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Ellen Haramalis

Corporate debt restructuring wave requires creative solutions

The current corporate debt restructuring wave, which is likely to be prolonged, puts pressure on market participants to seek amend-and-extend solutions, according to the participants of Debtwire Restructuring Forum Europe 2023 which took place last week.

CDR attended the event and took the following takeaways:

The panellists debated whether we were going into another 2008-like crisis and highlighted the difference between then and now. Whilst they agreed that the current crisis is different in nature from the GFC, they also forecasted that the current downturn cycle was going to be the biggest and longest one since 2008.

Inflation and rising interest rates were clearly front of mind as corporate borrowers across the globe urgently reassess the sustainability of their debt funding and evaluate the best refinancing and restructuring options.

Debtwire conducted an online survey ahead of the conference and many of the findings were in line with the consensus at the event. In particular, 86% of survey respondents thought that debt restructuring activity was likely to increase in Europe in 2023 compared to the previous year whilst 52% of respondents believed rising interest rates to be one of the top three macroeconomic factors most likely to drive that restructuring activity this year.

Interestingly, the UK and Italy topped the list of countries that were likely to see the biggest uptick in year-on-year restructuring activity in 2023. In terms of sectors, financial services and consumer featured among the most attractive to distressed debt investors in Europe in the next 12 months. In the Middle East, construction and real estate topped the list (58%) whilst in Africa – energy was the top pick (63%).

The evolving regulatory environment was also discussed with mention of the EU Directive of Restructuring and Insolvency impact on local legislations. It was mentioned that Germany, France, Spain and the Netherlands had already updated their restructuring regimes. Interestingly 96% of respondents in the UK and Ireland favoured further harmonisation of restructuring and insolvency law in the EU, a higher proportion than in any other region, despite Brexit.

Not surprisingly ESG remains a prominent topic among debt professionals. 84% agreed that companies without positive ESG records would find it challenging to attract funding when restructuring compared to companies with solid ESG records.


Given this challenging outlook, opportunities for distressed debt participants and restructuring are highly likely to increase and companies who need to refinance will benefit from the advice of a bench of senior advisers, like CDR, who are experienced in protecting their clients’ reputation through the most complex macro-economic cycles.  

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CDR’s partnership with the United Nations’ Women-led Cities Initiative

Women-led Cities was launched during the United Nations’ 67th session of the Commission on the Status of Women (CSW67). Women-led Cities is a joint initiative formed by UN-Habitat, UNCDF, and ellaimpacta, a consortium of women-led companies and philanthropies, to develop and support projects that accelerate gender equality, achieve SDGs, and create cities that foster inclusivity.

Achieving gender equality in political and public life is critical for upholding women’s human rights and also plays a pivotal role in progressing towards the UN’s Sustainable Development Goals (SDGs), especially as women still face unequal representation in public life. More than 50% of the world’s population are women, and only 5% of the world’s cities are led by women. WLC was founded last year to address this problem by creating a crucial link between women business leaders and women city leaders to promote and innovate solutions that empower women and serve the whole city.

WLC is a unique network of women business leaders globally and women mayors worldwide seeking to foster the growth and development of women in leadership, andn establishing new generations of women business leaders and political leaders. Working together and leveraging their expertise, women leaders will advocate for transformative change to accelerate progress against SDGs by improving safety for women in the city and access to basic services, while supporting women entrepreneurship, equal work rights, and political empowerment as women engage equally in local decision making.

Speaking of the launch, Executive Director of UN-Habitat Maimunah Mohd Sharif stated, “Women can’t wait 265 years to bridge the gender equality gap. We need to accelerate and support Women-led Cities to promote development and eradicate violence against women…women city leaders and women businesses leaders working together in solidarity can drive the transformation needed to support human rights, gender rights and equality.”

Leveraging the power of blended finance, WLC brings together financial institutions such as Multilateral Organizations, Development Banks, Foundations, Funds and Family Offices, to finance and support projects focused on addressing gender equality and promoting women leadership and inclusion. As of its launch, WLC has over $5 million pledged to begin its journey, and seeks to mobilize $480 million in the next four years to impact over 200 cities around the world, which will be directed towards financing gender responsive projects related to service delivery, infrastructure and economic growth, providing seed capital and investment in women-led businesses, and assisting local governments with financing and de-risking solutions for urban improvement projects.

