Your SlideShare is downloading. ×
0
Opportunities
> Different types of distressed assets
> Pre-business rescue, during business rescue and after business
resc...
Challenges
> Its not ordinary M&A - very technical from a legal
perspective
> Can be litigious - militant creditors
> Regu...
Southgold Exploration Pty Ltd
> PCF providers -
> Standard Chartered
> Credit Suisse
> Combined Exposure R2.6b - secured
>...
Southgold Exploration Pty Ltd
> Business rescue practitioner appointed –
> BRP legal team – business rescue legal, M&A leg...
Southgold Exploration Pty Ltd
> Regulators and government –
> DMR (6 to 7 months)
> Competition com (2 weeks for the Witsg...
Southgold Exploration Pty Ltd
> Witsgold offer –
> R75m on deal closure
> Fixed repayment schedule to lenders for R600m ov...
Southgold Exploration Pty Ltd
> Witsgold bought an asset which swallowed an initial investment of
R11 billion before it we...
On Digital Media t/a Top Tv
8
> PCF providers –
> shareholders stopped funding - had nothing
> approached creditors
> secu...
On Digital Media t/a Top Tv
> Business rescue practitioner appointed advisors –
> business rescue legal team – business re...
On Digital Media t/a Top Tv
10
> StarTimes offer –
> R45 million to trade creditors (15c/R)
> R30 million to DBSA
> existi...
On Digital Media t/a Top Tv
11
> StarTimes have invested in an asset which swallowed an initial
investment of R1.4bil befo...
Summary
12
> Business rescue can keep an asset whole as opposed to non-
business rescue solutions
> Big becomes, complex a...
THE ROLE OF WERKSMANS
AS LEGAL ADVISOR
Eric Levenstein, Director
Upcoming SlideShare
Loading in...5
×

VSquXred Business Rescue presentation

216

Published on

VSquXred Business Rescue presentation

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
216
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
9
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "VSquXred Business Rescue presentation "

  1. 1. Opportunities > Different types of distressed assets > Pre-business rescue, during business rescue and after business rescue – focus today is on during business rescue > Many successful business rescues have resulted from some form of investment > Business rescue is a creditor driven process > Distressed investment environment in South Africa is young and undeveloped > Business rescue legal framework offers protection and “space to put together a deal” > Practitioner (neutral and independent) takes the deal to stakeholders – avoids, or at least mitigates, the dangers of the over or under selling to stakeholders by management or board. 1
  2. 2. Challenges > Its not ordinary M&A - very technical from a legal perspective > Can be litigious - militant creditors > Regulatory environment in South Africa is a deterrent > Within business rescue it is emphasised --> clock speed (the potential discount for an 'intact asset' makes up for the pain) > All stakeholders’ interests need to be balanced to avoid failure due to litigation and/or unnecessary delays and/or 'no' votes 2
  3. 3. Southgold Exploration Pty Ltd > PCF providers - > Standard Chartered > Credit Suisse > Combined Exposure R2.6b - secured > Why business rescue? > Care and Maintenance costs - approximately R200m for South Africa only > Other creditors – > Noteholders - R1.0 billion > Trade creditors - R0.3 billion > Inter-company / shareholders loans - R7.0 billion > Total - R11b 3
  4. 4. Southgold Exploration Pty Ltd > Business rescue practitioner appointed – > BRP legal team – business rescue legal, M&A legal > JP Morgan - Transaction advisory > KPMG - financial modelling, creditor verification, advisory > Terra consulting - valuations 4
  5. 5. Southgold Exploration Pty Ltd > Regulators and government – > DMR (6 to 7 months) > Competition com (2 weeks for the Witsgold deal, 3.5 weeks for Sibanye/Witsgold deal) > DWAF > NNR > SARS (more than a year to settle) > SARB > Local municipal and community structures 5
  6. 6. Southgold Exploration Pty Ltd > Witsgold offer – > R75m on deal closure > Fixed repayment schedule to lenders for R600m over current LOM > R1.2b flex payment schedule to lenders based on FCF > Further R680m to lenders based on 10% FCF participation over any additional LOM (if any) > Option to settle without penalty > 36 month interest moratorium 6
  7. 7. Southgold Exploration Pty Ltd > Witsgold bought an asset which swallowed an initial investment of R11 billion before it went into rescue for approx R1.9 billion (PV) > Discount - 83% > Duration - 21 months > Level of complexity - extremely complex > Various jurisdictions - Switzerland, English, Canada, United States of America > Canadian CCMA and Receivership > USA Chapter 11 proceedings > Time zones - conference calls with callers on various time zones - (worst was Vancouver, NYC, Toronto, London, JHB, Zurich, Singapore, Beijing) - it’s a killer 7
  8. 8. On Digital Media t/a Top Tv 8 > PCF providers – > shareholders stopped funding - had nothing > approached creditors > secured creditor - DBSA consent (DBSA R200mil exposure) > monthly subscription fees > business 'as usual' - trading entity > Other creditors – > IDC -approx R900 million total exposure > NEF - R100 million > trade creditors - R400 million > Total - approx R1.4 billion
  9. 9. On Digital Media t/a Top Tv > Business rescue practitioner appointed advisors – > business rescue legal team – business rescue legal, M&A legal > KPMG – valuation > ODM CEO - domain expertise > ODM CFO – finance and modelling > Regulators and government – > ICASA > DOC > Competition commission (deal did not require approval, investigations into anti-comp behaviour by Multichoice) > SARB (claims bought by ST) > Electronic Communications Act (ECA) - limitation on foreign ownership of a broadcast license > New BEE consortium (still confidential) 9
  10. 10. On Digital Media t/a Top Tv 10 > StarTimes offer – > R45 million to trade creditors (15c/R) > R30 million to DBSA > existing shareholders kept in but severely diluted > new BEE > split into 2 companies - broadcast company, services company > further investment of R1 billion in business plan
  11. 11. On Digital Media t/a Top Tv 11 > StarTimes have invested in an asset which swallowed an initial investment of R1.4bil before it went into rescue for approx R106 million > Discount - 92% > Duration - 20 months and counting > Level of complexity – extremely complex (but for other reasons) > politics and agendas > rogue offer (MSG Africa backed by Multichoice) > litigation > regulatory - DOC, ICASA, SARB > cross-border and cross-cultural issues > virtually every major supply contract has been re-negotiated > almost all technical platforms have been migrated (uplink stations, fibre links, play- out facilities, redundancy systems)
  12. 12. Summary 12 > Business rescue can keep an asset whole as opposed to non- business rescue solutions > Big becomes, complex and becomes expensive - underlying value is essential > Time consuming and resource hungry > Deep discounts are made possible > Ultimately builds goodwill with stakeholders > Young law - experienced advisors and business rescue practitioners are essential and also scarce > Every business rescue presents its idiosyncrasies - there is no 'cookie cutter' approach > Regulatory environment and other laws do not speak to BR  need to know how to navigate the 'waters‘ > PCF remains a challenge and will do so until distressed investment (debt and equity) market develops
  13. 13. THE ROLE OF WERKSMANS AS LEGAL ADVISOR Eric Levenstein, Director
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×