Welcome to the third newsletter in our series of joint editions of Collateral and On Target. Our previous newsletter covered aspects of a company’s third-party credit facilities that could cause concern in light of the hardships caused by COVID-19. In this newsletter we provide practical tips on how a borrower might approach discussions with third party lenders to refinance or adjust the terms of its facilities.
1. Engage early and decisively
It is clear that many borrowers have immediate issues to address. Typical (solvent) borrower behaviour since lockdown has been characterised by diligent and conservative cash management together with an unprecedented drive to secure liquidity for the near term, with widespread drawdowns on existing revolving credit facilities, utilising permissible baskets and where possible, deferring interest or capital payments.
Experience shows that in most cases, lenders have been supportive of existing borrowers that were performing before Covid-19, particularly where other key stakeholders such as shareholders and sponsors also play their part (i.e. provide additional finance).
MJ Hudson works with clients in the fields of law, international administration, fund management, investment advisory, and IR and marketing, across both alternative and traditional asset classes.Gresham House Strategic PLC (LON:GHS) has a 1.3% ownership of MJ Hudson as of June 2018.