WLC will begin its co-creation journey with a 12-month exploratory phase in select countries in Latin America, Africa and Asia. This phase will further inform the philosophy of WLC, identify entry points for action, and capture lessons that can be applied at scale. Projects will work to address three main objectives:

  1. Political empowerment: Improved engagement of women in local decision-making processes
  2. Economic empowerment: Improved economic opportunities for women
  3. Better places to live: Improved urban environments for women

CDR is part of ellaimpacta initiative and is honored to contribute our expertise to this vital initiative and look forward to continuing our collaboration with UN-Habitat, UNCDF, and ellaimpacta to support women everywhere, accelerate progress towards gender equality, and make cities better for everyone.


Written by Lucia Domville


For more information on Women-led Cities, please read the announcement linked here.



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ChatGPT: Friend or foe for advisors?

Will widespread use of ChatGPT lead to key parts of the strategic advisor’s role being obsolete? After all, if a chat bot can be instructed clearly enough, then surely it can draft accurately many of the day-to-day documents that advisors craft for their clients. 

ChatGPT has generated – in addition to impressive written responses – a level of intrigue, discussion and conjecture that is hard to overstate. While much of this has centred on the Big Tech industry and its combined trillions of dollars in market cap, there has also been significant speculation surrounding the potential implications that text generative AI could have for wider industries such as ours, the strategic communications profession. 

However, to misquote Mark Twain, rumours of the death of the advisor have been greatly exaggerated! 

To begin with, despite Elon Musk’s recent tongue-in-cheek comments about the risks of ChatGPT’s integration in Bing ‘going haywire and killing everyone’, it is important to recognise that AI chat bots are a nascent technology and, at least for the time being, have notable limitations which necessitate continued human input.  

Firstly, the process through which chat bots access and repackage information remains fraught with reliability issues and is liable to manipulation. As such, for communications consultants who choose to use these technologies, enhanced due diligence will be required with continued fact-checking and proofing needed before materials can be released to the public.  

Additionally, a more fundamental consideration to bear in mind is that while chat bots excel in rapidly drafting well-structured summaries of chosen topics, they lack the ability to use nuanced language capable of resonating with specific audiences. As communications consultants we help companies develop a voice and tone which is unique to them and resonates with their key stakeholders. Chat bots in their current form lack this level of subtlety and innate understanding of an intended audience. 

To this end, the role of the communications consultant will remain essential in helping companies to develop the unique tone of voice and key messages on which all communications materials should be based.  

The idea that chat bots pose a threat to communications consultancies also entails a rather reductive understanding of the services advisory firms provide to clients. More specifically we see an excessive focus on the work consultancies do in drafting communications materials, which ignores their crucial role in deciding strategy around what, when and how to communicate in the first place. Even prior to ChatGPT, any company could draft their own communications, but it is the knowledge of the media landscape and wealth of experience that makes advisors’ services valuable.  

Although the adoption of AI systems like ChatGPT could certainly reduce the barriers to entry associated with communicating on pertinent issues, this does not diminish the value of strategic advice. Instead, the potential saturation of key communication channels with undifferentiated material, could actually see greater demand for more creative and self-aware communication strategies, which will be needed to cut through noise and secure clients a voice.  

Recognising these points, the correct way to conceptualise chat bots should be as supplements to, rather than replacements of, existing ways of working. Here the emphasis should be placed on how chat bots can sharpen existing proficiencies and streamline the execution of low skilled work.  

I myself have found it useful in my work in anything from proofing pieces of content I produce to assisting with research. It’s ability to connect dots between topics and information has given it a clear utility for me. 

In this way chat bots are powerful tools for freeing up time and headspace, allowing consultants to focus on strategic thinking and explore innovative communications approaches. Ultimately, the things which matter most to our clients. 

Of course, it would be remiss not to accept that with technological developments comes potential for disruption and efficiency gains may lead to a change in how companies are operated and structured. Despite this though, it is clear to see that opportunities for the most imaginative and open-minded individuals remain plentiful. And this is no bad thing.   


Written by Jonah Boon


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Five key trends for the 2023 AGM season

In light of new regulations, increasingly vocal shareholders and challenging market conditions, the 2023 proxy season is expected to be eventful. Companies would do well to consider the following five key trends as they prepare for their upcoming AGMs.


Increased scrutiny of executive remuneration

In the context of current inflation levels, investors expect restraint when it comes to executive remuneration. The number of contested remuneration reports is likely to increase on 2022 and companies operating in sectors with a large, low-paid workforce will be under particular scrutiny. Guidance from the ISS and the Investment Association calls for any adjustments to executive director pay to be lower than those for the wider workforce. However, feedback from governance teams suggests many companies are trying to push through more ambitious increases in pay, which don’t always correlate with improvements in company performance. How companies are responding to the cost-of-living crisis will be a key part of the narrative ahead of upcoming AGMs.


