Contact: Cheryl Krauss
Bain & Company
Telephone: +1 646 562 7863
cheryl.krauss@bain.com

U.S. RECESSION DEFAULT SCORECARD: 300 MAJOR COMPANIES DOWN, 300 TO GO; ACCORDING TO BAIN CRG FALL 2009 CORPORATE DEFAULT OUTLOOK

More Default Dominoes Poised to Fall as Wave of Speculative Debt Maturities Come Due in 2011 and 2012

NEW YORK, NY - October 23, 2009 - Troublesome signals point to a second wave of corporate defaults of major U.S. companies ($100+ million in assets) as the recession unwinds, driving the total number of defaults up to nearly 600 by the end of 2011 since the onset of the downturn in 2008; this according to the 'Fall 2009 Corporate Default Outlook,' released today by Bain Corporate Renewal Group (Bain CRG). The authors of the study find that persisting economic softness and a looming two-year spike in speculative debt maturities-first a 50% jump from 2009 to 2010, followed by a doubling in the following year-will force approximately 300 additional large companies to default on debt obligations over the next several years.

Bain CRG has increased its 2009 default forecast slightly, given the spike in the number of defaults during the second quarter this year and the persistence of tight credit market conditions. The restructuring firm is now estimating:

• 2009: 180-210 defaulting issuers (12-14% default rate)
• 2010: 140-160 defaulting issuers (9-11% default rate)
• 2011: 100-130 defaulting issuers (7-9% default rate)

Exacerbating this forecast of defaults is that speculative grade maturities, the date when the debt comes due, grow 50% in 2010 and then double again in 2011. "We are seeing a pig in a python," said Sam Rovit, Bain CRG managing partner and lead author of the Fall 2009 Corporate Default Outlook. "A significant number of companies won't be able to pay the tab for all of the speculative debt that they've consumed."

As has been the case for a year, sectors most at risk for default continue to be consumer facing: media and entertainment, consumer products, retail, restaurants, insurance and transportation. According to the study, approximately 50% of all defaults to-date in 2009 have occurred in both media and entertainment, automotive, chemicals and packaging industries. The authors do point out, however, that there has been an easing of the default outlook in several key B2C industries, namely media and entertainment, consumer products, retail and restaurants and home building.

Distressed exchanges, compared with the more traditional bankruptcy filing, are up in 2009 over 2008 as a type of default triggering event. Distressed exchanges are a way for troubled companies to negotiate with banks to ease their debt burden and avoid breaching a covenant or filing for bankruptcy. But the study's authors say that this is only "kicking the can down the road" and avoiding the necessary work of restructuring distressed companies to return to positions of strength.

"Distressed exchanges can be a temporary fix for broken companies," said Phil Kleweno, Bain CRG partner and co-author of the Fall 2009 Corporate Default Outlook. "It's likely these companies will see high rates of recidivism since most will fail to effectively fix the underlying strategic and operational issues that led to their default."

Editor's note: To arrange an interview with Sam Rovit or Phil Kleweno or to receive a copy of the Bain CRG Fall 2009 Corporate Default Outlook, please contact Cheryl Krauss at email: cheryl.krauss@bain.com or 646-562-7863 or Frank Pinto at email: frank.pinto@bain.com or 917-309-1065.

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About Bain Corporate Renewal Group (Bain CRG)
Bain CRG provides integrated, rapid turnaround services and unites Bain's heritage of turnaround work, deep industry, operations and strategic expertise, with financial restructuring capabilities. It brings together three market-differentiating capabilities to preserve shareholder equity:

• Financial and restructuring professionals experienced in cash modeling, cash management and creditor negotiations
• Senior partners with both consulting and line management experience who can take on interim CEO, CFO and CRO roles
• Access to the breadth and depth of Bain's global industry, operational and strategic expertise

Bain CRG is differentiated in its ability to deliver in-depth turnaround expertise and provide interim CEO/CFO/CRO leadership to drive a financial and operational turnaround. For more information visit: http://www.baincrg.com

About Bain & Company, Inc.
Bain & Company, a leading global business consulting firm, serves clients on issues of strategy, operations, technology, organization and mergers and acquisitions. The firm was founded in 1973 on the principle that Bain consultants must measure their success by their clients' financial results. Bain clients have outperformed the stock market 4 to 1. With 41 offices in 27 countries, Bain has worked with over 4,150 major multinational, private equity and other corporations across every economic sector. For more information visit: www.bain.com.