Ufuk Süleyman Oflaz

01Debt structure, repayment capacity and restructuring scenarios

Debt Restructuring Analysis

An analysis model that brings a company’s financial debt into a single inventory, compares it with cash generation capacity and makes the effect of different restructuring scenarios visible.

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The problem

In companies under debt pressure, loans sit with different banks under different maturities, rates and collateral. Total debt service is rarely compared with the cash the company generates, so when talks with lenders start, nobody knows which restructuring is actually sustainable.

Why it matters

Restructuring is meant to fit the repayment schedule to the company’s ability to generate cash. A restructuring agreed without knowing that capacity only pushes the problem a few quarters forward.

Approach

  1. Bring all financial debt into one inventory by lender, product, maturity, rate and collateral.
  2. Lay out the current repayment schedule by quarter and year.
  3. Measure repayment capacity by comparing projected operating cash flow with debt service.
  4. Run scenarios such as maturity extension, grace periods and rate or collateral changes on the same structure.
  5. Turn the results into a clear summary that can be shared with lenders.

What it examines

  • Debt inventory by lender and product
  • Current and restructured repayment schedules
  • Debt service coverage ratio (DSCR)
  • Grace period and maturity extension scenarios
  • Interest rate and FX sensitivity
  • Alignment with cash flow
  • Summary view for lenders

Example output

A debt table by lender, a quarterly comparison of the current and restructured repayment profiles, and the debt service coverage ratio for each scenario.

Limitations

  • The model shows financial sustainability; the legal and contractual terms of a restructuring must be assessed separately.
  • Results depend on how realistic the operating cash flow projection is.

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