Loan modification workstream methodology from EA Markets:

1. Assessment.  Review your existing credit agreements and capital structure in the context of business conditions, lenders, market activity, and financial objectives.

2. Financial.  Assess and develop financial-model forecasts and scenarios, emphasizing terms and conditions compliance with a focus on extending liquidity. Consider:

• What do our new projections look like for the next few quarters?
• Where do we expect to experience pressure on the covenants?
• What are the downside scenarios?

3. Alternatives.  Develop, evaluate, and present alternative commercial strategies for achieving the desired financial objectives. Questions to answer include:

• Should we go to an alternative market?
• Should we try to add more banks to the lending group?
• What other business opportunities can we offer the lender?
• Should we take an aggressive or a conservative approach?
• What are the different paths to achieving our financial objectives?

4. Roadmap.  Of all the paths you've considered, which will enable you to create a streamlined proposal that will be motivational to your lending group? Select the optimal path, and create a roadmap for the selected strategy, including financial, market activity, documentation, positioning, and implementation workstreams.

5. Positioning.  Prioritize loan modifications and potential concessions, and define lender positioning, influence levers, and a communication plan.

• What's the narrative we're going to present to the lenders?
• Are we positioning this as a simple or complex exercise?
• Are we positioning it as relatively fair and balanced, or does it lean heavily in our favor?
• Do we want to create competitive dynamics for the lenders?
• What is the negotiating path that we're going to be presenting to persuade the lenders to agree?

6. Documentation.  Prepare transaction materials, including form of implementation, terms and conditions modifications, proposed language, and a project management plan.

7. Implementation.  Execute the targeted commercial outcome, including lender management, transaction negotiation, and process management.

Sidebar to:

• How to Ride High on the Loan-Modification Wave