UA-55300619-1
By Sean Tembo – PeP President
Do you want to suspend repayments for a certain window period in order to get a breather? Do you want to reduce the repayment period so that you liquidate the debt earlier than you had agreed with the lender in the debt agreement? Etcetera.
So the starting point before we even talk about anyone coming to help us restructure our debt is what is it we want and what is it we want to achieve with regard to our debt portfolio?
Now, something that you must take special note of is that the face-to-face interaction in debt restructuring negotiations add very little to the decision that a lender will make.
The key consideration is the documented proposal that would have been earlier submitted and the purpose of face to face interactions is merely for the lender to obtain clarity on certain aspects of the earlier submitted proposal which might not have been very clear.
So it does not matter how sweet one’s language is or how shiny your suit is, it is unlikely to influence the lender in any significant way.
Depending on the quantum of the debt, such a decision is likely to be made by a Board of Directors, in the case of commercial debt, and by a Cabinet, in the case of sovereign debt.
What this means is that it is unlikely that you the borrower will be invited to meet the Board of a commercial lender or the Cabinet of a sovereign lender.
Usually you and your Lazard Freres will only meet some mid-level official who will compile a report and submit to the decision-making organ together with the formal proposal. Therefore, the aspect of speaking good language to the lender does not arise in this set up.
They are likely to have several more dealings in future representing other borrowers, do you thing they would be willing to push hard enough for our interests in the negotiations and risk alienating themselves to their perpetual customers, the lenders?
It is the same reason most people don’t use insurance brokers in Zambia and instead just go straight to the underwriter, because there is so much accumulated familiarity between the broker and the underwriter that the broker is more interested in preserving their relationship with the underwriter than representing the interests of their client, whose business may constitute less than 0.01% of the gross revenue of the broker and is therefore inconsequential.
Therefore, why you argue that Lazard Freres has long established connections with most of our lenders over several years, l would like to argue that such a situation is a disadvantage to Zambia and not an advantage.
Let me end here for now.
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