Covenant Advisory Meet the team Summer 2018 - EY
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Covenant Advisory Meet the team Summer 2018
Why EY
Our national award winning and friendly team is experienced in advising in all matters
relating to covenant with the ability to draw on the strengths of a global firm for
sector insights. This short document provides an overview of our team, the services
we offer and our methodology. At the back of the document we provide brief CVs of
our core team.
1
Highly experienced team
Our team has considerable experience in the industry, advising on a wide range of situations. Whilst we advise on some of the most
complex, high profile cases we also advise a broad range of schemes and corporates of all sizes.
2 Deep sector expertise
We have significant experience of working across a number of key sectors with the ability to pull sector expertise globally from within EY.
3
Collaborative and proportionate
stee-centric
We work extensively with trustees, corporates, lawyers, actuaries, investment advisors and
the Pensions Regulator, enabling us to understand the perspectives of all key stakeholders
and to bring a collaborative and proportionate approach that helps achieve optimal
Tru
outcomes while appropriately managing costs.
EY
4
Proven covenant methodologies Desired outcome
We have proven methodologies for covenant assessment, corporate transactions,
monitoring and scenario planning which will deliver a robust view of covenant and risk to Scheme
Company
Advisors
support an integrated approach to your funding strategy.
ol
la b es
C
5 s
orative proc
Clear and concise reporting
Our reporting is tailored to each situation to make sure that it is clear, concise and focused
on key issues. This improves efficiency in both decision-making and helps manage costs.
Covenant Advisory Meet the team 1
Who we are
A highly experienced, Core team Scotland
multi‑disciplinary team Jamie MacKenzie
operating throughout the UK.
We love what we do and our Sarah Paul
clients tell us we provide them
with great advice.
Karen Kirkpatrick
Leeds
Trevor Oates
Manchester
Mike Holford
Birmingham
Paul Taylor
Rachel McCarthy
London
Taylor Dewar Chris Steven Sacha Kilner
Karina Brookes Heather Walker Kathryn Todd
James Berkley Jo Nicholson
2 Covenant Advisory Meet the team
Client Testimonials
“James is very strong, is good at listening to what
“You did an awesome job for the trustee and we’re describing and providing advice that is
the regulator.” relevant. His advice is measured, to the point and
Non-exec director, support services he’s got a nice thoughtful reflective style.”
FD, household name
“The trustees breathed a collective sigh of relief
“EY has an encyclopaedic knowledge of the UK
that they were in good hands. Heather, you came
Pension landscape.”
across well & knowledgeable.”
Vice President, retailer
Chair of Trustees, listed IT services provider
“Taylor — really impressive and very highly “Mr Dewar is a highly experienced employer
regarded. His approach and style is positioned covenant specialist whose evidence was careful
well and both listens as well as listened to. and measured. I found him to be an impressive
Helping to drive progress rather than tension.” and entirely reliable witness.”
Trustee, consumer goods The Court, MNRPF judgement
“We can rightly be pleased with the package we “The team gave clear and transparent advice
negotiated and could not have got anywhere which helped articulate the trustees’ concerns
near it without Karina’s help, support and to the overseas employer and paved the way to a
resilience. I for one slept a lot better last night.” sensible and consensual solution.”
Trustee, listed retailer Trustees, international retailer
“Thank you very much for the final report and more importantly all of your guidance, support and advice
throughout the process which has been much appreciated by all of the Trustees.”
Chair of Trustees, Foreign parent
Covenant Advisory Meet the team 3
Our wider firm: deep sector expertise
On the majority of our assignments we use the wider EY firm to provide both sector
expertise and technical support, enabling us to quickly and efficiently identify the big
issues and focus our work in those areas. Management like working with us because
we understand their business and that reflects well on the trustees in turn, leading to a
stronger trustee and corporate relationship.
“EY’s knowledge of the covenant and the Sponsor’s
industry were critical in formulating a defence.”
Trustee, utilities provider
4 Covenant Advisory Meet the team
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Legal Tax
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Life Sciences
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Insurance
ratings
Entity
Assurance Priority
Contingency Modelling
Health planning Mining & Metals
Financial
Power & Utilities
Services
Real Estate
Banking &
Hospitality &
Capital Markets
Construction
Covenant Advisory Meet the team 5
Our services
A collaborative and proportionate approach to help solve your issues.
