Two-thirds of firms to continue restructuring in 2010

The PwC poll, which was carried out with the Dublin Chamber of Commerce, showed that over three quarters (78pc) of Irish firms have undertaken operational or financial restructuring in 2009, with nearly two thirds (64pc) planning to take further action in 2010.

According to the poll, the key financial restructuring measures being planned in the year ahead are renegotiating existing bank facilities (42pc), extending or rescheduling capital repayments (36pc), restructuring of bank borrowings (27pc) and raising new capital (24pc).

Businesses positioning for upturn
“The poll confirms that businesses continue to tackle the challenges presented by the economic downturn in order to position themselves for the upturn,” said Brian Bergin, Partner, Business Restructuring, PwC.

“Many businesses are currently facing restructuring challenges whether this is to improve operational effectiveness or to restructure their funding positions. In many cases the first wave of operational restructuring has taken place and businesses are now looking even deeper to identify how to generate further value in such areas as supply chain management, route to market and organisational effectiveness,” he said.

“The success of these larger-scale projects relies on the quality of information used in making key decisions and an effective execution which recognises the need to collaborate with the people impacted and obtain their support going forward. From a financial perspective the ability to reach an agreement with your lenders will be underpinned by the strength of the relationship and the level of trust between the parties. It is therefore important in the current environment to maintain frequent, direct and candid communications with your lender,” Bergin added.

Biggest barrier to restructuring
The poll also revealed that business restructuring continues to represent a significant challenge for nearly two-thirds (64pc) of Irish businesses.

The single most significant barrier to restructuring cited by companies was the lack of available finance from financial institutions, with 53pc of survey participants highlighting this problem.

Other barriers noted were difficulties in generating cash internally (38pc), increased security levels required (22pc) and bank amendment fees and charges (also 22pc).

“This poll demonstrates that cash-flow management problems remain a serious challenges for many businesses,” said Gina Quin, Chief Executive, Dublin Chamber of Commerce.

“We've been working with Government, including through its Credit Supply Clearing Group, to come up with solutions. Measures to improve liquidity coupled with effective business restructuring will ensure that Irish business can be sustainable into the future.”

The national picture
According to Bergin, restructuring will go a long way towards restoring Ireland's national competitiveness.

“We can expect Irish businesses who act decisively to emerge fit for the future and well positioned to seize the growth opportunities that will present themselves,” he said.

Pictured launching the results of PwC's poll on business restructuring carried out with the Dublin Chamber of Commerce are (from left): Brian Bergin, Business Restructuring Partner, PwC, and Gina Quin, CEO, Dublin Chamber of Commerce