Integrated Capital Services Ltd · BSE:ICSL
Integrated Capital Services — ICAN Conference on Insolvency Best Practices "A Case for Nigeria" 2016
27 slides from Integrated Capital Services's conference presentation, Feb 19, 2016
Slide 1: Sustaining Corporate Entities Through Debt Restructuring
SUSTAINING CORPORATE ENTITIES THROUGH DEBT RESTRUCTURING Presented by, Sajeve Deora Director, Integrated Capital Services Ltd., India Presented at, ICAN Conference on – Insolvency Best Practices “A Case for Nigeria” Conducted by The Institute of Chartered Accountants of Nigeria Lagos, February 18-19
Slide 2: Average Life (S&P 500)
AVERAGE LIFE (S&P 500) Source: www.innosight.com It is estimated that by 2027, 75% of the companies in the S&P 500 shall be replaced by other companies © 2016 Integrated ©Capital Services 2011 Integrated CapitalLtd. Services Ltd RAAS/Restructuring www.raas.co.in Advisory and Support Page 2
Slide 3: Create, Operate & Trade
CREATE, OPERATE & TRADE Source: www.innosight.com Since 2002, Companies embracing model of “Create, Operate & Trade Without Loosing Control” have survived and outpaced S&P 500 Index by wide margin Takeaway – Apply Market Principles to Yourself © 2016 Integrated ©Capital Services 2011 Integrated Capi
Slide 4: Startup Survival Rates
STARTUP SURVIVAL RATES © 2015 Integrated © 2016 Integrated Capital Services ©Capital Ltd. Services 2011 Integrated CapitalLtd. Services Ltdwww.raas.co.in RAAS/Restructuring Restructuring www.raas.co.in Advisory and Advisory Support and Support Page 4
Slide 5: S&P 500 Entries and Exits
S&P 500 ENTRIES AND EXITS Source: www.innosight.com © 2015 Integrated © 2016 Integrated Capital Services ©Capital Ltd. Services 2011 Integrated CapitalLtd. Services Ltdwww.raas.co.in RAAS/Restructuring Restructuring www.raas.co.in Advisory and Advisory Support and Support Page 5
Slide 6: Sustainable Restructuring
SUSTAINABLE RESTRUCTURING © 2016 Integrated ©Capital Services 2011 Integrated CapitalLtd. Services Ltd RAAS/Restructuring www.raas.co.in Advisory and Support Page 6
Slide 7: Pressure Points
PRESSURE POINTS • Disruptive Technology • Geopolitical Developments • Commodity Prices • New Materials/ New Processes • Credit Contraction Cycle • Distortions in International Trade • Currency Fluctuations • Environmental Costs • Living Will • TLAC Funding Accept volatility as normal Computer Code t
Slide 8: Debt Restructuring, Objectives
DEBT RESTRUCTURING, OBJECTIVES • Preservation of Capital – A Scare Resource • Revival of Industrial Units • Minimising Value Erosion for Stakeholders • Employee and Exchequer Payouts • Separation of Good Assets and Bad Assets • Sacrifice of Stakeholders, Commensurate to Stake • Acting in a Timely Ma
Slide 9: Jurisdiction and Forum
JURISDICTION AND FORUM • Examination of Contracts and Agreements • UNCITRAL Model Law on Cross Border Situations • Centre of Main Interest • Modified Universalism • Determining Applicable Law and Authority(ies) • Bilateral Investment Protection Protocols • Experts Assist Judiciary COMI, London appro
Slide 10: Separating Wheat from Chaff
SEPARATING WHEAT FROM CHAFF • Stakeholders look-up to Management • Business Restructuring leads Debt Restructuring • Alignment of Business Risks with Business Lines • Monetising Assets of Value • Creating Bankable Entities • Leverage Value Creation by Performance • Isolation of Cross Collaterals / G
Slide 11: Actions for Sustainability
ACTIONS FOR SUSTAINABILITY • Acting Early and in a Timely Manner • Taking Lenders and Stakeholders in Confidence • Dilemma between Selling Good or Bad Assets • Forgiveness, Long Dated Instruments • Segregation of Manufacturing, Brands and Logistics • Align Cash Outflows with Cash Inflows • Pressure
Slide 12: Debt Analysed
DEBT ANALYSED • Option for Equity Swap • Security Cover • Assessment of Litigation • Currency Swap under Natural Hedge • Refinancing • Debt Assignment/ Restructuring Specialists • Provisioning by Lenders – Protection from Provisioning Bad Bank Bankruptcy Law Lenders Supervision, External Collateral
Slide 13: Restructuring Kit
RESTRUCTURING KIT • Holding-On Operations • Trust Retention Mechanisms • Funding in Distress • Ballooned Back Loading • Refinancing in Terminal Year • Debt Equity Swap • Security Sharing • Waterfall Mechanism for Cash Flow Operations • Cash Flow Monitoring & Management • Company within a Company • A
Slide 14: When to Act
WHEN TO ACT Fresh Start Do not delay, else others will do it for you Should you wait for the troubles to bottom out Remedial plan changes as intensity of problem alters © 2016 Integrated Capital © 2011 Services Ltd. Services Ltd Integrated Capital RAAS/Restructuring www.raas.co.in Advisory and Suppo
