transforms a Business

Prepared by

BIG Strategic Management Consultants

Dubai – India – Spain – Ghana – Singapore

FUND RESTRUCTURING

DEBT RESTRUCTURING

2 Fund Restructuring

The Story of Wockhardt

Wockhardt acquired

Esparma GmbH

(Brand, Businesses,

Sales and

Marketing

Organization)

May 2004

Public offering of

25 million equity

shares introduced.

But the IPO failed

to garner funds and

was called off by

the promoters as it

got poor investor

response.

January 2008

Wockhardt

Under CDR

Restructuring

A statement to

the BSE,

Wockhardt referred

itself to the CDR

cell through

ICICI Bank

Limited (ICICI)

to restructure its

mounting debts

of over Rs. 38

billion

March 2009

Sold the German

Subsidiary Esparma

GmbH for around Rs.

1.2 bn.

MoU With Vétoquinol

SA to sell animal

health business in

India for an estimated

Rs. 1.7 to 1.8 bn

Sold 10 of its

hospitals to Fortis

Healthcare Ltd for

Rs. 9.09 bn (Rs.

0.052 mn per bed)

Liquidating

Assets

August 2009

Default on

FCCBs payment

consequences

Wockhardt had

defaulted on

repayment of

US$74 million

worth of FCCBs.

On October 31,

2009, the company

reported Rs. 542

million of net loss

in the quarter that

ended on

September 30,

2009

October 2009


Wockhardt’s Turnaround

After 8 quarters of continuous losses. Wockhardt moves into profits.

Company reported a Rs. 1.4 bn profit compared to a Rs. 1.8 bn loss in

same period of previous year.

A Rs. 1.3 billon net profit in the second quarter ended on

September 30, 2011, compared to the Rs. 967 million net losses

in the same period a year ago.

Surprising

Financing

Performance

Q3 Results The net profit had increased by 50% to Rs. 2.1 billion

in Q3FY12 from Rs. 1.4 billion in Q3FY11. In the same

period, sales also increased by 20% to Rs. 11.4 billion

from Rs. 9.5 billion

Turnaround at Wockhardt


What is Debt Restructuring

Debt restructuring refers to

Reallocation of resources

Change in the terms of loan extension

Ease out the temporary difficulties to the debtor

General Debt Restructuring Troubled Debt Restructuring

• Creditor extends the loan period at

low or no interest rates

• Creditor incurs no losses

• Debtor can recover from temporary

financial difficulty and recover the

loan later

• Creditor incurs losses in the process

• Reduction in accrued interest


Debt Restructuring – When & Why

Debt to Equity ratio is very high

Interest expense for the current

scenario too high

If business has export potential

then the domestic debt can be

swapped for foreign debt if the

interest rates are high in India

Debtor gets more

time to pay the

loans

SME gets one more

chance to prevail

from the bottom

Advantages When is it

needed


How BIG Can Help G

RO

WT

H

Thorough Review

of the business

and industry it

belongs to.

Thorough assessment

of the business’

financial structure and

condition (Cash flow

Projections, Financial

Situation and status of

parent entity,

Converting short term

debt into possible long

term plans, etc.)

Expected time to

recover the debts.

Terms of loan

repayment, timely

performance measure

of the debtor to be

provided to the

creditor

Avoid Unnecessary

legal fees, Dealing

with Creditors,

Collection agencies

and Attorneys so that

the business gets back

to generating revenue

Understanding The Business

Financial Status Review & Projections

Outlining Restructuring Strategies

Undertaking the Entire Restructuring Responsibility


PRIVATE EQUITY FUNDING


What is Private Equity P

riva

te E

qu

ity

Fu

nd

ing

becoming a partner, sharing the

risk in the venture

their investment programs while keeping

their balance sheets healthy

experienced advice on financial or strategic

decisions and access to an invaluable network

of contacts

entering the business

structure

usually a business with proven mettle

and promising growth prospects

Equity interest in an unlisted

company

Provision of capital in exchange of

stake in the business

Addresses dynamic companies with high

growth rates in need of finances

Ownership of a company is

restructured

Receiver gets access experienced and

established individuals


Advantages of Private Equity

Small number of large

shareholders

Investors are often actively

involved in the operations of

company

Management normally very highly

incentivised - and the incentives

are aligned with the interests of

other shareholders

Very quick decision making process

- companies can move swiftly and

keep costs down

Happy to employ large amounts of

leverage - probably closer to

optimal capital structure

Very easy to effect management

change

Less regulation

and

little disclosure

Potential high rewards tend to

attract very talented individuals to

both Private Equity and Private

Equity-backed companies


Key Challenges Faced by SMEs

Access to Finance

Access to People/ Talent

Access to Technology & Environmental

Constraint

Access to Markets

Access to Infrastructure

Private Equity Funding could help SMEs

overcome these challenges


How BIG Can Help? G

RO

WT

H

Thorough Review

of the business

and industry it

belongs to.

Thorough

assessment of

the business’

financial

structure and

condition

Development of

the most feasible

strategy for

infusing funds in

the business

Finding potential

investors, their

detailed profiling,

facilitating

interactions and

finalising the

most suitable

investor

Preparation of the

long term fund

disbursement

strategies, exit

plans, financial

growth plans

Understanding The Business

Financial Status Review

Strategy Formulation

Finding PE Investor

Long Term Strategies


About BIG Strategic Management Consultants

• BIG Strategic Management Consultants, established in 2008, is a fusion of the vast experience of

industry veterans and the vitality of the young blood, which blends to give superior consulting services

to both domestic and international clients in fields as diverse as strategic consulting, technology

consulting, financial consulting, market research and analysis, feasibility studies and manpower

planning.

• We are a Management Consulting firm based in Dubai and having our offices in India, Spain, Ghana

and Singapore.

• We are specialized in developing Strategies for Corporates for Growth and Turnaround, Preparation of

Detailed Financial Viability Studies, Preparation of Detailed Business Plans, Developing

Cost Optimisation Modules, Conducting Business Process Re-Engineering, Conducting Market

Opportunity Assessment for New Entrants and New Geographies, Conduct Risk

Assessments, Performing Financial Structuring and Re-Structuring for clients, Assist Clients raise funds

from Financial Institutions and Private Equity Funds Conducting Consumer Surveys, Employee

Satisfaction Surveys, Valuation Studies, Offer Project Management Services and Identify and Conduct

Joint Venture / M&A Deals.


BIG Strategic Management Consultants

4, Hindustan Kohinoor Complex, LBS Road, Vikhroli (W), Mumbai – 400083

Tel: 91-22-25790058 / 59/ 61

E-mail id: [email protected]

Website: www.big-consultants.com

Thank You

14

UAE (Head Office)

Big Strategic management

Consultants FZC

# 806, Rose 6, TECOM,

Dubai, UAE

Tel: 00971 4 4325975

Ghana

BIG Strategic Management

Consultants - West Africa

World Trade Center, 4th floor,

P O Box CT 8267 –

Cantonments, Accra, Ghana

Mob: 00233 506425900

Spain

Big Strategic Management

Consultants

Mazustegui 21- 3a entreplanta

izquierda 47806 Bilbao

Vizcaya, Spain

Tel: 0034 674155370

mailto:[email protected]



http://www.big-consultants.com/



Documents

Decision at the Right RESTRUCTURING Time Transforms a Business Restructuring by BIG.pdf · How the Right Decision at the Right Time Transforms a Business Prepared by BIG Strategic