Covenant review Monitoring Technical Expert
Major events
and advisory and IRM support witness
Ongoing Event driven
Covenant review and advisory Monitoring and IRM Technical support
►►Support triennial valuation by ►►Ongoing assessment of clients; ►►PPF certification
providing view on strength of covenant more emphasis where client is ►►Advising on regulatory changes
►►Covenant advisory, assessing business stressed/distressed ►►Trustee training
performance and affordability in the ►►Access to sector specific briefings ►►Advise in relation to CPI vs. RPI
Our offering
context of the current recovery plan and thought leadership from our
►►Living will
industry experts
►►Scheme mergers
►►Continued analysis of options available
►►Flexible apportionment Arrangements
to the pension scheme/corporate
►►Valuations and credit ratings
►►Contingent assets
►►Closure to accrual
Benefit
Robust, independent assessment of Understanding ongoing covenant strength Ensures compliance and advice based on
covenant strength in line with TPR best practice technical expertise
A flexible approach that is collaborative Monitoring is bespoke to client’s individual We have aligned our reports and
EY approach
and proportionate to scheme size needs in terms of drivers and monitoring covenant scale to fit in with the
frequency Regulator’s guidance
IRM provides confidence that the scheme
funding target, recovery plan and
investment risk remain appropriate given
the covenant strength
“Like many of our competitors we advise both “We provide regular monitoring reports to “We assist clients in certifying their PPF
trustees and corporates during triennial over a third of our clients, flexing our report guarantees covering parental guarantees
from the team
Observations
valuations, the difference is our approach is to fit with client needs, for example, I provide and more complex asset backed structures
collaborative and proportionate providing quarterly update reports to one of my clients, involving multiple schemes. For one of my
bespoke advice to our clients.” but annual for another, taking clients our work also included the
into consideration the strength valuation of their asset backed
of covenant.” structure.”
Rachel McCarthy Trevor Oates Heather Walker
6 Covenant Advisory Meet the team
Our services
Covenant review Monitoring Technical Expert
Major events
and advisory and IRM support witness
Ongoing Event driven
Major events Expert witness
►►Advice relating to pension scheme considerations when ►►Acting as an expert in a litigious situation regarding a
offering
undergoing a transaction/corporate event pension scheme
Our
►►Assessment and advice where a large pension deficit is
impacting the going concern of the business
A pragmatic and practical approach to give the best possible Experience of advising on complex and litigious matters
Benefit
protection to members benefits. Creative solutions to help
the sponsor achieve their objectives. A collaborative process
that strengthens relationships where possible and avoids
unnecessary conflict
Our multi-disciplined team’s depth of experience in this area is With experience in a wide range of sectors and advising on
approach
coupled with our understanding of each of the key stakeholders’ numerous market leading situations, we are well placed to
EY
perspectives and overlaid with sector expertise provide ‘a second pair of eyes’
“In each of the very many deals I have advised on “I acted as an expert witness for the trustees in the
Observations from the team
since the creation of the Pensions Regulator, I have High Court in respect of the MNRPF case.”
sought out win-win outcomes for the scheme and
Taylor Dewar
corporate alike.”
James Berkley
“Together with straight forward cash mitigation,
reaching a consensual agreement has at times
required asset backed funding, guarantees, changes
to the proposed transaction structure, de-risking of
the scheme or contingent funding agreements.”
Chris Steven
Covenant Advisory Meet the team 7Proven methodology
Our employer covenant methodology has been designed and updated
with TPR guidance in mind.
In assessing the relative position of a scheme and concluding on overall covenant strength, we consider the following:
Legal covenant What opportunities are available to
improve any weaknesses within the
legal covenant structure?
Direct Additional legal Wider
covenant support group
Balance — how much weight to place on each? What is the long-term view of
covenant strength, including
key risks?
Financial covenant How robust are the income streams
and what are the key earnings
Strategy and market dependencies?
Profitability
Ongoing What are the competing demands
Affordability on cash?
Financial flexibility
What is the flexibility for dealing
Exit Balance sheet with a scheme or sponsor
downside event?
Initial covenant assessment Does the asset base provide
sufficient coverage for the
scheme deficit and can this be
Weak Tending to weak Tending to Strong Strong supplemented with wider group
support or security?
