Debt Management
Debt Management
As a lender, you are facing an increasing level of sub-performing and non-performing loans. Whether you seek an overall assessment of your lodging and hospitality-related risks or require complete assistance to proactively manage your loan portfolio's performance, our team is ready to address your challenges.
For over 20 years, our team has monitored more than 300 hotel loans and we are the sole company to have structured a global answer for debt monitoring in the hospitality industry. After having understood your specific issues, we will offer you all, or part of the following services:
Debt Portfolio Audit
In our initial audit, we aim to provide a comprehensive evaluation of your lodging and hospitality risks, offering insights into the probability of default for each of your hotel loans.
We will categorize these loans into three groups (performing loans, sub-performing loans, non-performing loans) and develop a strategy tailored to their specific characteristics.
Leveraging our proprietary software, Advanced Debt Monitoring (ADM©), we will meticulously analyze the operational cost structure of each hotel. By stress-testing revenue streams, we'll forecast the Available Cash for Debt Service (ACDS).
Subsequently, our audit will rank every hotel and loan based on the outcomes of our ACDS stress test. This ranking process can be conducted collaboratively with your team or independently by our dedicated experts. Our goal is to empower you with actionable insights to optimize financial strategies and mitigate risks effectively.
Portfolio Monitoring
Performing loans: We will provide quarterly monitoring of the collateral's operational performance through desktop studies. To maintain our ranking, we will evaluate both operational performance and the 12-month ACDS rolling projection.
Sub-performing loans: Monthly reviews of operational and head office performances will be conducted, along with a 36-month ACDS rolling forecast based on various revenue scenarios. To prevent any further decline in performance, we will establish a mutually trusting relationship with the borrower.
Non-performing loans: Our focus will be on creating an appropriate and accurate exit roadmap for each loan to maximize your recovery.
Debt-to-Equity Swap
A debt-to-equity swap procedure is most often initiated in cases of default or when the borrower renounces repaying their debt installments. It can be partial or total. This involves the lender converting all or part of the initial debt into equity in the borrower's capital. In most cases, the borrower loses control of their company, and the initial lender becomes the principal shareholder.
We have operational experience with this type of complex operation and are able to ensure its implementation and success. In all cases, the success of a debt-to-equity swap is associated with a deep restructuring plan and a repositioning of the company. "If you don't change the story, you don't change the EBITDA."
Our mission is broken down into 5 steps:
- Negotiations
Conducting negotiations between the initial borrower, the lender, and possibly the judicial administrator representative if the borrower is under his protection. - Drafting the Debt-to-Equity Swap Contract
Piloting and drafting the contract with all the parties involved. - Creating a "Turnaround Roadmap"
Developing an action plan for restructuring and repositioning, enabling the company to restore operational performances and achieve the expected valuation level. - Operational Asset Management Mandate
Through this mandate, we ensure the proper execution of the Turnaround Roadmap on a day-to-day basis, which often means that we hold a delegation of authority over the management teams. - Exit & Valuation
After executing the Turnaround Roadmap, we organize and/or handle the entire process of selling the asset or asset portfolio.