 |
|
|
Best Global corporate restructuring house: Goldman Sachs |
|
|
Also nominated: Lazard and Moelis |
Evaluating candidates for the best global restructuring house always involves two considerations: advisory firms argue that banks are too conflicted to be meaningful players and banks argue that it is their access and insight that gives them a better perspective on restructuring solutions. The strength of either argument changes with market conditions but Goldman Sachs, Euromoney’s restructuring house for 2011, has ably demonstrated the benefits of the latter proposition this year. “The thing that distinguishes Goldman is that we combine restructuring black belts with all the expertise that an investment bank can bring,” argues Andrew Wilkinson, managing director and European head of restructuring at Goldman Sachs in London. “There are some assignments where all you need is restructuring advice but when you are faced with a complex restructuring you just can’t get the answer out of a boutique.”
And complexity has been the order of the day in the restructuring market over the past year. “Business is more transactional and the footprint of our restructuring business is broader than that of other traditional restructuring houses,” explains Bruce Mendelsohn, co-head of Americas restructuring at Goldman Sachs. “We are advising on multiple components. One of our biggest positives is that we can do M&A advisory, restructuring advisory and liability management.”
This has been the case across the globe, a legacy of the debt-laden and complex financings that were put in place in the market excesses before 2007. Not surprisingly, real estate has featured large in many situations and Goldman has brought its expertise in this field to bear in many successful outcomes.
 |
“The thing that distinguishes Goldman is that we combine restructuring black belts with all the expertise that an investment bank can bring” |
In the US the firm advised Brookfield Asset Management, the cornerstone investor in the recapitalization of General Growth Properties, the second-largest shopping mall owner and operator in the country, which filed for Chapter 11 bankruptcy protection in April 2009. This was the second-largest bankruptcy the US had ever seen and Brookfield’s investment enabled all creditors to receive par. “The components of the deal included an equity offering as part of the restructuring,” explains Mendelsohn. “There were intricate structures associated with this.” Goldman was integral in formulating and structuring Brookfield’s investment strategy and was actively involved in negotiations with GGP creditors and in structuring the transaction. It was also left lead on the $2.3 billion equity raise launched on emergence from Chapter 11. “We need to know how to get out when we go in,” explains Mendelsohn. “We invented the concept of the DIP [debtor in possession] to exit, which has now become a trend. In GGP we created a DIP to equity. There was a lot of mortgage debt that the DIP lenders wanted, but it would have invaded the bank structure of the CMBS and had repercussions for the deal.”
It is exactly this kind of structuring expertise that Wilkinson feels sets the bank apart. “There are one or two large public company restructurings in Europe a year that involve full-scale debt conversion,” he says. “Last year it was Thomson and this year it is Punch and we were on both. Punch is probably the most complicated restructuring in Europe – it is inconceivable that a firm without a structured finance business could lead a restructuring like that. There is no doubt that each cycle of restructuring has become massively more complicated,” he continues. “Our window on the capital markets has been so important in the last three years. We saw the equity markets opening up before anyone else – you can only do this if you are number one in the equity markets. If you are a boutique, you simply don’t have a window on this.”
Goldman’s structuring expertise was again in evidence in Australia’s Lane Cove Tunnel work-out – which involved a bond buyback, the sale of the business, a staple financing and a pre-packaged bankruptcy. The US firm advised MBIA, which had wrapped A$1.1 billion of bonds but came out of the restructuring whole.
The strong credit markets for much of the year have enabled many potential restructuring candidates to amend and extend their debt facilities. Goldman has been at the forefront of this trend as well, tackling the more complex situations where there might be covenant breach and maturity issues. It was sole adviser to Grupo Corporativo Ono, the Spanish cable TV company, on the amendment of its €3.5 billion senior bank facilities – a deal that Wilkinson describes as “an amend and extend with lots of hair on”. Goldman led the deal for the sponsors and created a first-time forward-start facility to term out the amortization of the debt. “It needed a smart technical fix, so we set up an SPV and created a structure that did not need 100% approval. This kind of thing is meat and drink to our restructuring business.”
