News
Largest debt restructuring in Russia during the past year
As the financial advisor of Concern Tractor Plants and lending banks, Ernst & Young assisted with the conclusion of an agreement to restructure the loan portfolio of the group's entities. The agreement was signed on 21 March 2011. Sixteen major Russian and foreign banks involved in the negotiations issued a five-year syndicated loan of RUB 32.34 bn to the largest machine-building holding in Russia.
This transaction became the largest national multi-creditor debt restructuring in the last year. In assisting with multilateral negotiations between the group’s owners, state and commercial lending banks, holders of bonds issued by group entities and government officials, Ernst & Young professionals performed a variety of important tasks:
- Independent review of long-term financial projections and the group's financial model;
- Analysis of the group's structure and economic relations between its entities;
- Assistance to the parties in formulating the terms of restructuring and a framework of interaction between the group and banks upon completion of the restructuring;
- Advice to the group and lenders in preparing a new loan agreement, including advice on financial covenants, definitions, conditions precedent and conditions subsequent, the monitoring system as well as other financial and commercial issues;
- Analysis of the group's short-term cash-flow forecasts and preparation of recommendations to improve the forecasting methodology.
At subsequent stages, it is planned that Ernst & Young will monitor the group's activities and assist in improving its operational performance.
The successful completion of the advisory engagement was made possible by the coordinated efforts of Ernst & Young professionals in various divisions, led by the Restructuring Department. At different stages, a substantial contribution was made by Transaction Advisory, Valuation, Internal Control, Tax and other Ernst & Young departments.
