Restructuring the Financial Characteristics of Projects in Financial Distress
Swiss Management Center
Global Journal of Business Research, Vol. 6, No. 2, pp. 125-134, 2012
This paper deals with project finance restructuring in the view of future or present financial distress. We treat the occurrences of negative cash flow and negative NPV as signs of potential project distress. The solutions offered for negative cash flow are (1) restructuring debt thereby making it payable earlier when the project has sufficient cash influx or (2) change of the project management and contractors. The paper explains advantages of the first technique over the second. We explain that legal costs in the latter can exceed perceived benefits. The paper argues the best solutions for negative NPV problems are deferring of payments and restructuring of cash disbursements as a part of the project financial agreement.
Number of Pages in PDF File: 10
Keywords: Project Finance, Financial Distress, Positive Cash Flow, Positive NPV, Finance
JEL Classification: G31, G32Accepted Paper Series
Date posted: December 18, 2011
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