PP Restructuring

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Companies

Restructuring Analysis

Prof. Dr. Dan Dumitru Popescu


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Main issues

A. Corporate Restructuring of State-Owned-Companies

1. Commercial Viability through Managed Change

2. Enterprise Level Restructuring

3. Institutional Level Restructuring

4. Cost-Effective Restructuring

5. What Lies Ahead

B. General Components of Restructuring for Private

Companies


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A. Corporate Restructuring of State-Owned Companies

The objectives of large scale corporate restructuring:

Restructure viable corporations

Liquidate non-viable ones

Restore the health of the financial sector

Create the conditions for long term economic growth

The main government-led corporate restructuring tools:

Mediation Incentive schemes

Bank recapitalization

Asset management companies

The appointment of directors to lead the restructuring


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Laying the foundation

Overall economic stability (prices, interest rates,

exchange rates)

Assess whether the problems are systemic

A comprehensive restructuring strategy

A supportive legal, regulatory and accounting

environment

Improved governance by using international standards

Closing non viable corporations will incur social costs,

so government actions will be needed


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Restructuring the Financial Sector

Restructuring the Corporate Sector

Choosing the form of Government Involvement

Government mediation Government-financed Incentive Schemes

Recapitalizing Banks

Asset Management Corporation

A Restructuring Director

Reducing the Role of the Government


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A.1 Commercial Viability through Managed Change

Definition: Restructuring a commercial activity implies

changechange in the way a company creates value

and delivers that value in the form of goods or services

to a marketplace.

the long term commercial viability of an enterprise is

dependent on the ability of management to implement

the changes needed to optimize its strengths and

minimizes its weaknesses.

Efficiency-Based Restructuring

any actions are justified on a cost-benefit basis

a well defined plan of actions

a critical path

short-term and long-term priorities identified


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A.1 Commercial Viability through Managed Change


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A.2 Enterprise Level Restructuring

Identifying the achievable and taking charge

Techniques for quick assessment and momentum building


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A.2 Enterprise Level Restructuring


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A.3 Institutional Level Restructuring


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The basic approach to "Efficiency-Based Restructuring"

involves the following:

Choosing the right approach for restructuring

profile of the enterprise (s) to be restructured, the

particular industrial or agricultural sector involved, as

well as the capabilities of the entity overseeing the

project

scope of program and resources available

general environment within which the project is being

conducted

Pre-Privatization vs. Post-Privatization Restructuring


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Unique Approach to the Restructuring Process:

A. Establish a Special Designed Delivery System

Short-term action plans

Conciliation agreements

Financial restructuring plans

B. Establish a Partnership for Privatization with theenterprise through Cooperative Agreements

C. Establish Strategic Alliances with other entities


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Stage 1The Triage process

Stage 2 an in-depth evaluation of the operations and finances

an in-depth Due Diligence prior to privatization

Short-term Actions

Comprehensive Restructuring Plan

Stage 3 identify potential for rationalizing industrial sectors through

mergers and spin-offs

special technical assistance programs

special purpose valuations

Environment valuation

Re-deployment valuation

Debt valuation

Stage 4

Post-Restructuring Assistance Requirements


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A.4 Cost-Effective Restructuring

Cost-Effective Restructuring

Triaging of the Portfolio

Fast-Tracking any quickly privatizable enterprises

Risk-Mapping the operational landscape

Short-Term Action Plans (STAPs)

Sector Restructuring vs. Enterprise by Enterprise

Generic Models for rapid deployment


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A.4 Cost-Effective Restructuring


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A.5 What Lays Ahead

Critical Monitoring and Follow-up Support

Other Critical Success Factors, such as:

Focus on external issues

Distribution system Energy availability and cost

Labor mobility

Modern pollution standards

Corporate governance issues

Decision Support Systems within the enterprise

Access to reasonably priced capital

Special skills and services


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A.5 What Lays Ahead

Issues related to successful economic reform:

I. Management of the Process

II. Measurement of Success

III. Demonstration-Effect


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General Components of Restructuring

Debt Restructuring

ST Debt Conversion to LT Debt

Conversion of Debt to Equity

Debt Consolidation

Corporate Restructuring

SBUs / Cost Accounting

Mergers and Right-Sizing


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Checklist for Preliminary Company Analysis

The Company (Question everything!)

How large is the market? Competitive advantage

What is the Business Model?

Who is managing the show? (CEO or CFO?)

Who really wants the company to succeed and whodoes not?

SOFT Assets:

Employee turnover

Educational level Training level

Innovative capacity

Strategy for specific market goals


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Overview of current Company Status and

Description of the Business

Essential Elements of the Business Legal status, reputation, operations, production,

technology,administration, accounting & control,regulation & licenses, sales & marketing

Market and Industry

Management and Organization, Key Personnel

Business Plan

Financial Analysis

Special Issues

Risk Assessment


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Case study Romanian Privatization

PP Restructuring

Documents

Transcript of PP Restructuring