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KPMG CEE

KPMG CEE . CEE Real Estate Capital Markets “Dense Clouds, No Rain”. AUDIT / TAX / ADVISORY / LINE OF BUSINESS . George Leslie Director Advisory Head of Special Situations Group, CEE April 8, 2009. Outline. Current situation - fundamental issues

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KPMG CEE

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  1. KPMG CEE CEE Real Estate Capital Markets“Dense Clouds, No Rain” AUDIT / TAX / ADVISORY / LINE OF BUSINESS George Leslie Director Advisory Head of Special Situations Group, CEE April 8, 2009

  2. Outline • Current situation - fundamental issues • Distressed situations - principal stakeholders • Restructuring strategies - general activities • Policy questions & market regeneration

  3. Current Situation Fundamental issues

  4. Hello!

  5. Non-functioning market (chaos)

  6. Confusion, misinformation

  7. Restructuring(Grandfather of restructuring, Samuel Pepys)

  8. Global deleverage

  9. Unavoidable capital destruction

  10. Distressed Situations Principal stakeholders

  11. Banks situation

  12. Investors/fund managers situation

  13. New players (Somalia based opportunity funds)

  14. Developers situation

  15. Restructuring General activities

  16. Bank restructuring

  17. Risk management(Pre-default)

  18. Financial restructuring • Diagnostic assessment (IBR) • Valuation and pricing analysis • Liquidity and working capital management • Financial plans to underpin the restructuring • Lender/borrower communications and negotiations • Accelerated M&A advice, transaction support • Strategic financial advice • Contingency planning • Monitoring

  19. Operational restructuring • Business model rationalization • Enterprise value rationalization & re-engineering • Restore order, clarity & stability • Operational plans to underpin restructuring • Downsizing • Management reorganization, interim management • Processes – decision making, production, etc. • Market, product/service realignment • Governance

  20. Investors/fund managers

  21. Uncovered positions

  22. LP Revolt • Promote evaporation • Pending sponsor insolvency • Misalignment of stakeholder incentives/interests • Monitoring • Voluntary/forced surrender of investment manager • Fund dissolution or transition to new sponsor

  23. Policy Questions Market regeneration

  24. Containment • Quantitative easing • Sovereign guarantees • Bank nationalization • Bank recapitalization

  25. Market regeneration • Bank transparency • Isolate toxic assets • Workout • Capital redistribution • Derivatives regulation

  26. Muddling through – economic trends Inflation versus deflation

  27. Time…

  28. …is not kind…

  29. …to inactive markets

  30. Market activity, transactions

  31. Redistribution of capital

  32. George Leslie Director Advisory Head of Special Situations Group KPMG CEE +36 703 331 467 george.leslie@kpmg.hu www.kpmg.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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