Debt advisory - Michael Berry: It’s good to talk
When he set up debt adviser Versatus, ex-Nomura leveraged finance chief Michael Berry joined a growing universe of ex-bankers looking to join in the corporate turnaround and restructuring business. He speaks to Louise Bowman.
NOTHING ENCAPSULATES THE revolution in leveraged finance over the past couple of years more starkly than the re-emergence of the debt adviser. Who needed advice on how to raise debt in the boom years when banks were falling over themselves to lend without covenants, and CLOs and hedge funds were pumping unprecedented liquidity into the loan market? The only advice that many firms needed was how to field the deluge of solicited and unsolicited offers. Both corporates and private equity sponsors became accustomed to not having to wonder where their next loan was coming from.
The persistent lending freeze these entities are now faced with is having a traumatic impact. In March, Moody’s trailing speculative-grade corporate default rate for Europe was 2.7%. The agency predicts that this will rise to 22.5% by the year-end. Recent defaults include Sanitec, British Vita and Ferretti. That is a shocking deterioration, accelerated by the lack of new funding available to companies on the brink. Many ex-bankers are therefore planning to exploit their experience to try to find those pockets of liquidity that still exist.
"Some banks are demanding absurd fees for permitting things that are good for the borrower, and thus for the banks"
Michael Berry, Versatus
A 20-year veteran of the European leveraged finance market, Michael Berry launched Versatus (‘turnaround’ in Latin), with a view to exploiting the long experience of his team either to find new money or restructure existing deals for companies in trouble.