Debt restructuring

XYZ LTD

Debt Restructuring Inter Firm Lending Restructuring

Milton

12/13/2011

Debt Securitization

December 13, 2011 [Debt Restructuring]

Sichangi Partners Advocate 2011

2 Ways

a. Lending for money owed to client

b. Fees to be offset against funds owed to clients

How to Meet the Deficit

1. Units to pay off their debts immediately

- Option not viable due to stress on cash flow the option gives to units

2. To have short receivables

- Clients that owe units pay immediately, units use clients payment to reduce deficit

o The money would be 50/50 rule on money availability

3. Prepayment

- Agreement with clients to pay deposit in advance to be offset on future services provided by

the firm.

Internal Debt Restructuring

1. Capitalization of Debt

2. Classification of Lending

- Working Capital

- Asset leasing

3. Repayment Plan

a. Coming up with a repayment plan.



Simple Model: Basic Structures;

1. Debt Capitalization /Securitization

Financial Guarantee

2. Arrangements for Simple Model:

Hill Financial Services - Sponsor __________________________________________

Sale or Agreement Special Purpose Vehicle _______________________________________________

1. Issue Credit Enhancement 2. Sovereign Protection 3. Introduce Interest Rates 4. Cash Flow Reallocation

HFS-

Lender

Units-

Borrower

Investors-

Recovery

Furquipment

SP Trust

Accounts Receivables

Accounts

Receivables



3. Explanation of Debt Capitalization:

Loan Payment Loan Agreements Proceeds Proceeds Sale of Asset Assets Backed Securities Service Agreements

Key Decision: Securitize the assets

Borrower Units

Hill Finance Services

Services Team

SPV- Furquipment

Investor

Securitize the Assets

Form of transfer of asset

Form of special

purpose vehicle

Form of credit

Enhancement Form of cash flow

Allocation Form of

Transformation of

Cash flows



The Process

Securitization Of Assets

- Securitization is the transformation of an illiquid asset into a security. - For example, a group of consumer loans can be transformed into a publically-issued

debt security. - A security is tradable and therefore more liquid than the underlying loan or

receivables, Securitization of assets can lower risk, add liquidity, and improve economic efficiency.

- Sometimes, assets are worth more off the balance sheet than on it. Types of Assets to Securitize:

a) Volume which is sufficiently large and homogenous to facilitate statistical analysis b) A stable history of rates, defaults, delinquencies, prepayments and so forth c) Sufficient diversification- to reduce vulnerability to economic stresses d) Basic lender’s credit quality standards that are capable of being evaluated and approved

by accounting and finance dept and specialized independent financial guaranty companies

e) Assets must be transferable and unencumbered Things to Assess from Assets Provided:

a) Asset portfolio analysis b) Legal structure of the transaction c) Quality of the originator/servicer d) The trustee/ Funding Entity e) The cash flow structure f) The counterparties

Is the company

ready?

Are the assets

Suitable?

What pool?

What legal Structure?

What credit Enhancement?



Option 2 Available From: Ford Motors: SPV ___________________________________________________________________ Furquipment _________________________________________________________________

Sichangi Advocate

HFS

UNITS

Funds Owners- Trust

Receivables Hill – CEOs Office

Corporate Brief

Litigation

Westlands

Rongai etc.

Receivables Assets Backed Securities (Furquipment)

Debt restructuring

Economy & Finance

Transcript of Debt restructuring