How the Right Decision at the Right Time Transforms a Business
Prepared by
BIG Strategic Management Consultants
Dubai – India – Spain – Ghana – Singapore
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
3 Fund Restructuring
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
4 Fund Restructuring
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
5 Fund Restructuring
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
6 Fund Restructuring
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
7 Fund Restructuring
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
9 Fund Restructuring
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
10 Fund Restructuring
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
11 Fund Restructuring
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
12 Fund Restructuring
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.
13 Fund Restructuring
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
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