As we continue to navigate through economically straitened times, we're likely to see more challenging multi-creditor refinancings involving companies and groups with defined benefit (DB) pension schemes. These situations can become extremely complex – and understanding the perspectives of bank lenders, bondholders, and DB-scheme trustees is vital if a satisfactory outcome is to be achieved; and unnecessary value destruction avoided.
With this in mind, we've produced a guide, in conjunction with Herbert Smith Freehills, which seeks to enable lenders and DB trustees to understand each other’s likely position in a stressed refinancing or restructuring transaction from both commercial and legal perspectives.
The aim is to help mitigate value destruction through the parties failing to agree appropriate terms due to misunderstandings or misperceptions around the positions and priorities of other stakeholders - in turn leading to the further demise of the corporate borrower/DB scheme sponsor.
While this guide has been written in challenging economic times, its principles apply in relation to any stressed corporate refinancing or restructuring involving multiple creditors, including lenders of various forms and a UK-DB pension scheme.
The guide explores the perspectives of differing stakeholders in a refinancing or restructuring scenario by considering the position of a fairweather company which is performing well – and then, using a fictional case study (starting on page 8) involving a group called 'Steadyco International PLC' considers how various parties may behave during progressive periods of corporate stress.
