Paul Share: Mid-Year 2018 Update (Part II) – Turnarounds & Workouts
Paul Share was interviewed in Turnarounds & Workouts‘ July edition in the article titled “Mid-Year 2018 Update (Part II).”
Question: What has been your greatest success thus far this year?
Paul Share: The debt markets are extremely hot right now, so if a company is in the market to refinance, now is the time to do it. The markets are rewarding companies as there is a lot of cash chasing deals right now. I have seen clients get more debt and reduced rates, which was unexpected when we were testing the market.
Question: Has anything changed about your outlook for Chapter 11s since early January?
Paul Share: While it is difficult to predict the future, I am seeing the slow-creeping interest rate affect a lot companies. Weak companies with high debt loads are unable to sustain the continued water board effects. I am currently working on a healthy company with $1.6 billion in debt and free cash flow of $80 million after debt service. They are in no risk of any debt violations. The challenge is [that] every 25-basis-point increase by the Federal Reserve is a $4 million interest impact. There are currently six 25-basis-point increases forecasted through the end of 2019, which for my current company translates into $24 million of incremental debt service regardless how the core business performs. While this won’t put them out of business, it will impact the cash generated and their willingness to invest or pay dividends.