8 Covenant Advisory Meet the teamTraining and thought leadership We deliver trustee training to our clients, provide networking opportunities to link people together, and harness the insights of our sector experts for the benefit of all. Training We are experienced in delivering trustee training, relevant to client needs and speak at pension servicers across the UK. Thought Leadership We are able to harness thought leadership and sector expertise across the firm to provide insights on covenant issues and market trends. Profit warnings and EY ITEM Club publications Sector specific publications Covenant Advisory Meet the team 9
Summary of our core team
London London London
Taylor Dewar Karina Brookes James Berkley
Partner Partner Associate Partner
Mobile: +44 7920 139 378 Mobile: +44 7469 036 336 Tel: +44 20 7980 0049
Email: tdewar@uk.ey.com Email: karina.brookes@ey.com Email: james.berkley@uk.ey.com
Background Background Background
►► Taylor is a qualified accountant and ►► Karina is a qualified chartered accountant ►► James is a qualified chartered account
insolvency practitioner and leads our and insolvency practitioner and leads EY’s ant and has specialised in analysing and
national employer covenant advisory team, London covenant advisory team. advising on the strength of employer
which he established in 2005. He has been a covenant and resulting negotiations since
►► Karina has over twelve years experience
partner in EY since 2008. the creation of the Pensions Regulator.
within pension advisory services, advising
►► He is recognised as one of the most on some of the first scheme funding cases ►► He has gained significant experience
experienced covenant advisors and has under the new legislation in 2005. Karina in assessing the impact of corporate
advised on some of the UK’s ground- now advises on some of the largest UK transactions on pension schemes, and
breaking pension transactions. pensions schemes on issues including helping trustees, corporates and private
scheme funding valuations, transactions, equity agree appropriate mitigation for any
►► He works with corporates, trustees, TPR
restructurings and scheme reorganisation. weakening of support. ►
and other advisors, and is retained advisor
to a number of the largest schemes in ►► She has a background in financial ►► In 2010 James completed a secondment to
the UK. restructuring and has spent time with a the Pension Regulator’s Risk and Funding
major US investment bank and the Pensions team, where he considered a wide range of
Recent Experience Regulator where she advised on over 100 schemes and situations from all industries.
Manufacturing transaction complex cases.
Recent Experience
I advised a corporate on the covenant
Recent Experience Insurance client
implications of a market leading, hostile
takeover bid of a FTSE 100 Company in Engineering client I helped the trustees of this well known
the automotive industry. This was the first I provided trustee-side advice in relation to insurance group through several triennial
transaction of its kind in 12 years! the acquisition of a number of participating reviews, a challenging negotiation around
employers by an overseas parent. I also assisted closure of the scheme, several corporate
Education client
in the negotiation of a parental guarantee. transactions, and helped them certify
We developed an integrated financial their asset backed funding structure for
management plan for the Trustees of one of the Consumer goods transaction
PPF purposes.
UK’s largest multi-employer schemes operating I assisted trustees with guarantee negotiations
in the not for profit sector. following a transaction whereby the Sponsor Banking client
was acquired by an overseas entity. I helped the trustees of this major bank
understand their employer covenant and
helped them consider how the ring fencing
requirements would impact on covenant
support for the scheme.
10 Covenant Advisory Meet the teamSummary of our core team
London Scotland London
Chris Steven Jamie MacKenzie Heather Walker
Director Director Assistant Director
Mobile: +44 7773 394 307 Joining the team from Mobile: +44 7747 790 445
Email: csteven1@uk.ey.com September 2018 Email: hwalker1@uk.ey.com
Background Background Background
►► Chris is a qualified Chartered Accountant ►► Jamie joins us in August 2018 and will be ►► Heather is a qualified chartered accountant
(FCA) with over twelve years experience in responsible for leading our National Markets with a background advising on some of the
corporate finance, including secondments teams in Scotland and the North of England. largest and most complex restructurings
to a clearing bank and to UK Government in the UK. In 2013 she completed a
Investments. secondment to HSBC’s distressed lending
team, advising the bank on some of its
►► He has advised a number of different
highest risk portfolio lends.
stakeholder groups in relation to the impact
on covenant of restructuring, refinancing ►► Heather advises on some of our most
and M&A, as well as advising trustees and complex schemes, mainly those reliant on
corporates in respect of triennial valuations. support from large listed global groups.
Her client portfolio encompasses schemes
►► His portfolio of trustee clients includes
within the Industrial Products, IT Services,
schemes ranging in size from £100mn to
Retail and Property sectors.
£10bn of assets.
►► She also co-leads the industry’s Women in
Recent Experience Pensions network.
