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The European debt is forcing a lot of the European companies to give up their valuable assets.
- February 7, 2012
- Posted by: admin
- Category: Uncategorized
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The sovereign debt crisis is only making the problems worse. A recent survey released by the European Central Bank showed that institutions reduced the credit available to companies in the third quarter of 2011, the latest figures available. More worrying for Europe’s corporate sector, banks also said they would pull back even further in the last three months of 2011.
“If companies aren’t viable and don’t have access to refinancing, banks don’t want to throw good money after bad,” said Ángel Martín Torres, head of restructuring for Spain at the accountancy firm KPMG.
Regulators’ efforts to spur lending have yet to pay off. In December, the European Central Bank moved to provide the financial sector with 489 billion euros ($639 billion) of low-interest loans. Authorities had hoped the money would ease the credit pressure on European banks so they would start lending again to the wider economy.
But instead of offering the money to credit-starved companies, institutions have preferred to deposit the cash with the central bank for safekeeping. On Jan. 18, officials said European banks had parked about $700 billion in overnight deposits with the central bank, the highest level since the euro was established in 1999.
The distress could open the doors for potential takeovers. Cash-rich multinationals, including Siemens of Germany and Philips of the Netherlands, have been hunting for attractive assets at troubled companies. Private equity firms that specialize in buying distressed assets also are on the lookout.
In January, Sun European Partners, the private equity firm, bought Bonmarché, a division of the insolvent British fashion chain Peacocks that caters to older women. Sun European already owns other retailers in the sector.
“Many companies have good assets but bad capital structures,” said Mark Sterling, managing partner of the law firm Allen & Overy’s restructuring and insolvency practice in London. “So if they are good underlying businesses and have no sources of refinancing, that creates opportunities.”
This article was taken from www
“If companies aren’t viable and don’t have access to refinancing, banks don’t want to throw good money after bad,” said Ángel Martín Torres, head of restructuring for Spain at the accountancy firm KPMG.
Regulators’ efforts to spur lending have yet to pay off. In December, the European Central Bank moved to provide the financial sector with 489 billion euros ($639 billion) of low-interest loans. Authorities had hoped the money would ease the credit pressure on European banks so they would start lending again to the wider economy.
But instead of offering the money to credit-starved companies, institutions have preferred to deposit the cash with the central bank for safekeeping. On Jan. 18, officials said European banks had parked about $700 billion in overnight deposits with the central bank, the highest level since the euro was established in 1999.
The distress could open the doors for potential takeovers. Cash-rich multinationals, including Siemens of Germany and Philips of the Netherlands, have been hunting for attractive assets at troubled companies. Private equity firms that specialize in buying distressed assets also are on the lookout.
In January, Sun European Partners, the private equity firm, bought Bonmarché, a division of the insolvent British fashion chain Peacocks that caters to older women. Sun European already owns other retailers in the sector.
“Many companies have good assets but bad capital structures,” said Mark Sterling, managing partner of the law firm Allen & Overy’s restructuring and insolvency practice in London. “So if they are good underlying businesses and have no sources of refinancing, that creates opportunities.”
This article was taken from www