White & Case advises insurers on restructuring of Trakcja PRKiI

Global law firm White & Case LLP has advised AXA Ubezpieczenia Towarzystwo Ubezpieczeń i Reasekuracji S.A., Credendo – Excess & Surety Societe Anonyme operating in Poland through Credendo – Excess & Surety Spółka Akcyjna Branch in Poland, Generali Towarzystwo Ubezpieczeń S.A., Korporacja Ubezpieczeń Kredytów Eksportowych S.A., Sopockie Towarzystwo Ubezpieczeń Ergo Hestia S.A., Powszechny Zakład Ubezpieczeń S.A. and Uniqua Towarzystwo Ubezpieczeń S.A. on the restructuring of the financial debt of Trakcja PRKiI S.A. and its subsidiaries.

As a result of the restructuring, Trakcja PRKiI S.A. obtained overall financing of around PLN 1.2 billion in the form of various financial instruments including revolving loans, subordinated loans, funds from share capital increases, bank guarantees and insurance guarantees.

“This is one of the most complicated restructurings in Poland in recent years,” said White & Case partner Tomasz Ostrowski. “The document approval process took more than six months and involved more than ten financial institutions. The documentation is governed by Polish law, but the transaction also includes important elements of English and Lithuanian law.”

The White & Case team in Warsaw which advised on the transaction included partner Tomasz Ostrowski and local partner Aneta Urban.

If you would like to find out more information, please visit: https://www.whitecase.com/

General Electric slashes quarterly dividend ahead of restructuring

General Electric will radically shrink to focus on aviation, power and healthcare, betting on sectors it thinks it can make profits in, as the most famous US conglomerate tries to revive its share price after a decade and a half of stagnation.

The 125-year-old company cut its dividend and profit outlook in half as it begins the transition, in a widely expected plan unveiled on Monday by new chief executive John Flannery in New York.

GE shares fell 6 per cent to $19.22, its lowest in more than five years, valuing the entire company at about $168bn, as investors worried how the slimmed-down company would generate cash to justify its stock valuation.

“By the numbers, we see a core operating performance that is below plan, and, currently, a consensus expectations curve that we think remains too high,” said JPMorgan analyst Stephen Tusa.

GE is the worst-performing Dow component this year, down 35 per cent by Friday’s close. GE stock has effectively been dead money since September 2001, when recently retired chief executive Jeff Immelt took over, posting a negative total return even after reinvesting its juicy dividends.

Mr Flannery, who took over as CEO on 1 August, said he was “looking for the soul of the company again” and would focus on “restoring the oxygen of cash and earnings to the company.”

The transition likely means the sale of $20bn of assets. GE will jettison businesses with “a very dispassionate eye,” Flannery said, keeping only units that offer growth, a leading market position and a large installed base.

That could mean exiting businesses like lighting, transportation and oil and gas, closing factories around the globe, analysts said.

GE also plans to cut 25 per cent of corporate staff at its Boston headquarters. It has already started shedding jobs at its software business.

The dividend cut, only the third in the company’s 125-year history and the first not in a broader financial crisis, is expected to save about $4bn in cash annually.

“This dividend cut will be a major disappointment to GE’s (roughly 40 per cent) retail shareholder base,” said RBC Capital Markets analyst Deane Dray.

The cut will save GE $4.16bn in payouts, the eighth biggest dividend cut in history among S&P 500 companies, according to Howard Silverblatt, senior index analyst of S&P Dow Jones Indices. GE also had the biggest cut when it slashed its dividend by $8.87bn in 2009, Silverblatt said.

GE forecast adjusted 2018 industrial free cash flow of $6bn to $7bn, up from an estimated $3bn in 2017.

The move to make GE smaller and nimbler is a turnaround from the previous multi-business approach taken by former chief executives Jack Welch and Jeff Immelt.

Flannery’s changes repudiate much of Immelt’s vision of a “digital industrial” company that builds software to manage and optimize GE’s jet engines, power plants, locomotives and other products.

Conglomerates have long been out of favor on Wall Street, where investors prefer to bet on specific industries rather than a mixed portfolio.

GE forecast 2018 adjusted earnings per share of $1 to $1.07 per share, compared with its earlier estimate of $2 per share. Wall Street was expecting $1.16, according to Thomson Reuters.

The company on Monday cut its quarterly dividend to 12 cents per share, from 24 cents, starting in December.

GE’s dividend cut – a bid to save cash when the company’s cash flow is deteriorating – is the third in its history. The other two cuts came during the Great Depression and the global financial crisis of 2007-2009.

Flannery’s strategy is a turning point for the company, which over several decades built itself into a sprawling conglomerate with interests across media, energy, banking, aviation, railroads, marine engines and chemicals.

GE executives have said that analysts have undervalued the company’s digital business. They argue the digital units should be valued more like Amazon, Google and other fast-growing tech companies.

GE will also cut its board to 12 from 18 members.

AE Back

BM Advisory celebrates 5 years of Restructuring & Advisory Excellence

This week marks the 5th anniversary of the founding of our specialist mid-market restructuring & advisory firm.

We would like to take this opportunity to thank our business partners for their support in the successful outcomes BM Advisory has achieved over the past five years.

Our Restructuring & advisory Excellence Story

Since opening our doors to business in 2011, BM Advisory has built a reputation for bringing clarity, comfort and courtesy to complex and distressing financial situations in London, the South East and Manchester.

As a result of our success we have expanded our team from one member of staff to 20 staff across five offices nationally.

As further evidence of our growth, we have been rewarded with strong and growing relationships with our introducer base of accountants, solicitors, banks and asset based lenders.

Looking ahead, we are excited about expanding our services into the North West.

About the author: Andy is a licensed insolvency practitioner and a partner at BM Advisory. He is known for his extensive expertise in a wide range of industries with recent focus on retail, manufacturing, media, professional practices and the licensed trade.

Get in touch with Andy for insolvency and turnaround advice and services.