Leisure, retail sectors will struggle in 2013, says Grant Thornton
Firm’s restructuring industry survey suggests more pain in a stagnant 2013
By CFOWorld.co.uk staff | CFO UK | Published 21:00, 25 January 13
A survey of the restructuring industry by Grant Thornton predicts that retail and leisure sectors will struggle the most in 2013.
While a stagnant economy this year will mean more pain for some, forbearance by banks would provide some much needed breathing space for proactive companies to prepare for refinancing, the financial advisory firm added.
The survey, of UK restructuring bankers, lenders and advisers, found that the majority (80 percent) of respondents see no real economic recovery in 2013 and 45 percent expect an increase in the level of defaults compared to 2012.
It further highlights that defaults are likely to be very sector specific, with 84 percent of respondents rating retail as having the lowest resilience of any sector in 2013. Grant Thornton said such a sentiment has been reinforced by recent bad news about the likes of Blockbusters, Jessops and HMV.
The hotels, pubs and leisure sector is rated second least resilient, while more positively, sectors including food and drink and energy are considered much more resilient. On a positive note for underperforming businesses, bank forbearance levels are anticipated by over 60 percent of respondents to stay at the same comparatively high levels as in 2013.
Government influence over nationalised banks, the on-going review of the sale of interest rate products and the impact of public opinion were cited by Grant Thornton survey respondents as important factors influencing forbearance this year.
Shaun O'Callaghan, UK head of restructuring at Grant Thornton, said 2013 would be marked by muted consumer confidence and tough trading conditions for companies without a compelling proposition.
"Corporates with strong balance sheets, good brands and products will build market share. For those that need to put their house in order, 2013 may offer a final breathing space. So, I'd say now is the time to get ready for future refinancings. If you fail to change in 2013 you will find refinancing in 2014 increasingly challenging," he added.
In total 233 respondents participated in the survey, breaking down into 32 percent restructuring and recovery bankers, 26 percent origination, portfolio, credit risk bankers, 12 percent interim directors, 11 percent lawyers, 5 percent private equity/special situations and mezzanine investors, 4 percent asset based lenders and 11 percent restructuring advisers and other market participants.
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