Consumer goods client
Recent Experience
I provide ongoing covenant, monitoring and
IT client
transaction advice to the trustees of three
schemes with a common sponsor. This has I advise the trustees to multiple schemes
included advice in respect of refinancing and in relation to covenant, ABF structures and
other corporate activity. guarantee certification.
Utility provider client Chemicals client
I support the trustees of a large utility I provide advise to the trustees of four schemes
company in respect of covenant, in particular supported by a global, listed chemicals company.
sector challenges and changes in the The schemes have a complicated security
regulatory environment. structure and we are helping them navigate
a period of change within the organisation to
determine any detriment to covenant.
Covenant Advisory Meet the team 11Summary of our core team
London Birmingham Manchester
Jo Nicholson Rachel McCarthy Paul Taylor
Assistant Director Assistant Director Assistant Director
Tel: +44 20 7951 5549 Mobile: +44 7795 507 465 Mobile: +44 7717 892 690
Email: jnicholson@uk.ey.com Email: rmccarthy@uk.ey.com Email: ptaylor1@uk.ey.com
Background Background Background
►► Jo is a qualified chartered accountant with ►► Rachel is a qualified chartered accountant ►► Paul is a qualified accountant and insolvency
a transaction, diligence and restructuring and insolvency practitioner. She has practitioner based in our Manchester office.
background. Her particular specialism has specialised in advising pension trustees
►► He has a wealth of experience advising
been assisting clients review and improve and completed a secondment with the
trustee and corporate clients on a broad
cash flow forecasting and this has included a Pensions Regulator.
range of covenant issues across a number
period of time seconded overseas.
►► Rachel is retained advisor to a portfolio of different sectors. Paul also co-ordinates
►► Over the last 5 years she has used this of clients and has advised on a range of our work advising trustee clients on
specialism to help her trustee clients covenant matters including affordability, Pension Protection Fund contingent asset
understand the strength of employer IRM, journey planning and impact of certification issues.
covenant and assess the affordability of changes to indexation.
contributions into the scheme. Recent Experience
►► She has experience across a variety of
Consumer goods client
►► She has experience across a number sectors including education, aerospace, not
of sectors, in particular automotive, for profit, retail and banking and finance. I helped to certify an Asset Based Contribution
construction and support services. arrangement involving an ABC asset valued
Recent Experience at £500mn.
►► Jo is leading the team’s development of new
Not for profit client Aerospace and defence client
products, and is currently exploring the use
of technology in helping trustees review and I provide advice to charity trustees considering a I advise a global business with a foreign parent
monitor the covenant. switch from RPI to CPI to illustrate the enhanced in relation to quarterly covenant monitoring.
security of member benefits post switch and
Recent Experience ongoing valuation and covenant support.
Automotive client PPF
I am a long term advisor to the trustees of three I am part of an EY team that has been appointed
schemes, advising through triennial valuations, to support the PPF in critiquing and assessing
quarterly monitoring and ad hoc corporate guarantor reports.
events and transactions.
Retail client
We are on-going covenant adviser to the
trustees of a major UK retailer with a significant
ABF structure. We provide covenant monitoring
and regular (quarterly) valuation of the ABF.
12 Covenant Advisory Meet the teamSummary of our core team
Leeds Scotland Manchester
Trevor Oates Sarah Paul Mike Holford
Assistant Director Assistant Director Assistant Director
Mobile: +44 7500 108 741 Mobile: +44 7917 076 519 Tel: +44 161 333 2592
Email: toates@uk.ey.com Email: spaul3@uk.ey.com Email: mike.holford@uk.ey.com
Background Background Background
►► Trevor is a Chartered Accountant and ►► Sarah is a chartered accountant through ►► Mike is a qualified accountant with extensive
during his time with EY has completed a the Institute of Chartered Accountants of experience working with corporates
secondment to a large high street bank. ► Scotland and a member of the Association and trustees on triennial valuations
of Business Recovery Professionals. and transactions (refinancing, M&A,
►► He has extensive experience advising
restructuring).
pension trustees with regard to ongoing ►► She advises clients on a range of covenant
employer covenant matters in the not for related issues, and has experience across ►► He has been involved in a number of RAA
profit, consumer goods and utilities sectors. a number of sectors including Energy processes working closely with TPR and the
Trevor has also advised on cases where the and Travel. PPF, and has significant experience dealing
Regulator has enforced their powers. with stressed and distressed cases.
