MSN MoneyCentral – Europe could face a wave of corporate restructuring in the second half of this year or first six months of 2008, according to a survey of US and European hedge funds and otherinvestors.
The survey – conducted by Cadwalader, Wickersham & Taft, the law firm, Rothschild, the investment bank, and Debtwire, publishing group – says private equity-owned companies could be particularly vulnerable to problems. Most buy-out groups predict that up to a fifth of their deals will run into trouble in the next three years, the report adds.
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It finds that paper and packaging and chemicals are the most likely sectors to generate restructuring business.
“Rising commodity and energy prices are putting pressure on producers in the paper/packaging and chemicals sectors,” says Richard Millward, of Rothschilds.
Germany is considered to be the most vulnerable country market. The survey comes amid a growing debate about how vulnerable businesses could be to a deterioration in borrowing conditions. The cost of raising debt finance has been unusually cheap for risky companies in recent years – one factor that has enabled private equity players to embark on highly indebted deals.
