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How To Convince Shareholders To Support A Debt Restructuring Plan

By Spodek Law Group | February 20, 2024

How To Convince Shareholders To Support A Debt Restructuring Plan

Restructuring a company’s debt can be a complex process that requires buy-in from various stakeholders, especially shareholders. As a company leader, convincing shareholders that a debt restructuring plan is necessary and in their best interests is key. Here is some advice on how to make a compelling case:

Communicate Early and Often

Don’t wait until the last minute to inform shareholders about restructuring plans. Provide regular updates on the company’s financial situation and the rationale behind proposed changes. Frequent and transparent communication will help build trust and understanding.

You can communicate through shareholder meetings, letters, company websites and portals, etc. Be clear on the problems being faced and how debt restructuring provides solutions.

Make a Strong Business Case

Use facts and figures to demonstrate why restructuring debt makes good business sense. Present realistic projections on cost savings from improved terms and cash flow relief. Analyze various scenarios – best/worst/most likely – to indicate the range of outcomes.

Back up arguments with third-party validation like analyst reports on the viability of restructuring plans. Financial advisers and legal consultants can also provide credibility. The goal is to logically show how restructuring aligns with business growth and profitability.

Emphasize Upside Potential

Along with the practical benefits, emphasize how debt restructuring creates opportunities for the company’s future. With cost savings and operating improvements, highlight growth plans to expand products/services, enter new markets etc.

Help shareholders see the longer-term vision and returns offered through temporary, tactical balance sheet adjustments.

Resources

Images

Shareholder Meeting

Shareholder Meeting where Company Leadership can Present Restructuring Plan

Debt Restructuring Concept Image

Symbolic Image Highlighting Debt Restructuring

Videos

Here is a video on communicating with shareholders during business challenges:

https://www.youtube.com/watch?v=EcMlpii8LXs

Here is an explainer video on debt restructuring:

https://www.youtube.com/watch?v=K_Aq06t93kk

Articles

This Forbes article outlines reasons why companies may need to restructure debt.

This Harvard Business Review article provides tips on communicating with the board during crises.

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