Recent Experience
►► Alongside his pensions role Trevor Recent Experience
Travel sector client
also has extensive experience within
I advise the trustee on its covenant provided by UK Bank
our restructuring team advising on
insolvency issues and Legal Entity a large Nasdaq listed, Dubai based corporate. I advise the trustees of a UK bank and have
Rationalisation projects. Recent work has included FAAs and asset set up an annual monitoring framework to
backed security structures. provide intra-valuation support in respect
Recent Experience Utility client
of ongoing funding, affordability and
Not for profit client restructuring programmes.
I provide covenant monitoring and general
I assist the trustees in assessing and monitoring covenant advice for two schemes sponsored by Telcoms client
the covenant strength and affordability of an energy company. Specific advice provided I recently advised trustees to help understand
contributions for a not for profit client. on the impact on covenant of the transfer of the extent of any detriment to the scheme in
Consumer goods client certain UK assets to an overseas entity. respect of a proposed Flexible Apportionment
Arrangement involving a business combination.
I provide ongoing covenant advice to the
The transaction involved the introduction of
trustees of a pension scheme supported by a
new debt and a group restructuring with scheme
food manufacturer. Advice included assistance
liabilities being apportioned to new entities
in relation to the trustees interaction with TPR
within the group.
as part of TPR’s proactive engagement relating
to this scheme.
Covenant Advisory Meet the team 13Summary of our core team
Scotland London London
Karen Kirkpatrick Sacha Kilner Kathryn Todd
Senior Executive Senior Executive Executive
Tel: +44 141 226 9459 Tel: +44 20 7951 1002 Tel: +44 141 226 9460
Email: kkirkpatrick@uk.ey.com Email: skilner@uk.ey.com Email: ktodd@uk.ey.com
Background Background Background
►► Karen joined EY in 2011. She is a Chartered ►► Sacha joined EY in 2010 with an initial ►► Kathryn is a qualified chartered accountant.
Accountant and currently divides her time focus on real estate, before moving into
►► Kathryn joined EY’s restructuring team in
between London and Glasgow. the restructuring team and gaining a broad
Glasgow before moving to London to focus
range of experience. In 2015 she seconded
►► Karen’s has over seven years of on Pensions Covenant Advisory. She has
to the Civil Aviation Authority where she
restructuring and insolvency experience assisted client through a variety of covenant
spent time reviewing the business plans and
within Scotland, including formal insolvency reviews, regular covenant monitoring,
financial risk of travel operators wishing to
appointments, business reviews, options certification of guarantees for PPF
renew their Atol licences.
appraisals and financial advisory. During purposes and worked with EY’s valuation
which time she had responsibility for the day ►► On return from secondment, Sacha joined team in implementing an asset backed
to day running of a trading whisky distillery the Pensions Covenant team and has funding structure.
for 16 months until its sale. used this experience to help trustees and
►► Kathryn is responsible for the day to day
corporates assess the strength of the
►► Since joining the Pension Credit Advisory running of the Women in Pensions Network
employer covenant.
Team the majority of her clients have been jointly set up by EY and Herbert Smith
based in Scotland and sit in the Financial ►► Sacha is responsible for developing and Freehills.
Services, Education, Government Services executing the team’s business development
and Regulated Power sectors. strategy, including coordinating the sharing Recent Experience
of our thought leadership, running trustee Consumer goods client
Recent Experience training events, and organising cross-
We are long term covenant advisors to the
FS Transaction industry networking events.
trustees of a well-known confectionary business
My team provided covenant advice to a leading advising on their triennial valuation, scheme
Recent Experience
financial institution regarding a proposed mergers, FAAs and ad hoc advice as and
transaction to divest non core activities. Telecoms client when required.
I assisting in providing covenant advisory
Government Services client Construction client
services and PPF certification advice to
I provide ongoing covenant advise to the trustees four schemes of a global telco networks and We advise the trustees of a UK construction
of a pension scheme supported by a company service provider. company on the certifiable value of the PPF
in the Government Services sector with a US guarantee provided to 2 schemes following a
listed parent. Advice provided has related to IRM Real estate client corporate restructure.
monitoring, considering the impact of refinancing My team provides corporate side advice
on covenant and supporting the trustees following the merger of two global real
interaction with TPR in relation. estate companies.
14 Covenant Advisory Meet the teamCovenant Advisory Meet the team 15
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