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South Africa restructuring outlook survey results 2017

Seeing through the fog

What does 2017 hold for the Restructuring Industry?

Key takeouts from this report

  • 57.1% of respondents expect growth in South Africa’s economy, driven by an improving global economic environment 
  • sectors most at risk to be distressed in the next year are retail, agriculture and construction 
  • 58.1% of survey respondents expect an increase in activity in their restructuring teams in the next 12 months, following on from 45.5% over the last 12 months 
  • protecting the business is still ranked as the number one priority of a restructuring project, with the preservation of employment becoming increasingly prominent
  • early identification of financial distress remains one of the main areas where restructuring professionals believe the local restructuring industry could be improved 
  • 38.8% of respondents report that the injection of equity finance (via a sale of the business, non-performing assets or the introduction of new equity) is the most frequently used form of restructuring, followed closely by business rescue 
  • existing banks are still the most likely sources of distressed funding for the majority of respondents (30%), but existing shareholders are listed as the second most likely option (20%) 
  • a lack of available security was cited as the greatest challenge to distressed companies raising debt finance, closely followed by a lack of risk appetite from lenders 
  • respondents mainly define ‘success’ in business rescue as the business continuing on a solvent and liquid basis, closely followed by a better return for creditors 
  • 81.9% of respondents have had a 50% or higher success rate in informal restructurings compared to 63.7% in business rescue, pointing to the importance of early identification and the inherent risk of value erosion in business rescue.

What our experts say

The ability to identify distress early by management and boards of directors, accompanied with the imperative need for restructuring practices, both informal and formal, to develop and become more dynamic, is more critical now than ever before.

How can Deloitte help.

At Deloitte, we deliver restructuring solutions designed to build a platform for swift recovery and sustained success. We will use our expertise to identify the causes of the difficulties, identify the best strategy for business recovery and develop an optimal financial and/or operational restructuring solution. We’ll also help you implement the optimal solution through a solvent or business rescue route.

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