Morgan Joseph: Restructuring Remains Tough
November 11, 2009
Completing a restructuring remains difficult despite the open high yield market, according to a report issued today by the restructuring group of investment bank Morgan Joseph. The report cites a lack of DIP financing and high capital costs as chief obstacles.
While restructuring activity has increased recently, default rates continue at high levels, direct lending from hedge funds has dried up and financing remains expensive, notes James Decker, managing director and head of Morgan Joseph’s restructuring group.
Lenders and borrowers are increasingly using waivers and amendments to avoid selling distressed assets at low prices. Borrowers have negotiated extensions on debt in exchange for fees and adjusted yields. Fragmented lending groups such as CLOs, banks and distressed investors have made it more difficult for bank groups to agree on how to confront an issuer’s default. And debtors are still having a tough time finding debtor-in-possession financing.
Morgan Joseph is based in New York and provides financial advisory and capital raising services. Last year it branched into restructuring when it added a seven-person financial restructuring group from Alvarez & Marsal Corporate Finance (LFN, Sept. 23, 2008).
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