New know the ups, downs, ins and outs of credit cycles better than William Repko. The 58-year-old co-head of Evercore Partners' restructuring practice has made a career of working out bad debts, including such high-profile cases as the massive, fraud-fueled bankruptcies of Enron Corp. in 2001 and WorldCom in 2002. Since Evercore chairman Roger Altman convinced him to come out of retirement to join the boutique advisory firm nearly two years ago, Repko has patiently waited for the abnormally buoyant credit markets -- just 1.4 percent of corporate debt is now in default, according to Moody's Investors Service, an all-time low -- to begin an inevitable decline.
Now, finally, he's starting to get busy, as companies that gorged on debt over the past few years run into problems and investors balk at the easy terms that, until recently, LBO firms and other borrowers had insisted on. During the past few months, Repko and his co-head of restructuring, David Ying, advised Northwest Airlines on its reorganization from bankruptcy and worked on Cerberus Capital Management's failed bid for bankrupt auto-parts maker Delphi Corp.
Repko has also been advising LBO firms on how to ensure that their acquisitions can clear suddenly dodgy debt-financing markets. One such client is Cerberus, which needs to raise $20 billion to acquire Chrysler Corp. A recent wave of subprime-mortgage defaults has caused big investor losses and raised caution flags among corporate-debt buyers, endangering some pending LBOs.
"We've been increasingly busy as the degree of difficulty in financing transactions has increased," says Repko, who is in demand as an independent adviser because Evercore doesn't provide buyout financing, removing a potential conflict of interest. (He declines to discuss specific deals, citing client confidentiality agreements.)
Repko joined Manufacturers Hanover Trust Co. in 1973 and moved into restructuring eight years later, when the bank (now part of JPMorgan Chase & Co.) asked him to recover a loan to farm-equipment maker International Harvester Co. He found his calling in such workouts, tapping a talent for diplomacy to ensure the bank got back as much of its money as possible without damaging long-term client relationships. He became a top adviser to companies like Chrysler and International Business Machines Corp. Novelist Tom Wolfe consulted Repko before writing his 1998 best-seller, A Man in Full, about a CEO whose business went south. When Altman sought a restructuring pro, Repko -- who had retired from JPMorgan in 2005 to spend more time with his family -- was a natural choice.
"Bill has seen as many cycles and difficult, complex situations as anyone in the restructuring business," says James Sprayregen, co-head of restructuring at Goldman, Sachs & Co., who has worked on many deals with Repko. Sprayregen recalls the aplomb with which Repko handled the nettlesome June 1999 restructuring of conglomerate Harnischfeger Industries. In just a few weeks, the company burned through $200 million of a $750 million debtor-in-possession loan from JPMorgan. Harnischfeger CEO John Nils Hanson met with Repko and other advisers at the company's Milwaukee headquarters. Instead of reading Hanson the riot act, Repko said, "John, how do we work this out together?" Says Sprayregen: "He does not panic. He has a good understanding of what needs to be done to resolve a situation."
Repko thinks that the next default spike will differ from previous ones in that the pain will be spread over a longer period. That's because popular financing techniques like so-called covenant-lite loans limit lenders' power to force companies into bankruptcy. Another difference: Banks can now be both underwriters and restructuring advisers to the same companies, thanks to a 2005 change in bankruptcy laws. That could mean more competition for a focused boutique like Evercore. But Repko thinks that having underwriters pitching restructuring advice will only serve to underscore the independence of boutiques. "In the next wave of restructurings, that independent model will remain important," he says.
