Debt/Equity Swap

(redirected from Debt Equity Swaps)

Debt/Equity Swap

A situation in which a debtor (which is a company) replaces the debt held by one or more creditors with a percentage of ownership in the company. A debt-equity swap often occurs if the company would otherwise be unable to repay the creditor(s) anything without going bankrupt. However, the swap may be a result of change from a debt-based to an equity-based capital structure. In either case, these swaps are often considered part of a company's attempt to restructure itself. Some debt agreements restrict the debtor's ability to force a debt-for-equity swap.
References in periodicals archive ?
Finally, we examine the issue of debt equity swaps as one of the best alternatives for surplus funds from Islamic banks.
The provision of debt equity swaps by the banks was appreciated by the board except that proper check and balance be in place to avoid abuse of this facility.
Debt equity swaps involving conversion into equity and debt currency swaps that convert debt into local currency liabilities contribute if they attract additional foreign equity investment or bring about a return of flight capital.