Execute a debt offering

Interest rates remain at historic lows and with increased volatility in the equity markets, debt financing continues to be a popular avenue for raising capital. But the debt markets are challenging and complex to navigate and successfully completing a debt offering requires thoughtful planning and execution.

Maximize interactions with bankers, lawyers, auditors, boards, ratings agencies and other advisors.

Impacts to companies:
Capital raising through issuance of debt or equity demands significant executive attention and resources.

Improperly applying non-GAAP measures or not appropriately reflecting complex accounting transactions can
  • impact reported or pro forma financial measures
  • which in turn directly impacts the rating agencies assessment
  • which ultimately drives the pricing on the debt

Impacts to companies:
Accounting matters are often overlooked while negotiating indentures to the debt documents e.g.
  • definitions to various ratios used in covenant calculations
  • reporting deadlines to bond holders

Determine pro forma implications of the debt offering, how these will be captured in the offering memorandum and if there are any accounting implications on the historical financial statements.

What companies should do:
Define financial statement requirements, non-GAAP measures and non-financial disclosures required for the offering memorandum.

The finance team should be closely involved in working with company / outside counsel on covenant performance measures, definitions of accounting terms, financial statement requirements and filing timelines.

What companies should do:
Develop effective project planning and monitoring systems, understand risks and interdependencies, design communication frameworks and issue resolution processes, as well as a structured change management process.

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Frequently, companies look to alternate forms of debt financing by negotiating private placement debt offerings (e.g., 144A) that are typically required to be publicly registered up to a year later. With no initial registration requirements, time to market can be considerably quicker. However, with little guidance on non-SEC offerings and diversity in practice, it can be challenging to understand how best to navigate complexities when preparing an offering. In addition, subsequent to registering private placement debt with the SEC, a myriad of reporting issues arise, especially for entities that were previously private. Many questions must be answered: What are the pros and cons between private placements and registered offerings? What are the minimum requirements on private placement deals? What are best practices? What works with investors? What are some of the common pitfalls? Answering these questions and managing the associated complex tasks requires commitment and prioritization. PwC’s capital market professionals can help you answer these questions and advise you on addressing key issues in a constrained timeline.

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