Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Zombie Businesses Haunting Lenders


Media Release
3rd December 2012
Zombie Businesses Haunting Lenders

Shaun Adams – KPMG Transactions and Restructuring partner

Businesses with low or no profitability and which are unable to generate sufficient cash flow to repay borrowings – are keeping some lenders awake at night.

KPMG research, which surveyed around 200 of New Zealand’s bankers, shows that while zombie companies are not dominating lenders’ perspectives across the board, they are a polarising phenomenon which is haunting a significant number of debt providers.

All the evidence points to a hardening approach going forward; it is likely that as banks become less busy dealing with the immediate fallout from the GFC, there will be less tolerance of businesses that are simply treading water.

There is recognition within the banking community that they themselves need to be more aggressive in encouraging their customers to seek specialist restructuring advice early. If businesses continue to ignore the symptoms they could find themselves increasingly at risk of being corralled into processes and losing control of their own destiny.

The survey highlights that zombies are more likely to go through turnaround situations, voluntary sales and refinancing which are already the most common ‘exit route’ for lenders. However, in a cautionary note receiverships, liquidations and even administrations are also expected to increase compared with 12 months ago.

Taking a macro perspective, you could view zombies as sucking the life out of healthy businesses as they often compete by undercutting competitors.

• Zombie businesses are largely in the SME group with well over half of zombies having turnover of $3-20 million, with a lack of available credit felt far more acutely than in larger zombie businesses.

• The sectors seeing the highest proportion of formal insolvency procedures are the construction, retail and financial services sectors.

• According to the lenders, the zombie problem isn’t going to go away any time soon.


________________________________________


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

No Voda/Sky: Commission Declines Clearance For Merger

The Commerce Commission has declined to grant clearance for the proposed merger of Sky Network Television and Vodafone New Zealand. More>>

ALSO:

EARLIER:

Power: IEA Report On New Zealand's Energy System

Outside of its largely low-carbon power sector, managing the economy’s energy intensity and greenhouse gas emissions while still remaining competitive and growing remains a challenge. More>>

ALSO:

NASA: Seven Earth-Size Planets Around A Single Star

NASA's Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water. More>>

ALSO:

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news