How to make quick and effective restructuring of companies in Russia
Restructuring of companies in Russia
At moments of turbulence, plans and projections made during quiet times cease to be implemented, while previous approaches to doing business are no longer practical. Everything changes the supply and demand structure, payment terms with suppliers and customers, interest rates on bank loans, and access in principle to debt financing. Changing the business in line with the new realities becomes key to survival for companies and banks.
Restructuring the loan portfolio is a priority, enabling the borrower to stabilize its position and win time for operational changes and business performance improvements in the new realities.
Lenders are just as interested in the restructuring of the loan portfolio as the borrower: the level of recoverability of restructured loans exceeds many times the amount that the bank will receive from litigation, the recovery of collateral, and the bankruptcy of the borrower.
At the same time, however, banks and companies can find it hard to understand each other and agree on mutually acceptable terms. This is particularly true if the loan portfolio includes different lenders — state and private, foreign and Russian banks, and further, including complex, loan products.
Engaging a restructuring consultant will help to simplify and speed up the process, as:
- The consultant organizes the restructuring process professionally, whereas the need for restructuring is a force-majeure circumstance both for the business and the lenders. The consultant knows the strategies that should apply in different situations, how the procedures in place at lenders work, what is required from the borrower and how to find and implement the best solution for all parties.
- The consultant assumes the roles of mediator and intermediary in the negotiations between lenders and the borrower. The consultant knows how to talk like a banker and a businessman, and understands the requirements of both parties, thereby significantly enhancing the effectiveness of the negotiation process.
Why Russian lawyers
Since 2012, Valen Group has been working in Russia with highly leveraged companies. Since 2012, our restructuring department has overseen some significant restructuring engagements in Russia and the CIS. Our restructuring team has experience working with companies in almost every industrial sector.
In our work, we draw on Russian and international experience, engaging experts from Russian lawyers firms as and where necessary. When we work on engagements, we engage experts from different areas of knowledge: financial analysis, taxes, debt finance, operational restructuring, mergers & acquisitions, etc.
How Russian lawyers Can help
The action of a business plan and financial model
Before developing detailed restructuring options, a robust cash flow forecast needs to be prepared. To this end, we examine the current position at the company and the market movements and bring out a thorough analysis of management’s existing plans and assumptions. At this stage, we usually create a company’s financial model, which then serves as a key tool in the restructuring negotiations. If the company already has an economic model, we test it and make any required adjustments before utilizing it as a basis for updated projections.
Development of debt restructuring options
After developing a robust cash flow forecast, we work with the client to identify debt restructuring alternatives acceptable for the company, performing scenario modeling for each. The restructuring recommendation made to the creditors includes a description of the situation, the business plan developed, and the debt restructuring options proposed by the company. If required, we support you in negotiations with the bank by organizing a presentation on the debt restructuring proposal and acting as a moderator.
Operational Restructuring
It is often the case that operational restructuring programs triggered by financial distress are not planned thoroughly enough or adequately implemented and, as a result, do not achieve the desired results.
We have operational restructuring specialists who can work as part of your team and help you to:
- find more opportunities for cash flow improvement
- convert a more significant proportion of options into real savings
- make it all happen more quickly
- avoid the mistakes we have seen made elsewhere
Restructuring is our day job, so we bring experience, share best practices from other companies, and provide a proven methodology that can be quickly tailored to match your situation. If you feel you may need our assistance, please contact us to discuss how we can help you.
Working Capital Management
What’s on your mind?
- A lack of cash to finance CAPEX and service debt, with limited opportunities to raise additional external financing
- Excessive working capital
Your questions
- Is the current level of working capital optimal for your company?
- How does your company’s cash turnover compare to that of your competitors?
- Can cash be released from working capital to finance other expenditures without damage to the business?
How Russian lawyers can help
Our experience shows that in many CIS companies working capital is not managed correctly, is excessive, and can be reduced with cash released back to the business. The size of such a potential release is sometimes comparable to annual free cash flow.
We analyze the structure of and historical changes in each component of the company’s working capital.
We benchmark your working capital against your peers.
We use the results of this analysis and our review of the working capital management processes to determine the realistic potential for reducing working capital and releasing cash and draw up a detailed optimization plan.
Why Russian lawyers
Having extensive experience in working capital optimization, we understand management’s needs and the specifics of doing business in different sectors.
Valen Group’s international knowledge and the experience of our professionals about working capital enable us to work effectively with our clients worldwide and share relevant information quickly.
Cash Management
What’s on your mind?
- A lack of cash to finance CAPEX and service debt, with limited opportunities to raise additional external financing
- A lack of a centralized approach to payments at the Group’s companies
Your questions
- Is the current level of cash optimal for the Group?
- Can money be released from working capital to finance other expenditures without damage to the business?
- Does the cash management system fit the needs of the company?
How Russian lawyers can help
We perform a comprehensive analysis of cash inflows and outflows for each Group’s company. From this analysis, we determine the optimal cash balance for the Group and develop a unified payment management system aimed at minimizing the cash balance.
We analyze the cash control procedures and optimize the business processes and the cash management regulations.
We review the cash flow planning and reporting procedures.
Why Russian lawyers
With significant experience in cash management structure optimization, we understand the needs of the business and the importance of timely control and effective planning about cash flows.
Valen Groups’ international knowledge and the experience of our professionals in cash flow management enable us to work effectively with our clients worldwide and share relevant information quickly.
What’s on your mind?
- It would be best to increase cash flows as quickly as possible to continue servicing a debt.
- You have debt servicing problems and need to strengthen relations with creditors.
Your questions
- Can the business’s income be increased quickly without significant investment?
- Can expenditures be reduced promptly without damage to the company?
- Can idle/non-core assets be sold quickly?
- How far can working capital be reduced without damage to the
- Business? Can external investors be drawn to the company?
How to engage service from Russian lawyers in Moscow
- Please tell us your business and which kind of service you need;
- Reply a few questions;
- We’ll conclude business profile and contact you in shortest period of time.
How Russian lawyers can help
We carry out a thorough but quick review of all aspects of your business, assuming all the existing options for increasing liquidity. Such alternatives usually fall into two categories: improving working results (measures aimed at a one-time increase in income and reduction in costs) and increasing net cash flow (optimizing working capital, selling non-core assets, and attracting external investors).
We then use the analysis results to determine the realistic potential for increasing liquidity and develop a detailed action plan.
Why Russian lawyers
Russian lawyers have the most experience of debt restructuring engagements in Russia and the CIS. We provide financial advisory services for all the major debt restructuring projects in the CIS, involving tens of millions of euros worth of debt, and work on smaller projects.
Our extensive experience allows us to quickly identify possibilities for rapidly rising cash flows and provide you with realistic solutions.
