A group of companies went from £50m worth of equity to £20m worth of negative equity in just 6 months, at a time when it was not possible to sell any of the assets.
The group had outstanding bank debt, and the bank needed a solution.
There was a renegotiation of the banking facilities, and the bank took a significant reduction in the debt owed and agreed a very long term loan – enabling the company to survive.
Insolvency of the company, and a subsequent sale of assets in a fire sale would have created significantly greater negative equity.
There was nothing in it for management as the share equity was entirely negative.
Time invested by advisers
The renegotiation was complex and nearly collapsed several times.
When you have worked with a client for 15 years you have to “invest” – in this case run up the fees knowing that the only way you will get paid is if the deal goes through. That’s when relationships count.