Slide 15: Events of Last Global Round
EVENTS OF LAST GLOBAL ROUND Results Cause Actions Housing Quantitative Institutions Bubble Easing Saved Locked Troubled Derivatives Asset Relief Program Fallout Lessons Learnt Deflationary Fears Leaner Organisations Real Estate < 2008 Rates Technological Upgradation Emerging Markets Gains © 2016 Int
Slide 16: Sustaining Last Global Round
SUSTAINING LAST GLOBAL ROUND • Downgraded Bonds • Proliferation of e-Businesses and Business Models • Vulnerability of Certain Economies • Negative Rate of Interest • Fitness for Sustainability, Across Industries & Geographies Changed times lead to new challenges No one-size-fits-all solution, restr
Slide 17: Lenders Rights
LENDERS RIGHTS • Assess Clean Hands of Controlling Management • Option Review, Precursor to Restructuring • Possess Security, Realise, Lease, Sub-Contract • Change of Management • Refinance Debt, Existing /Alternate Currency • Senior Money • Distress Asset Investors • Sell / Assign to Asset Restruct
Slide 18: Nigerian Insolvency – Issues, Suggestions 1
NIGERIAN INSOLVENCY – ISSUES, SUGGESTIONS, 1 Issues Suggestions Deficiency in law with Development of robust and regard to business sound mechanism for turnaround restructuring restructuring and turnaround insolvency and informal workouts Lack of efficient means by Deployment of alternative which de
Slide 19: Nigerian Insolvency – Issues, Suggestions 2
NIGERIAN INSOLVENCY – ISSUES, SUGGESTIONS, 2 Issues Suggestions Collective procedures Business reivews and available under the general Creditors committees can insolvency law are not lead the way business rescue oriented From creditors’ point of Legislative reform view: No credible legal threat to r
Slide 20: Nigerian Insolvency – Issues, Suggestions 3
NIGERIAN INSOLVENCY – ISSUES, SUGGESTIONS, 3 Issues Suggestions No provisions for insolvency Regulation of Insolvency practitioners to be qualified, practitioner regulated Lack of statutory provisions Multilateral effort of both the on Cross Border Insolvency government and private sector in legal r
Slide 21: Nigerian Insolvency – Resolutions
NIGERIAN INSOLVENCY – RESOLUTIONS • Informal Workouts • Legislative Reform • Harmonisation of Laws • Fast Track Insolvency Procedures • Regulation of Insolvency Practitioner(s) • Role of Courts in Driving Insolvency Procedures • Sound Mechanism for Restructuring & Turnaround • Deployment of Alternat
Slide 22: Live Longest
LIVE LONGEST • Religious Establishments • Clubs and Co-opertives • Places for Social Interactions • Charitable and Not For Profit Organisations • Tourist Attractions and Locations of Interest Keep generating cash Spend within budgets Stakeholders continue interacting Strong and accepted succession p
Slide 23: Oldest Family Companies
OLDEST FAMILY COMPANIES Kongo Gumi 578 A.D. Osaka, Japan Construction Hoshi Ryokan 718 Ishikawa, Japan Hotel Chateau de Goulaine 1000 Nantes, France Winery Fonderia Pontificia Marinelli 1000 Agnone. Italy Bell Foundry Barone Ricasoli 1141 Chianti, Italy Winery Barovier & Toso 1295 Murano, Italy Glas
Slide 24: Creative Destruction
CREATIVE DESTRUCTION S&P turns over 5% of its companies in a given year A corporation should Add 5% to its sales from new businesses Shed 5% of its current sales through divestiture Lifespan determined by balancing 3 management imperatives Running Operations Effectively Shedding Business – One Time
Slide 25: Recipe for Long Life – The Art of Endurance
RECIPE FOR LONG LIFE – THE ART OF ENDURANCE, SHINISES • Beware the Dogma of Founders • Cultivate Wasted Time • Talk to Your Customers • Don’t Just Build Competencies, Build Dynamic Capabilities Key to Sustain Competitive Advantage: Buy Competencies, Develop Capabilities • Japan – People live longest
Slide 26: Families Seen Recessions, Tercentenarian Club
FAMILIES SEEN 47 RECESSIONS, TERCENTENARIAN CLUB • Barely a dozen members • No annual fee • Meets just once a year Club Collection • Wine Merchant • Builder • Butcher • Boatyard Owner • Hat Maker • Candlestick Seller Tercentenarian Survived • Clutch of Banking Crises • End of Horsepower • Stock Mark
Slide 27: Thank You
THANK YOU Does not deal with: • Governmental owned or controlled enterprises • Banks, Financial Companies and Financial Product providers © 2016 Integrated Capital Services © 2011 Ltd. Integrated www.raas.co.in Capital Services Ltd Restructuring Advisory and Support www.raas.co.in Page 27