Day One
Foundations
High yield (HY) and leveraged loans market background – size, historic returns and default rates
Key instruments – HY bonds (across capital structure including PIKs and PIK-Toggles); term loans; other bank debt (revolving credit facilities, bridge finance, working capital facilities); credit default swaps (CDS)
Group structure and capital structure – super senior, senior secured (first lien, second lien), senior unsecured; structural subordination; restricted group
Security packages and enforcement rights – floating vs fixed charges; share capital as security
Key covenants and carve-outs – limitations on additional indebtedness, collateral liens, restricted payments and asset sales
Guarantors
Call schedules
Key differences between HY bonds and term leveraged loans
Case Study 1 – Cerba (European clinical lab testing business). Analysis of: group structure and capital structure; security; covenants and carve-outs; guarantees
Credit Analysis & Investing Toolkit
Delineation of credit analysis process – business assessment, financial assessment, instrument assessment
Business assessment – products, competition, customers, company
Financial assessment – financial statement analysis including key cash flow template; forward-looking financial modelling; key credit metrics; covenant compliance testing; liquidity analysis and debt service capacity
Instrument assessment – covenant, seniority, security and guarantor protection
Stress-testing – what does it take to “break” the company? What are the key ways in which companies get into distress? What are recovery prospects?
Valuation – identifying comparables for relative valuation; DCF valuation
Case Study 2 – Cerba (European clinical lab testing business). Deep dive business analysis including of comparables; financial statement analysis; full forward-looking financial model across base, bear and bull scenarios, restructuring analysis and recovery estimates
Day Two
Case Studies – All Include Deep Dive Business, Financial & Instrument Analysis
Identifying & Analysing Companies In Structural Decline
Companies With Negative Free Cash Flow Due To Period Of High Capex In Anticipation Of Strong Future Growth
Aggressive Shareholder Tactics To Expropriate Value From Creditors
Case Study 5 – Altice International (fixed line, mobile, broadband, pay TV provider across Portugal, Israel and Dominican Republic), Designation of Portuguese and Dominican Republic entities as unrestricted subsidiaries and economically higher ranking debt issuance at Portuguese entity
Case Study 6 – Lowell (debt purchaser and servicer of consumer unsecured NPLs, primarily in UK, Nordic region and Germany). Liability management exercise
Companies With Weak Governance / Optimistic Representations To Investors
Companies With Hidden Value To Support Debt Coverage
Case Study 8 – Boparan (poultry producer). Hidden value within Poultry segment with Polish profitability masked by loss-making UK business
Case Study 9 – Morrisons (UK food retailer). Hidden value in petrol forecourts business and car park space
Companies With Reasonable Businesses But Stretched Capital Structures
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