Growing dissent against board directors

Boards are more accountable and responsible than ever before on a measurable scale, with the complexity of board skills expected to match the complexity of board concerns. When dissatisfied with governance issues or a company’s broader strategic direction, investors are increasingly willing to vote against board committee chairs and members. The variety of reasons for the votes against director re-election is also on the rise, from board diversity to oversight of climate-related issues. This increasing level of dissent is a great opportunity for activists, so reputational risks are high.


Rising focus on overboarding

In volatile market conditions, the board’s ability to govern effectively is particularly important. Board directors need to dedicate an appropriate amount of time to exercising their fiduciary responsibilities towards each company they govern. Whilst proxy advisors have defined what this means in theory, in practice, there’s a lot of room for nuance. In the absence of a universally adopted definition of overboarding, it is down to companies to ensure they are disclosing adequate, well-tabled maps that show director engagement across all the companies they govern, and to engage proactively with investors to explain why and how this works in practice.


Spotlight on board diversity in terms of ethnicity and race

Investors are looking for increased engagement regarding progress on different aspects of diversity, with particular focus on ethnic diversity. In the UK context, disclosure requirements are on the rise. From this year, companies listed on the London Stock Exchange will need to disclose information about ethnicity and gender equality in their annual reports. The target, set by the Parker Review, is for every FTSE 250 company to have at least one board director from a minority ethnic background by December 2024. Companies that have not achieved this will need to explain how they are tackling the issue, with third party evaluation of board skills and composition an increasingly useful tool.


Continued demand for climate resolutions

Following softer than expected support for some of the more ambitious climate-related resolutions put forward by both companies and investors in 2022, the question is: what are investors looking for in 2023? Most asset managers, who themselves are facing growing regulatory pressure in this area, are expected to remain committed to their ESG principles. As such, companies will be expected to present ‘SMART’ targets and explain what they really do, why they are meaningful and who they are meaningful to. In this context, materiality really is key. Knowing your shareholder base, what they care about and how they are likely to vote will help avoid any unwelcome surprises once resolutions have been filed.


With choppy waters potentially ahead, close collaboration between IR teams and the corporate secretariat is critical to facilitating proactive engagement with portfolio managers, their governance teams and proxy advisors, and ensuring disclosures effectively address key issues.


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The value of the independent adviser 

Decisions by various central banks to raise interest rates have dominated column inches in recent months, from recession and recovery predictions, to rising mortgage repayments and debt servicing costs. But something about looking back at the extraordinary period of near-zero interest rates has captured my attention, and the knock-on effects affects across the world of business. One such effect that has been thrown into focus is governance, where it fell short and how this greatly contributed to catastrophic losses. To paraphrase Warren Buffet, I believe it is only when rates go up that we see who has been growing without proper governance.  

There has been a pattern of similar stories over the last few years that have grabbed headlines, and most have had the same type of company at their heart; a rapid growth disruptor. These companies have tended to progress through infancy to achieving unicorn status in a miraculously short time period, often bypassing the necessary steps needed to sustainably build and run a company of this size. The main reason for this is simple; a near-zero interest rate environment has led to investors valuing growth as the most important metric, and cheap money inflating the valuation of anything demonstrating growth.  

Granted, this day-trader investment style has awarded investors significant returns over the last two decades. However, in some cases the fear of missing out prevented robust oversight by forgoing the proper due diligence, leading to the implosion of some of the investor community’s favourite businesses.  

Growth vs Governance 

Due diligence has always been a cornerstone of the financial industry. Handling other peoples’ money comes with the fiduciary responsibility to ensure the risk profile matches that of your investment criteria, including ensuring there are solid corporate governance structures.  

The problem with due diligence is that it is time intensive, and can be seen as an impediment to those chasing momentum in a bull market. However, it is a necessity in the identifying and protecting of long-term successes. Set against my own living memory (which is admittedly reasonably short), when it comes to companies which claim to have the ability to change entire industries, to lose time has been to lose growth opportunity. 

These companies in question were founded on disruptive ideas coupled with engaging stories that convinced those they were pitching of fast and furious growth. This lethal combination meant investors were willing to cut corners to get a piece of the action, resulting in not enough attention being paid to the devils in the detail, neglecting oversight of corporate governance and risk. A quirky founder with a strong personality and an idea became a new form of tradeable currency.  

