Kerrigan Industrial Solutions
GBP 180m revolving credit facility. Sponsor-backed.
Q3 results show performance deterioration.
No covenant breach. Liquidity remains adequate. The sponsor describes this as temporary.
Over the next fourteen weeks, you will make a small number of decisions. Each involves a trade-off. None will feel obviously wrong.
Leverage tends to decline under pressure. The question is how that decline is managed.
Select how you would proceed.
Start the decision sequenceThis takes approximately 5 minutes.
Week 0
Q3 results have been circulated.
Revenue is down. EBITDA has declined. No covenant breach. The borrower has not raised any concerns.
What do you do?
ContinueWeek 4
An update call has been scheduled.
Management attributes the decline to short-term factors. Forecasts indicate a recovery in the next two quarters.
No covenant breach. Liquidity remains adequate.
How do you respond?
ContinueWeek 7
Updated figures show further deterioration.
Forecast recovery has been pushed out. Covenant headroom is now tightening, but no breach has occurred.
Management remains confident in the revised plan.
What do you do now?
ContinueWeek 14
Performance has continued to deteriorate.
Liquidity is now becoming constrained. The borrower requests amendments to provide additional headroom.
A covenant breach is now likely without intervention.
How do you proceed?
That was your final decision.
ContinueThe situation evolved in a similar way across all paths. What changed was your position - and what you were able to do at each stage.
The same situation. Two different sequences of trade-offs.
Both paths decline. The difference is not just the rate - it is what remained possible at each stage.
Both paths involve reasonable trade-offs. The difference is that earlier decisions changed what later decisions could achieve. The same action at Week 14 produced different results depending on what had been established before.
Four decisions. Fourteen weeks. Each involved a trade-off.
Leverage declined in every path. But the earlier decisions changed what was possible later - not just the outcome, but the ability to act.
GovernanceRehearsal builds environments like this from your own portfolio history. Your teams step through real situations as they unfolded and see how decisions affect the rate at which leverage and optionality narrow.
So you can see how leverage is managed before the next situation arrives.
This is not about making better decisions. It is about understanding the trade-offs within them.
Discuss a setupInitial setup uses your own situations to build a working environment.