Capital Structure & Funding Strategy – AWR Lloyd

Capital Structure & Funding Strategy

Long range financial planning is based on a combination of capital structure targeting, funding requirement analysis and existing debt redemption schedules.

AWR Lloyd uses a proprietary Medium Term Financial Planning* analytical method. We first help clients set optimal medium and long-term capital structure targets through application of tax efficiency criteria, debt covenants, peer analysis, case studies – and assessment of rating agency benchmarks. We then put together detailed cash flow projection models and assess debt and equity funding requirements under different growth scenarios.

Based on this analysis we then help our clients to develop alternative strategies for raising new debt or equity capital, refinancing existing debt finance, generating proceeds from divestment or spin-offs – and/or exploiting excess cash (low gearing) through more aggressive acquisition and investment strategies or via dividends and share buybacks.

*Note: ‘MTF’ or Medium Term Financial Planning is a proprietary AWR Lloyd analytical tool.

For example: AWR Lloyd worked with a listed Asian energy group to develop a medium term financial planning model. The group had a complex portfolio of intermediary holding companies and businesses in different countries. We modeled the cash flows, debt schedules and intra-group flows and loans to establish funding requirements and possible excess or under-gearing outcomes. In one year the company had high gearing but wanted to execute a large (multi-billion dollar) cash acquisition. AWR Lloyd advised on maximum gearing potential, divestment strategies and equity capital raising schemes to facilitate the acquisition.