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Arranging a syndicated loan - Article
The growth of syndicated loans in Europe over the last few years means that many companies now view them as alternatives to a bond issuance programme. This article explains the process of arranging a syndicated loan. It identifies the key decisions a company needs to take when structuring this sort of loan.... |
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Syndicated loan documentation - Article
Loan Market Association documentation can help banks and borrowers short cut the negotiation process, allowing loans to be arranged more quickly. Companies must also make sure they protect their own interests during the negotiation. Understanding where compromises can be made is an important part of the negotiation process.... |
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Structured finance solutions - Article
Both bank debt and traditional bond and commercial paper issues are priced according to a company's creditworthiness, often described in a published credit rating. This is good news for the highest rated credits, as they benefit from a low cost of funds, but is not so good for weaker credits who will be charged more. Structured finance techniques allow companies to reduce the cost of funds by us... |
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Leveraged finance - Article
This article assesses the nature of leveraged finance and explains how it can be used to fund acquisitions. Corporate treasurers may find themselves on either side of an acquisition. As a purchaser, a treasurer must structure a transaction to ensure the company's objectives can be met. As a seller, a treasurer must understand the potential investors' objectives and details of its funding struct... |
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Management buy-outs - Article
When the group promoting the purchase of an entity is its own management, this transaction is known as a management buy-out. In this article, we identify the process of structuring a management buy-out and highlight some of the advantages for the parent companies divesting an entity through an MBO.... |
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Project finance - Article
This article highlights the main reasons why companies consider arranging project finance. It explains the main cash flows within a basic project finance structure. The difficulty is that no two project finance structures are the same. Companies need to ensure the structure suits their requirements and that their advisors have the skills to help them in the event the scheme fails to work as exp... |
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Leasing structures - Article
Companies are under increasing pressure to manage their balance sheets as efficiently as possible. This article looks at how finance and operating leases can help companies obtain the equipment without tying up capital. It also recognises there are cash flow benefits for manufacturing companies, which can use them as a means of financing custom.... |
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Sale and leaseback transactions - Article
Sale and leaseback transactions allow companies to generate cash from selling existing fixed assets, whilst retaining their use through a subsequent lease. As companies come under increasing pressure to use their capital efficiently, techniques which allow them to do so are attractive. However, treasurers also need to be aware of the sometimes complex tax and accounting treatment of sale and lea... |
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Asset-based lending – Part I - Article
Companies are under increasing pressure to manage their assets as efficiently as possible. This article highlights the main reasons why companies consider undertaking asset-based lending. It explains the main options available and the impact such choices can ultimately have in financial terms. Companies also need to be fully aware of the long and short-term implications of such financing.... |
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How to arrange an asset-based loan - Article
Companies increasingly view asset-based lending as a viable means of raising finance or restructuring debt levels within a company. This article explains how to arrange an asset-based loan by outlining the key stages involved in reaching an agreement. By adopting a well-structured approach, a company can help to ensure it receives the maximum return on assets.... |
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The impact of Basel II - Article
In this article we look at the revised Basel Capital Accord – commonly referred to as Basel II. We explain the origins of this international capital measurement system, as well as the implications for corporates.... |
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Credit rating advisory - Article
The importance of credit ratings has increased in recent years. While it is still possible to issue debt without a rating, the options are becoming more and more limited. In particular, smaller or less well known companies will find it difficult to gain access to the capital markets without a rating. At the same time, these companies often do not have the experience of dealing with credit ratin... |
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Bank credit ratings - Article
Banks have used internal credit ratings for some time and the process often lacks transparency for corporate customers. Under Basel II bank internal credit ratings may be used for calculating the minimum capital a bank has to allocate against each individual loan. As these minimum capital requirements will be reflected in the margin and credit terms the importance of bank internal ratings is go... |
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Mezzanine Finance - Article
Mezzanine finance is an increasingly popular form of debt finance. Here we explain different mezzanine finance structures and their applications. We will consider which type of company this form of finance is best suited to and evaluate the benefits and disadvantages in comparison to other forms of debt finance. ... |
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Transfer pricing - Article
More than 60% of international trade is conducted within multinational companies. Transfer pricing, the pricing of these intragroup trades and services, has long been the number one tax issue for multinational companies. This is no surprise given the growing international regulatory framework designed to curb transfer price manipulations that could substantially reduce a country's tax revenue. ... |
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Company pensions - Article
