Preparing for the unknown Accessing liquidity and mitigating risk during the coronavirus crisis - MARCH 2020 - Alantra
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POSSIBILIT Y IS IN THE A SCENT
Preparing for the unknown
Accessing liquidity and mitigating
risk during the coronavirus crisis
MARCH 2020
POSSIBILIT Y IS IN THE A SCENT
Coronavirus crisis impact MUSA SÖNMEZ
CO-HEAD OF EUROPE,
Businesses across many industries foresee an inevitable impact on the demand for goods PARTNER
and services or on the ability to supply distributors and end customers due to exposure
to global supply chains or a shortage of goods following the coronavirus outbreak. In
addition, the knock-on effects of the squeeze on consumers and limitations on work
are already having an effect. We know from speaking to our clients that companies are
concerned about short-term and long-term financing, both for those negatively exposed to
global production schedules – leading to goods being stuck in the production process – as
well as those able to fill the gaps who are seeing an increase in demand.
We are currently experiencing
an extraordinary public health
Governments are working hard to fight the virus and health experts are trying to predict crisis which is accompanied
what will happen next. We believe businesses can take steps to mitigate the impact of by unprecedented volatility
this health crisis. There are long-term refinancing solutions available to help minimize the in the global capital markets.
financial impact on sectors affected, including industrials, retail, and travel & hospitality. The containment measures
will undoubtedly lead to
earnings losses and liquidity
Which industries are most Fashion and technology are some of the needs for private companies
affected and how? hardest hit retail businesses which will across Europe. At Oak Hill
have a knock-on effect on shopping malls. Advisors (OHA) we have a
Industrials Both industries are dependent on Chinese long term and partnership
manufacturing. With major ports and driven approach and are able
factories closed, they are facing significant to offer flexible solutions
export issues. The Winter 2020-21 season’s to private companies to
production is already underway, and there meet their capital needs
are huge implications for seasonal stock irrespective of the current
distribution and therefore high streets turmoil in the capital markets
around the globe.
Travel & hospitality
Industrial companies are deeply affected
JÖRG MUGRAUER
through their exposure to Chinese and
Southeast Asian manufacturing where PARTNER
slowdowns or closures are impacting
global production and supply chains. The
accumulation of unfinished stock or overall
lack of demand for these goods from end
distributors means their working capital
may deplete.
Businesses in travel and tourism are We are very pleased to have
Retail already experiencing negative impacts with secured a sustainable and
customers canceling holidays and optional well-structured financing
business travel, as well as holding back package for IPSEN for the
on booking summer holidays as they wait next years, which also
to see what happens next with the virus. included a dividend payout.
Again, medium-term working capital issues The Alantra team has done
will need to be addressed as revenues a great job structuring this
diminish. deal in light of the complexity
of global scale business in
Europe, US and Asia.
Positive solutions: financial CARMEN ALONSO
HEAD OF IBERIA
control
Debt funds are willing to capital in these circumstances through
alternative lending providers, which
deploy capital in these are seeing an all-time high in levels of
circumstances through fundraising with over $600bn of assets Given the nature of our
alternative lending under management as of June 2019. We committed capital and large
have first-hand experience with these
At Alantra we have spoken to many clients levels of dry powder, we
in the past few weeks wanting to mitigate funds. We know all the players involved
in alternative lending solutions, having
continue to evaluate new
the immediate and potential financial risks
interacted with over 250 private debt funds investment opportunities
posed by coronavirus. We believe it will
be possible for companies to selectively and insurance companies in the last four even in the current volatile
use the debt markets even during these years and completed over 100 transactions environment. We have
with them.
difficult times and that there are many resources, flexibility and
options to access liquidity in the short-term
Given the unpredictable impact the agility to offer capital to
to address shortages in working capital as
new virus will have on businesses and quality businesses undergoing
well as financing inventories, shortfalls, and
supply chains, if companies refinance
increased demands. short-term liquidity issues
by leveraging longer-term debt products
with a maturity period of two to three
and the culture to accompany
Some sectors are anticipating a decline
years then they are in a good position to the companies we invest in
in revenues and cash flow generation
during the first half of the year due to the mitigate financial and business risk for over the long term.
coronavirus effect. This will impact firms’ the coming months. For this to happen,
ability to face amortization schedules business owners simply need access
within long-term bank financing structures. to the right products and need to find
Alternative financing can provide innovative tailored solutions that are right for them. If JUAN NAVARRO
solutions that can coexist with bank liquidity is available today at flexible terms
through a variety of product types from CFO
financing. Many restructurings will take
place during 2020 with a combination of debt funds, then we believe businesses
alternative lenders and traditional bank should leverage it as an immediate solution
financing. or a precautionary measure. That leaves
businesses free to focus on the day-to-day
This is where the most creative solutions necessities during this challenging period.
come in. Debt funds are willing to deploy Having gone through a
refinancing process with
Alantra, I am convinced that
Private debt dry powder their involvement was key for
its success. You need support
from someone that has the
right capabilities and speed
of execution to prepare all
the information, structure the
transaction and get in touch
with the right people that will
ultimately be able to deliver
the investment.
*As of June 30, 2019 - Pitchbook Research. Geography: global.
Recent debt advisory deals
DEBT RESTRUCTURING HOLDCO/ OPCO FINANCING DEBT REFINANCING SENIOR/MEZZANINE LBO
FINANCING
N/A €265M €140M €107M
Alantra Global Debt Advisory team
We advise privately owned companies, private equity-backed businesses, large privately
owned corporate groups and public companies on raising and refinancing debt capital.
Miguel Hernández
Javier Garcia-Palencia
Managing Partner, CEO of
Managing Partner, Spain
Investment Banking
javier.garcia-palencia@alantra.com
miguel.hernandez@alantra.com
Robert von Finckenstein Andrew Shellard
Managing Partner, Germany Managing Partner, United Kingdom
rvf@alantra.com andrew.shellard@alantra.com
Maximilian Rohardt Pierre-Louis Nahon
Managing Director, Germany Managing Director, France
maximilian.rohardt@alantra.com pierrelouis.nahon@alantra.com
Scott Hadfield Roberto León
Managing Director, United States Managing Partner, Spain
scott.hadfield@alantra.com roberto.leon@alantra.com
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Alantra is a global investment banking, credit portfolio advisory and alternative asset management firm focusing on the mid-market
with offices across Europe, the US, Latin America and Asia.
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