Restructuring covers a broad range of situations which many firms in Europe will experience at some stage. There are often occasions when the group’s financial performance goes unrewarded by the markets and the sum-of-the parts is greater than the whole (the classic Racal /Vodafone demerger) and this leads to the need to consider a restructuring in order to enhance shareholder value. On other occasions, a restructuring is necessitated by strategic issues (BA/ Go). Thirdly, restructurings take place because a group is in financial difficulties and the implementation of the transaction is intended to achieve a “turnaround” in the group’s fortunes.
Restructuring (or reorganisation – the terms are often used interchangeably) can be effected in a wide variety of ways: both formally, in court, or less formally, out-of-court. Additionally there are a wide range of methods in which this can be effected but in Europe, unlike the USA, much of the restructuring is done informally.
One of the tools which is assuming increasing importance not only in the UK but also in Europe and further afield is the scheme of arrangement procedure under the UK Companies Act. Despite this, schemes are been used increasingly by non-UK firms to restructure firms in Germany (Rodenstock, Telecolumbus, PrimaCom), Spain (Cortefiel, Metrovacesa, Re La Seda de Barcelona), Italy (Seat), Holland / Bulgaria (Vivacom) and even the Gulf (GIC) and the recent landmark Vietnam (Vinashin) case.
Although some jurisdictions have sought to implement similar legislation (e.g. Spain), the lack of precedents coupled with the enormous flexibility offered by schemes, makes it likely that, for the medium term, UK schemes will retain their attractions to foreign firms.
This Restructuring, Turnarounds & Schemes of Arrangement course reviews the key issues of schemes and their use and application together with the problem areas (for example, class and value).
Last, the programme, covers restructuring in a turnaround situation, as that often involves issues not relevant in happier circumstances. In particular it provides a template of the four key issues to consider.