KGI Advisors often represents borrowers and lenders in higher risk financing transactions - new loans as well as restructuring or extension of existing loans.
Concerns about business disruptions caused by the severe impact of the coronavirus are creating turbulence in the debt market. This will particularly affect companies that may be impacted by decreasing profits and liquidity, increasing debt levels, higher risk of loan covenant defaults, and overall capital constraints.
Many lenders are tightening their credit standards, and may take longer to approve these "tougher" loans for middle-market companies.
The uncertainties in today’s business world have caused lenders to become more cautious and expect business leaders to reassess their business plans. As a result, middle-market companies seeking to close "tougher" loans must be exceptionally well-prepared.
Working side-by-side with company management, we help our clients to assess or develop business plans, financial projections, and financing proposals. KGI also assists in the communication and negotiation of this information with current or potential new capital sources.
Based on KGI's experience in closing hundreds of higher-risk financings, lenders will typically need the following key data and information to get a "tougher" cash-flow or asset-based loan approved:
1. Credible weekly and monthly cash flow projections:
Demonstrate management's ability and commitment to manage cash flow
Utilize standard financial forecasting tools, such as a 13-week cash flow forecast
Confirm company's liquidity needs and ability to meet credit commitments
2. Credible monthly and quarterly financial projections:
Prepare integrated balance sheets, income statements, and cash flow statements
Use bridge analyses to compare past, current and future performance
Demonstrate reasonableness of profit and cash flow improvements
3. Compelling and credible business plan:
Summarize key goals, strategies and tactics to drive performance
Quantify and explain major strategic, operational or organizational changes
Highlight financial data, key performance indicators, and actions that point to future performance
4. Clear communications and engagement with lender senior credit management team:
Structure the terms of the financing to fit the lender's criteria, or make a compelling case for more flexibility relative to the lender's criteria
Identify the lender's downside risks and address these risks with actionable plans and supporting analyses
Build credibility with senior credit administration by using third-party professionals to develop or assess the company's financial plans and proposals, and assist in communications and negotiations with lenders
KGI would welcome the opportunity to discuss how to navigate through today’s increasingly turbulent capital markets, and how to close higher-risk financing transactions involving new loans, requests for additional borrowings on existing loans, and restructuring of existing loans.
For over 30 years, KGI has assisted both borrowers and lenders in completing hundreds of "higher-risk" financings, and has advised companies and organizations facing complex and urgent business matters, including over $500 million in recent loan transactions involving middle-market companies.
KGI is a market leader in helping our clients to improve profitability and cash flow, restructure debt and operations, resolve business disputes, and facilitate capital transactions.
For more information contact:
Steve Green, Co-Founder & President: sgreen@kginc.com