STRESS ASSET MANAGEMENT FOR THE ASSET OWNER
Any Asset can be considered as stressed if the revenue it generates is not able to meet all its expenses. These can be broadly classified into two.
1 OPERATING STRESS :
If the asset is not able to generate enough revenue even to take care of its operating expenses.
2 FINANCIAL STRESS :
Assets under stress can either be disposed off at distressed values or will need to be revived. Both these need to be managed differently and require specific set of expertise.
OPERATING STRESS MANAGEMENT: It requires:
In depth analysis of all the cost parameters
Identifying the delinquencies in cost control
Analysing / Changing the product mix
Suggest and implement the solutions
OPERATING FINANCIAL STRESS MANAGEMENT:
Due to failure in honouring Debt obligation, the relationship between the banker and the Asset Owner often deteriorate. To resolve, besides taking all the steps as mentioned for operating stress management, it requires
Effective and fair representation to the Bank
Finding a sustainable solution acceptable to owners as well as banks, which could be
o One time settlement (OTS)
o Corporate / Strategic Debt Restructuring (CRD/SRD)
Infusion of Additional Capital
New Investors who have better products, costs controls or practices
Executing the required procedures / documents
DISPOSING STRESSED ASSET:
Stressed assets could be a huge liability for the existing owners. However, at the same time, it presents huge opportunity to buy such assets at highly discounted price, provided the new management can bring in requires operational efficiencies.
At ProBizAdvisor, we advise on managing stress assets:
FROM BORROWERS PERSPECTIVE:
Improving Operating Efficiency
Re-Structuring of Loan
Induction of new investors and capital
FROM LENDERS PERSPECTIVE
Improved dialog between parties for finding solutions
Finding new investors