Liability management is becoming the go-to option for companies
in search of a lifeline, looking to capture a discount or seeking
to avoid formal restructuring.
Once seen as novel, transactions that leverage flexibility
within existing debt documents to create refinancings, unlock fresh
capital, and take advantage of other opportunities, are now
familiar in the U.S. and no longer uncharted territory in
Europe.
With techniques such as the double-dip, drop-down, and uptier
exchange becoming well entrenched, the nature of the conversation
is changing. Companies and lenders that have made a success of
liability management increasingly recognize that securing an
extension of runway is not an end in itself. Instead, it is best
deployed as part of a holistic exercise that aims to resolve
– rather than paper over – the underlying causes of
financial pressure as part of a comprehensive turnaround or
transformation.
