Sysco Corporation · NYSE:SYY
Sysco — Sysco Exclusive Relief Fund Webinar (April 2020)
40 slides from Sysco's conference presentation, April 2020
Slide 1: Sysco's Exclusive Relief Funds Info Session
Sysco’s Exclusive Info Session RELIEF FUNDS CUSTOMER WEBINAR
Slide 2: Speakers
Sheri Pastor | Chair Howard Berkower | Partner Arnie Mascali | President Insurance Recovery, Litigation McCarter & English, LLP Procor Solutions + Consulting & Counseling Practice Introduction to SBA What should restaurant owners Understanding business Disaster Loan Program be doing now to identify
Slide 3: Agenda
Agenda ● Business Interruption Basics ● Potentially Responsive Insurance Policies ● Key Provisions – Property & Business Interruption ● Potential Coverage Grants & Exclusions ● Tips For Maximizing Insurance Recoveries ● SBA Loans/Main Street Loans ● Sysco Cares Act Support Center ● Sysco Marketing S
Slide 4: Business Interruption Basics
Business Interruption Basics Chris Mortifoglio cmortifoglio@procorllc.com (203) 512-8916
Slide 5: Business Interruption Basics
Business Interruption Basics TIPS FOR DOCUMENTING AND CAPTURING COSTS • Time Element includes Business Interruption & Extra Expense • Purpose: Put Insured in same position “but for” the loss • Definition of BI • Often defined as Net Income + Normal Continuing Expenses (“Bottom Up” • Lost Revenues –
Slide 6: Business Interruption Basics
Business Interruption Basics • 1st Step - Project the Top Line (Sales/Revenues) • 2nd Step – Evaluate expenses • COGS • Payroll • Potential limitations for Ordinary Payroll • Identify Extra Expenses • Extraordinary expenses (e.g. generators, security, etc.) • Increase in normal expenses (e.g. OT Pay
Slide 7: Potentially Responsive Insurance Policies
Potentially Responsive Insurance Policies ● Employment Liability ● General Liability ● Event Cancellation ● Workers Compensation ● Directors & Officers Liability Sherilyn Pastor McCarter & English, LLP spastor@mccarter.com 973-639-2070 ● Property/Business Interruption Chair, Insurance Recovery, Liti
Slide 8: Key Provisions – Property & Business Interruption
Key Provisions – Property & Business Interruption ● Property Damage ● Business Income ● Extra Expense ● Extended Business Income ● Other Time-Element Coverages • Civil or Military Authority Sherilyn Pastor • Contingent Business Income McCarter & English, LLP spastor@mccarter.com 973-639-2070 • Conti
Slide 9: Likely Disputes
Likely Disputes • Physical loss of or damage to property, when required • Scope and application of exclusions • Virus • Communicable Disease • Pollution • Contamination Sherilyn Pastor McCarter & English, LLP • Calculation of Waiting Periods spastor@mccarter.com 973-639-2070 Chair, Insurance Recover
Slide 10: Potential Coverage Grants & Exclusions
Potential Coverage Grants & Exclusions • Examples • This policy covers property against . . . “all risks of physical loss or damage.” • “We will pay for direct physical loss of or damage to Covered Property at the premises . . . caused by or resulting from any Covered Cause of Loss.” • “We will pay
Slide 11: Potential Coverage Grants & Exclusions
Potential Coverage Grants & Exclusions Civil Authority ● “This Policy covers the Actual Loss Sustained and Extra Expense incurred . . . if an order of civil or military authority limits, restricts or prohibits partial or total access to an insured location provided such order is the direct result of
Slide 12: Proposed Legislation
Proposed Legislation • New Jersey, New York, Massachusetts, Ohio, Pennsylvania, and Louisiana have proposed legislation; federal proposals being considered • Clarifies coverage extends to losses attributable to pandemic and social distancing • Avoids costly disputes over meaning and scope of insurer
Slide 13: Tips For Maximizing Insurance Recoveries
Tips For Maximizing Insurance Recoveries • Carefully review policies • Give timely notice of claims and/or circumstances • Consider Grace Periods and extensions of them • Document and quantify the claim • Write to coverage positions and explanations of them • Call conversations in writing • Challeng
Slide 14: CARES Act/PPP Loans
Howard Berkower McCarter & English, LLP CARES Act/PPP Loans hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Title I of the Coronavirus Aid, Relief and Economic Stability Act (the “CARES Act”) establishes a $349 billion Paycheck Protection Program (“PPP”) to help small businesses re
Slide 15: PPP Loan Forgiveness Reduction
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness Reduction hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice 1. Decrease in Workforce The total amount spent on Qualified Expenses during the 8-week covered period (“Forgiveness Period”) is reduced if there has been a workforc
Slide 16: PPP Loan Forgiveness Reduction
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness Reduction hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice 2. Decrease in Salary or Wages The total amount spent on Qualified Expenses during the Forgiveness Period is reduced dollar for dollar by the amount of the reduction
Slide 17: PPP Loan Forgiveness Mechanics
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness Mechanics hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice 1. Documents to be Submitted by Borrower to the Lender a) Documentation verifying the number of FTEE on payroll and pay rates for the applicable periods, including:
Slide 18: PPP Loan Forgiveness Mechanics
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness Mechanics hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice 1. Documents to be Submitted by Borrower to the Lender a) Documentation verifying the number of FTEE on payroll and pay rates for the applicable periods, including:
Slide 19: PPP Loan Forgiveness Mechanics
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness Mechanics hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice 2. Lender decision of Loan Forgiveness will be made within 60 days of the submission of the documentation. 3. Section 1106 of the CARES Act requires the SBA to issue
Slide 20: Eligible Businesses
