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.
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 qualified investors; or a wider investor base including existing shareholders. Time to money will be different in each scenario.
Please click here to read the full alert memorandum.