Analyse de rentabilité
A mining and metals company faced losses as a result of an unlawful investigation by the authorities. Those losses included a downgrade to its credit rating, which increased its borrowing costs, as well as substantial internal and external costs incurred in responding to the investigation.
Adverse credit rating movements can have a material impact on a company’s borrowing costs. However, in circumstances where a group is undergoing lots of changes at the same time, care is needed to isolate the impact of one specific event on the group’s perceived creditworthiness.
We were engaged as experts by the claimant to quantify the additional costs incurred over a four-year period. Our approach consisted of reviewing indicators of the impact of the investigation on the company’s borrowing costs, considering the scope of debt within the group that was affected, and looking at yield spreads by credit rating for other businesses in the same sector. We also assisted with quantifying the interest due on the direct costs claim.