Financial advice: What are the implications of COVID-19 for the financing of your company?
The widespread reach of the coronavirus (COVID-19) outbreak has unfavorably impacted numerous industries all over the world. Companies need to proactively prepare for harsh macroeconomic conditions and reposition themselves. Cash is king.
COVID-19 implications on cash flow and loan documents
The negative impacts of the COVID-19 outbreak will result in cash flow issues and greater difficulty for borrowers in complying with any financial covenants in their loan documents. Breaches of financial covenants generally allow lenders to declare a default under loan documents and demand early repayment of loans. Potential drawstops can follow so that borrowers will not have access to their liquidity facilities.
Managing risks: assessing current and future risk profile
Borrowers will need to examine their loan documentation closely to review, among other things, any financial and non-financial covenants, repayment obligations and cure possibilities. Companies may also need to assess their ability to draw on existing facilities, refinance or access alternatives.
We offer you a tailored financial advice regarding your financial performance versus your financing in place. This is in order to prepare and make revised arrangements with your current financier(s), request (temporary) extension of credit facilities, sell non-core assets, find alternative financiers and investors (new equity) and/or restructure your balance sheet. We are seasoned and committed professionals and have extensive experience with such processes.
Potential next steps in the process and further support
- Composing of financial information package, including scenario analysis
- Communication with financiers and other stakeholders
- Negotiating with financiers on current and future finance arrangements
- Securing financing with current financiers and alternative funding sources
The coronavirus is expected to have significant impact on the cash flows. Proactive scenario analysis and active response accordingly is highly recommended.CLAES VON HEIROTH, MANAGING PARTNER, OAKLINS MERASCO
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Oaklins' trusted senior advisors are entrepreneurs and have the skills and experience to deliver excellence for every client, from large nationally and internationally listed companies to midsize private businesses. Our clients find that the faith they put in us is well placed, and that our results keep them on top. If you're interested in learning more, please talk to our partners Marcus Blomqvist or Samuli Siljamäki.