The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Distressed investments: Too hot to handle

Banks now busy negotiating debt-for-equity swaps in their distressed investments could actually be making their problems worse.

Banks funding leveraged buyouts were rightly criticized in the early stages of the downturn for being wrong-footed by private equity sponsors, signing up to generous covenant waivers largely as a result of being unable to do anything else.

In recent months they have adopted a more robust approach, and more and more wiped-out equity holders are being forced to hand over the keys in debt-for-equity swaps.

West Bromwich Building Society, Styles and Wood, and Independent News and Media have agreed to such deals, along with the private equity owners of Gala Coral (Candover, Cinven and Permira), which are ceding control of the company to debtholders. UK household goods retailer Robert Dyas, previously owned by Change Capital, has passed control to lenders Allied Irish and Lloyds. Even Hollywood studio MGM is reportedly considering a debt-for-equity swap to tackle its $3.7 billion debt burden.

But while many banks and debt funds may now be congratulating themselves for taking a tougher stance with their errant borrowers, they need to look carefully at what they have taken on. Many have been frantically staffing up their workout departments in anticipation of the volume of work coming their way but professionals with tried and tested expertise in this field are few and far between.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree