LATAM Construction Companies' Woes Not Over | FTI Consulting

Latin American Construction Companies’ Woes May Not Be Over, Yet

Corporate Finance & Restructuring | Emerging Markets Restructuring Journal (Reprint)

June 14, 2017

Latin American construction companies have not had it easy in recent years with deteriorating cash flows as a result of overexpansion within the region and abroad, the lack of financing as a result of changing regulations and/or government investigations and cutbacks in government spending. All of these factors have led to overleveraged financial positions. Can Latin American construction companies survive the expected plateau in gross fixed capital formation, particularly for a region so desperately in need of infrastructure investment?

Many construction companies across Latin America either have experienced or will likely experience restructurings. This shaky backdrop and the uncertainty of future economic development make capital investment decisions difficult. This has compounded on itself following the election of President Trump in the United States and its potential impact on global trade, the strengthening dollar, flat oil prices and the moderating growth outlook for China. For Latin America, economic growth is also restricted by depressed commodity prices in metals and mining.

Restructuring experts Brock Edgar and Devi Rajani discuss the future of Latin American construction companies and whether or not they will survive this economic turbulence and be around to capitalize on opportunities down the road.

Posted with permission from Emerging Markets Restructuring Journal. Copyright ©2017. All rights reserved.

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