When the tide goes out 

Examples of this are abundant, just look at the failings of WeWork and Bulb. Or perhaps think of Elizabeth Holmes and Theranos, a company built on empty promises and non-existent medical technology which investors failed to uncover for years. 

FTX is arguably the ultimate culmination of this investor approach, so much so that John Ray III, the new CEO of FTX hired to manage the company through bankruptcy proceedings, commented he had never “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information”. Having dominated headlines in recent weeks, rehashing its failings seem redundant. However, one anecdote worth mentioning is when an investor asked FTX to consider a two page list of recommendations as part of their due diligence, the response they received was a simple: “Go f*** yourself”.  

So, what safeguards can we put in place to prevent this risk, even when it is incentivised by economic factors? 

It would be fair to argue that investors should take more responsibility to understand the financial risks of their investments, including from a corporate governance perspective, rather than jumping on a popular bandwagon backed by other recognisable names.  

However, it also highlights the necessity of external consultants. Issues such as these could have been prevented by having a strong bench of independent and experienced advisers in place. 

Advisers provide balance 

Focus on growth at all costs has a tendency to centralise power around charismatic founders and create blind spots around unit economics. This ultimately creates long-tail risk for high-growth companies.  

Advisers should be more than just enablers of growth stories: they need to provide counsel that grounds companies in the real world. Investors need to be responsible stewards for their clients as well as generating returns. Advisers need to consider the long-term health of companies they work with, not just chase short-term fees. 

Governance is essential and advisers who don’t give adequate advice on this can and should be held accountable. They should support boards and management teams to ensure companies are governed by a comprehensive system of checks and balances. Most importantly, these advisers bring a wealth of sector specific knowledge and experience: their function is to call out the risks before anyone external has a chance to.  

To steal another Buffet quote, we know how long it takes to build a reputation and how quickly it can be ruined. As strategic communications consultant, we see the consequences of poor governance and the far-reaching reputational impacts it can have. We exist to elevate profile and performance through a clear, consistent narrative and ask the uncomfortable questions before others do. Stories about these rapid growth disruptors built on shaky foundations show how imperative it is to weigh reputational risk in equal measure against investment risk in order to achieve long-term success. 


Written by George Peele

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CDR’s 14th Global IR Survey reveals widespread investor apathy as volatile market conditions distract from fundamental analysis

Following more than two years of restricted interaction with the investment community, reinforcing existing and building new relationships is the main priority for companies over the next 12 months. Companies are accelerating efforts to increase engagement with a broader investor base and are striving to refine their story and tell it through wider ranging channels. This is reflected in greater engagement with passive and retail investors, the continued popularity of Capital Markets Days, and the increased willingness to travel for investor meetings.

However, against the current market backdrop, effectiveness of such initiatives is far from guaranteed. In addition to making expectation management more challenging, the volatile external environment has proved a significant distraction for investors, prompting fund managers to adopt a top-down approach while navigating challenging macroeconomic and geopolitical events and conditions. 37% of companies report difficulties in gaining traction with their desired targets while, despite increased desire for in-person meetings, two thirds of companies continue to conduct more than 50% of their investor meetings virtually.

As market conditions continue to evolve, investment narratives too need to be adapted in response – 45% of our survey respondents plan to refine their investment case over the coming 12 months to reinforce differentiation. This exercise is likely to consider greater integration of ESG themes into the overall narrative given the growing practice of referencing non-financial achievements across results materials and ongoing news flow.

Despite the continued rise in the number of companies with a dedicated sustainability committee at board level, from 37% in 2019 to 57% in 2022, half of boards still do not have members with specific experience of managing sustainability issues. The connection between the ESG commitments companies make and how management teams are remunerated also remains weak. Three out of four of the companies surveyed have less than 10% of executive remuneration linked to ESG targets and of this, 42% have 0% of executive pay linked to ESG targets.

Slow progress in addressing this issue may be partly due to a lack of awareness regarding investment decisions taken based on ESG factors, with 95% of IR teams unaware of any divestments based on unsatisfactory ESG performance. Investor feedback and greater transparency regarding investment decision making could go a long way in accelerating change in this respect.

With so much noise in the market, it may seem like no one is paying attention, but the reputational risks of abandoning clear, consistent and authentic communications have never been higher.

CDR’s 14th Annual IR Survey incorporates feedback from 282 Investor Relations Officers (IROs) at leading companies across the world. Click here for full highlights from our report and the download archive.


By Sandra Novakov, Head of Investor Relations, London

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