For many companies, 2020 will turn out to be drastically
different than expected. The impact of the COVID-19 pandemic is
still hard to predict, but there is no doubt that a number of
companies will face liquidity constraints, and possibly pressure on
financial covenants and/or their rating, as a result of lower
revenue, and a tightening of the credit market. Relief, after
cancelling dividends and reallocating cash within the group, may
require raising new equity or hybrid instruments, possibly on an
accelerated basis. This memorandum explores paths to fast-track
equity raises and provides a practical guide for boards and senior
management of Belgian companies.1
We plot a few legal and strategic parameters based on three
scenarios: a "rescuer" set-up; an ABB offering; and a
rights issue with a short offer period. The choice for either
scenario will be essentially driven by the question of who is
willing to fund: one or a few specific investors; a limited group
of
