COVID-19: impact on fin­an­cing


It is clear that the coronavir­us has a big impact, not only on a great num­ber of people, but also on com­pan­ies through­out the world. From a fin­an­cing per­spect­ive, com­pan­ies may for instance as a res­ult of decreas­ing rev­en­ues because of the vir­us, have dif­fi­culties to meet their fin­an­cial cov­en­ants like DSCR or lever­age ratio under exist­ing fin­an­cing agree­ments. The decrease in rev­en­ues will affect their cash flow, which may res­ult in issues with pay­ing interest and/or repay­ment of loans when due, and may affect the value of col­lat­er­al pos­ted. This in turn may lead to col­lat­er­al calls, events of default being triggered or even in ter­min­a­tion of agree­ments.

The coronavir­us may also affect bor­row­ers and lenders that are plan­ning to enter into new facil­ity agree­ments. Lenders may want to apply stricter bor­row­ing con­di­tions and ask bor­row­ers to incor­por­ate in their busi­ness plan how the coronavir­us may impact their busi­ness and how the bor­row­ers are plan­ning to deal with these risks.

Our spe­cial­ists can assist both bor­row­ers and lenders in find­ing prop­er solu­tions to fin­an­cing issues caused by the coronavir­us, for example by review­ing loan and secur­ity doc­u­ment­a­tion and map­ping risks in con­nec­tion with the coronavir­us, by pre­par­ing appro­pri­ate waiver let­ters and with amend­ing or refin­an­cing exist­ing facil­ity agree­ments.