COVID-19 #8 Sale of non-core or distressed businesses
Successfully raising cash through the divestment of non-core assets or businesses requires careful consideration, especially in a situation of financial distress. Although from a sell-side perspective a share deal is often preferred (click here), sellers may still be tempted to engage in an asset deal in their quest to realise the best possible outcome. Various
COVID-19 #7 Carve-out and sale of non-core or distressed businesses
In the current climate, it is expected that companies in a wide variety of industries will be confronted with a significant drop in sales volumes, possibly causing faltering cashflow positions or even cash crunches. Although the Belgian government, in concertation with financial institutions, are trying to stem the bleeding with short term measures, such as
COVID-19 #6 Cash repatriation – capital reduction
Next to dividend distributions and (early) repayment of intercompany loans, a group may also consider a capital reduction to repatriate cash to the upper tier structure. Whereas a reduction of fiscally paid-up capital is in principle tax neutral between corporates, it may still have some (unexpected) tax consequences. Item #6: A capital reduction is not
COVID-19 #5 Cash repatriation
Although various listed groups have already announced to refrain from distributing dividends to their shareholders, centralising cash within the group is likely marked as a high priority item on every corporate agenda. Multinational groups may currently be revisiting their cash repatriation policy / advancing dividend distributions to get ahead trapped cash issues – e.g. arising
COVID-19 #4 Sale-and-lease-back to generate cash
Over the last week, we informed you about unexpected tax cash out effects from debt waivers, pitfalls relating to capitalising companies in financial distress and tax challenges of changing financing terms. As countries are preparing for longer lockdown periods then initially anticipated, it will not come as a surprise that many companies are trying to
COVID-19 #3 The tax challenges of changes to existing financing terms
As central banks are – among other things – cutting interest rates in an attempt to limit the economic fallout from COVID-19, companies may consider refinancing older debt that still yields higher interest rates. However, such a refinancing exercise may come with unforeseen tax consequences if not properly managed. Apart from a refinancing, groups may
COVID-19 #2 Debt-equity swap to restore your equity position
In the context of the economic downturn caused by the corona crisis, companies may seek for (different) ways to restore their equity position. Previously, we explored intragroup debt waivers as a remedy to alleviate financial distress (click here). Another approach that may be considered is the contribution in kind of existing intercompany (or third party)
COVID-19 #1 Debt waiver: beware for a tax cash out
Next to having a huge impact on our personal and family lives, the outbreak and spreading of the coronavirus (COVID-19) is likely to result in a slowdown of economies across the globe. In the coming weeks, we will keep you informed on various tax (re)structuring related topics that may help you in combating the virus
