Financial Restructuring

We realize that sometimes companies face the reality of slower growth driven by the changing economic environment. Financial Restructuring by Seeds conducts a comprehensive re-design of your company's capital structure, debt obligations, liquidity profile, asset base, financing arrangements and, if necessary, the ownership structure, to restore financial stability and improve profitability moving forward.

This allows for stable business, healthy stakeholder relationships and the building of a strong platform for the future.

When to Restructure?

Seeds normally undertakes financial restructuring for a company when its existing financial structure no longer matches its economic capacity. The distressed company might have substantial profits, yet it faces financial distress because it has one or more of the following:

Too Much Debt

Inability to Fulfill Payments on Time

Capital Draining Non-Core Assets

Short-Term Debt Financing Long-Term Assets

Declining Operating Cashflow

Foreign Currency Mismatches

Excessive Interest Expense

Insufficient Working Capital

Large
Loan Repayments

Next: A Diagnostic Assessment

After identifying that the company is in need of a financial restructuring, the next step is to ask fundamental questions and perform a complete diagnosis on different financial and operational aspects of the firm, as follows:

Liquidity

Does the company have sufficient liquidity to operate in the next 12-24 months?

Operations

Is the underlying business economically viable and capable of generating sustainable cash flow?

Debt

How much debt can the company pay back sustainably?

Capital Structure

What is the best debt-to-equity mix to support financial growth?

Assets

Which assets should be sold, monetized, or re-allocated?

Funding

Which re-financing methods are most appropriate?

Stakeholders

How should value, risk and losses be allocated among creditors and shareholders?

Third: A 7-Step Action Plan

After completing the diagnosis, we will then proceed with performing a comprehensive, 7 step action plan to restore financial health:

Stabilize Liquidity

Optimize Cost Structure

Determine Room for Debt

Restructure Liabilities

Optimize Assets/Capital

Restore Profitability

Create Long-Term Financial Sustainability

Fourth: Deploying the Right Tools

Now that we have established a solid action plan for the company, these are among many tools Seeds Consulting can deploy to put the firm's restructuring plan into motion:

Tool

Refinancing

Maturity Extension

Interest Reduction

Grace Period

Debt Rescheduling

Debt-Equity Swap

Equity Injection

Asset Sale

Sale & Leaseback

WC Restructuring

Covenant Reset

Sukuk/Bond

Preferred Equity

Strategic Investor

Primary Purpose

Replace Existing Debt

Reduce Near-Term Repayment Pressure

Lower Debt Burdens

Preserve Short-Term Liquidity

Match Repayments with Cash Generation

Reduce Leverage

Recapitalize Balance Sheet

Generate Cash and Reduce Debt

Monetize Fixed Assets

Release Trapped Cash

Avoid/Cure Default Covenant Breaches

Diversify Funding

Add Capital while Structuring Control/Economics

Provide Capital and Possibly Operational Capability

Additionally: Other Items to Consider for Optimal Restructuring

Seeds Consulting considers the strongest restructuring assignments combine corporate finance, valuation, credit analysis, cash-flow modeling, negotiations, capital markets, legal structuring and a turnaround strategy.

This is particularly relevant to infrastructure and real-asset businesses, where a fundamentally valuable asset can become distressed simply because the original financing structure is poorly matched to its long-term cash generation.

Lastly: A New Financial Horizon

It is very important to note that a complete or partial financial restructuring is not merely a distress tool, but a strategic shift towards new value creation.

After a thorough consultation, if management is now able to:

Refinance Expensive Debt
Extend Maturities
Introduce Institutional Investors
Issue Sukuk
Optimize Working Capital
Separate Business Units
Recapitalize the Company Ahead of Expansion

They are now not only in a better position financially, but are able to grow un-hinged, enhancing their strategic and creative freedom all the while restoring stakeholder confidence.

Case Study: Financial Turnaround for a Vaccine Factory

(This project was completed by our principal consultant during her time at Gulf One Investment Bank)

A factory in the Eastern Province of the Kingdom produces vaccines for plants. Upon in-depth analysis of the company, we found a high amount of debt and low income generation, even though they are the only factory in the Kingdom that produces such vaccines.

Our next step was to create contracts with the Ministry of Health, and perform diligent financial structuring so as to cut costs and pay a lot of the accumulated debts.

The company was valued at $25 million, and 3 years after the financial restructuring the company was valued at $250 million. A 10x increase in company value.