Howard Berkower McCarter & English, LLP Eligible Businesses hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Small businesses with less than 500 employees (including self-employed individuals acting as sole proprietorships and independent contractors), private nonprofits, or 501(c)(
Slide 21: Eligible Businesses
Howard Berkower McCarter & English, LLP Eligible Businesses hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Restaurants, hotels and businesses that fall within the NAICS code 72 “Accommodation and Food Services,” where each location has 500 employees or fewer, are eligible. ● Franc
Slide 22: PPP Loan Amount/Payroll Costs
Howard Berkower McCarter & English, LLP PPP Loan Amount/Payroll Costs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● The maximum PPP loan amount a small business is eligible to borrow is 250% of their average total monthly payroll costs incurred in the one-year period before the l
Slide 23: PPP Payroll Costs
Howard Berkower McCarter & English, LLP PPP Payroll Costs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Seasonal business expenses will be measured using average monthly payroll expenses for the 12-week period starting on February 15, 2019, or March 1, 2019, whichever the seasona
Slide 24: PPP Loan Forgiveness
Howard Berkower McCarter & English, LLP PPP Loan Forgiveness hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Qualifying businesses will be eligible for loan forgiveness if all employees are kept on the payroll during the Forgiveness Period and the loan proceeds are used for Qualifi
Slide 25: Other Loan Provisions and Borrower Certification
Other Loan Provisions and Borrower Howard Berkower McCarter & English, LLP hberkower@mccarter.com Certification 212-609-6824 Partner, Corporate Practice ● To the extent that less than the total principal of the loan is forgiven the remaining balance will be due on the second anniversary of the loan
Slide 26: CARES Act/EIDL Loan
Howard Berkower CARES Act/EIDL Loan McCarter & English, LLP hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Section 1110 of the CARES Act expanded the existing Economic Injury Disaster Loan program (“EIDL”) by providing lower interest rates and longer repayment terms. EIDL is provi
Slide 27: EIDL Loan/Up to $10,000 Advance Grant
Howard Berkower EIDL Loan/Up to $10,000 Advance Grant McCarter & English, LLP hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice • Applicants for an EIDL loan can request an advance of $1,000 per employee up to $10,000 (“Advance”) on the loan. The Advance is available from January 31, 2
Slide 28: EIDL Loan Terms and Use of Proceeds
Howard Berkower McCarter & English, LLP EIDL Loan Terms and Use of Proceeds hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● EIDL loans up to $2 million with maximum unsecured loan amount of $25,000. ● Market Intelligence: Maximum EIDL loan is currently only $85,000. ● The interest
Slide 29: EIDL Eligible Businesses
Howard Berkower EIDL Eligible Businesses McCarter & English, LLP hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● Small businesses (including restaurants, retailers, hotels, manufacturers, owners of rental property, wholesalers) with fewer than 500 employees ● Small agricultural coo
Slide 30: EIDL Criteria for Loan Approval and Collateral
Howard Berkower EIDL Criteria for Loan Approval and McCarter & English, LLP hberkower@mccarter.com 212-609-6824 Collateral Partner, Corporate Practice ● SBA acceptable credit history ● Ability to repay EDIL loan ● Physical and tangible (P.O. Box does not qualify) presence in US (declared disaster ar
Slide 31: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● In addition to the programs established and the powers granted as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Federal Reser
Slide 32: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● The programs will work as follows: (1) a single-purpose vehicle (“SPV”) will be established and the Treasury Department will capitalize it with $75 billion made avai
Slide 33: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice • To take advantage of the program, businesses will need to be an Eligible Business, which, according to the term sheet, will include the following criteria: • Busines
Slide 34: Main Street Lending Programs
Main Street Lending Programs Howard Berkower McCarter & English, LLP hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice • The SPV will only purchase participations that meet the criteria for a New Loan or an Upsized Tranche of an Eligible Loan, which, according to the term sheets, inclu
Slide 35: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● According to the term sheet in the case of an Upsized Tranche, the collateral securing the existing loan must be shared pro rata with the Upsized Tranche. This requi
Slide 36: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ● The term sheets also lay out other requirements for any New Loans or Upsized Tranches, which include: 1. Proceeds not be used to repay or refinance preexisting loans
Slide 37: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice • The term sheets do not incorporate all the requirements for loans under the CARES Act, such as the rigorous requirements regarding maintaining employment. • The term
Slide 38: Main Street Lending Programs
Howard Berkower McCarter & English, LLP Main Street Lending Programs hberkower@mccarter.com 212-609-6824 Partner, Corporate Practice ●The next steps in the process will presumably be (1) establishing the terms of the participation being purchased by the SPV by drafting a form of participation agreem
Slide 39: Sysco Cares Act Support Center
Sysco Cares Act Support Center To support you as our valued customer during this unprecedented time, Sysco has established a CARES Act Support Center. This Support Center will help you with questions about the CARES Act and the application process to ensure a fast and accurate submission. We have a
Slide 40: Concierge Service for Customers
Our Concierge Service available to any customer ● Crisis Menus, Pop Up Shop/Marketplace, Social Media, Thank you cards and other restaurant marketing materials to ensure continuity ● Provide guidance on what you could be doing to promote your business ● Provide guidance and facilitate our iCare Part
Sysco — Sysco Exclusive Relief Fund Webinar (April 2020) on 6ix