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.