SERVICES
Business Rescue
Business rescue is a procedure aimed to facilitate the rehabilitation of a financially distressed company. The company is placed under the temporary supervision of a business rescue practitioner who manages the affairs of the company. There is a moratorium on the rights of all claimants against the company or in respect of all its property. A business rescue plan is developed to rescue the company by restructuring its affairs. This may include a restructure of the business, its property, debt, other affairs, liabilities and equity. This process is facilitated under Chapter 6 of the Companies Act 71 of 2008
Structured Finance
Structured finance is typically for borrowers – mostly large corporations – who have highly specified needs that a simple loan or other type of conventional financial instrument will not satisfy. In most cases, structured finance involves one or several discretionary transactions to be completed, thus evolved and often risky instruments must be implemented.
Structured financial products are typically not offered by traditional lenders. Generally, because structured finance is required for major capital injection into a business or organization, investors are required to provide such financing. Structured financial products are almost always non-transferable, meaning that they cannot be shifted between various types of debt in the same way that a standard loan is.
Increasingly, structured financing and securitization are used by corporations, governments and financial intermediaries in advancing, evolving and complex emerging markets to manage risk, develop financial markets, expand business reach and design new funding instruments. For these entities, using structured financing transforms cash flows and reshapes the liquidity of financial portfolios, in part by transferring risk from sellers to buyers of the structured products. Structured finance mechanisms have also been used to help financial institutions remove specific assets from their balance sheets.
Corporate and Specialist Financing
Short-term issues include the management of current assets and current liabilities, inventory control, investments and other short-term financial issues. Long-term issues include new capital purchases and investments.
The decision process of making capital investments is mainly concerned with capital budgeting, a key corporate finance procedure. Through capital budgeting, a company identifies capital expenditures, estimates future cash flows from proposed capital projects, compares planned investments with potential proceeds, and decides which projects to include in its capital budget. Poor capital budgeting that causes over-investing or under-investing could put a company in weaker financial condition, either because of increased financing costs or having an inadequate operating capacity.
Corporate finance is also responsible for sourcing capital in the form of debt or equity. A company may borrow from commercial banks and other financial intermediaries or may issue debt securities in the capital markets through investment banks. A company may also choose to sell stocks to equity investors, especially when raising long-term funds for business expansions. Capital financing is a balancing act in terms of deciding on the relative amounts or weights between debt and equity. Having too much debt may increase default risk and relying heavily on equity can dilute earnings and value for early investors. In the end, capital financing must provide the capital needed to implement capital investments.
Compromise with creditors
A proposal for a compromise must contain all information reasonably necessary for a creditor to decide whether to accept the compromise arrangement. This proposal must be divided into three parts namely; the background to the compromise, the proposal and the assumptions and conditions to the compromise.
Creditors who receive an offer of compromise must seek legal advice on the terms of the compromise before deciding whether to vote in its favour or rather apply to court to commence business rescue proceedings or, if the facts are evident that the company is unable to pay its debts, apply to court to wind-up the debtor company.
Capital raising
Capital structuring and restructuring
Restructuring is a type of corporate action taken when significantly modifying the debt, operations or structure of a company as a means of potentially eliminating financial harm and improving the business. When a company is having trouble making payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring, creating a way to pay off bond holders. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.
A company may restructure as a means of preparing for a sale, buyout, merger, change in overall goals or transfer to a relative. Perhaps the business has a failed product or service and does not bring in enough revenue for covering payroll and debts. As a result, depending on agreement by shareholders and creditors, the company may sell its assets, restructure its financial arrangements, issue equity for reducing debt, or file for bankruptcy as the business maintains operations.
When a company restructures internally, the operations, processes, departments, or ownership may change, enabling the business to become more integrated and profitable.
Restructuring should result in smoother, more economically sound business operations. After employees adjust to the new environment, the company should be better equipped for achieving its goals through greater efficiency in production.
Takeovers and Offers
There are several ways that two or more companies can combine their efforts. They can partner on a project, mutually agree to join forces and merge, or one company can outright acquire another company, taking over all its operations, including its holdings and debt.
Due diligence proceedings
A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition. The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision makers and by ensuring that this information is systematically used to deliberate in a reflexive manner on the decision at hand and all its costs, benefits, and risks.
Our Address
Qey West Finance Corporation (Pty) Limited
41 Sloane Street
Bryanston Sandton
South Africa
2191
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