The future of company pension schemes is never far from newspaper headlines. The introduction of new regulations governing pensions and a change to the way in which pensions liabilities are accounted for have altered the balance of power between companies and their pension liabilities. This article provides an introductory guide to the issues currently surrounding company pension schemes and how... |
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Valuing and financing acquisitions - Article
Following several subdued years, mergers and acquisitions have made a comeback across Europe. In 2005, M&A activity reached the highest level since the dotcom bubble burst five years ago. This trend looks set to continue in 2006. We look at two key areas which affect treasury: the valuation of the target company and the financing of an acquisition.... |
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Supplier finance - Article
Companies are increasingly focusing on ways to increase efficiency in the financial supply chain. On the one hand, many companies set out to improve their working capital position by extending the payment terms offered to suppliers. On the other, they are often keen to develop stronger relationships with those suppliers. Supplier finance is one method that can be used to try to reconcile these ... |
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Equity and debt capital - Article
When raising funds, companies have the choice between equity, debt and hybrid capital. Each type of capital has its own characteristics and has different implications for the financial structure of a company. The composition of equity and debt will also have an effect on the weighted average cost of capital.... |
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Corporate Finance - Article
Financing receivables is an alternative, non-traditional way of raising funds. It offers companies the opportunity to turn receivables into cash and enhance working capital and cash flow. There are several ways of financing receivables including factoring, invoice discounting and receivables securitisation. In this article we look at the benefits and drawbacks of the most commonly used receivab... |
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PIK notes and loans - Article
Payment in kind (PIK) instruments can increase debt leverage without using up cash flow as coupon payments are compounded and not paid in cash. During the past five years, PIK notes and loans have predominantly been used by private equity firms to fund dividend recapitalisations and to refinance or partially finance the cost of leveraged buy-outs. The appeal of these high-yield and, for investor... |
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Sub-prime crisis: the effect on the debt capital markets - Article
This month, we examine the crisis that originated in a small segment of the US mortgage market. We review the extent to which it has spread internationally and consider the impact it has had – directly or indirectly – on credit and funding markets.... |
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Private Equity - Article
Traditional bank debt financing is often not enough to fund sustainable growth. A stronger focus by banks on risk in the supply of loans puts the emphasis, among other variables, on the existing equity of a borrower. The sub-prime crisis has, in addition, reduced the volume of available credit by financial institutions. Companies that have solid growth prospects but which do not possess suffici... |
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Due diligence in an acquisition - Article
Due diligence is the validation of facts and information, on the basis of which a transaction is undertaken. During an acquisition, however, due diligence is more than just the verification of data. It is a process that provides the objective analysis of all those factors that may have an effect on the valuation of the target company, the structure of the purchase transaction and the integration... |
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Asset-based finance - Article
In an environment of tightening lending conditions, many companies are forced to examine where capital is tied up in their business and how they can use their assets to fund operations. Not surprisingly, asset-based finance, which is the use of accounts receivable, inventory, equipment, machinery, real estate or intellectual property rights to raise funds, has gained in popularity in Europe and t... |
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Stock exchanges: a market in transformation - Article
The markets for stock exchanges are undergoing significant change in terms of exchange consolidation, technological developments and the emergence of new alternative trading platforms in the US, Europe and Australasia. In this article we describe in more detail the main factors contributing to the evolution of the stock exchange markets.
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Credit crisis: the impact on corporate debt funding - Article
The crisis in the financial markets has led to a loss of confidence that has gripped all market participants. The difficulties faced by banks and a gloomy outlook for the global economy are translating into deteriorating financing conditions for corporates. In this article we look at the impact of the financial crisis on some sources of company funding including bank lending, the bond market and... |
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Ratings agencies revisited - Article
Critics have questioned the effectiveness of credit ratings prior to and during the credit crunch. Ratings agencies were blamed by some as a major contributor to the crisis and regulators in Europe and the US have investigated the role of ratings agencies and potential issues in their business models and rating processes. In this article we look at the alleged flaws in the process of rating stru... |
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Forward start facilities - Article
Enabling corporates to extend existing credit facilities well in advance of maturity, the forward start facility has emerged in recent months as a means of meeting the challenges of the current market. We look at the key features of this type of arrangement, discuss the benefits and risks, and explore a deal recently concluded by UK-based publisher Reed Elsevier. ... |
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Pensions – a crisis update - Article
The mere mention of pensions is enough to make some treasurers run for cover. With the financial crisis eroding asset values and scheme members living longer, we look at how companies are coping with the pensions crisis. We also examine how the role of the treasurer is expanding in response to these growing challenges.... |
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