debt restructuring

(redirected from Debt for equity)

Debt restructuring

Modification of the terms of a loan to provide relief to a debtor who could otherwise default on payments. The restructuring may involve extending the period of repayment, reducing the total amount owed, or exchanging a portion of the debt for equity in the debtor company. Also see extension, composition, debt-for-equity swap.

Debt Restructuring

The process of a person or business negotiating and agreeing with its creditors to reduce its debt or to revise a repayment plan. Debt restructuring often occurs when a person or company has taken on too much debt and is in danger of bankruptcy. Debt restructuring is beneficial to the person or company requesting it because it often results in a significant discount and/or a more flexible repayment schedule. It is usually less expensive than a bankruptcy would be. Likewise, it is beneficial to the creditors because a bankruptcy will likely result in some debt being discharged; creditors generally prefer debt restructuring because they would rather be paid less than not paid at all. See also: debt-to-equity swap, restructuring, capital structure.

debt restructuring

An exchange of one or more new debt issues for outstanding debt issues that can occur when the new issues have interest rates and/or maturities that differ from those of the outstanding issues. For example, a firm might offer holders of 9% coupon bonds with 5 years to maturity a new bond with a higher-coupon rate and a 25-year maturity. Creditors having difficulty making interest and/or principal payments often restructure their debt to reduce the size of the interest payments and to extend debt maturity. Also called troubled debt restructuring. Compare restructuring.
References in periodicals archive ?
The Company anticipates that at least $780 million of debt will be eliminated during the first quarter of 2004 through a debt for equity exchange.
The backstop is reduced by debt for equity exchanges from other bondholders and proceeds from the rights and equity offerings.
IFCO" or the "Company")(Frankfurt:IFE) announces that it has reached an agreement in principle with a committee (the "Ad Hoc Committee") representing the holders of over 70% of the outstanding principal amount of the Company's EUR 200 million 10 5/8% Senior Subordinated Notes due 2010 (the "Notes") to exchange the Notes for ordinary shares in IFCO in a debt for equity swap.
IFCO's debt reduction resulting from the debt for equity swap will better position IFCO to pursue growth opportunities in the European and U.
Rite Aid said that as a result of the private placement of common stock and the additional debt for equity exchanges, it has commitments to satisfy $898.
The exchange of debt for equity is subject to numerous conditions, including consent of the remaining debtholders of Merisel Americas to the extension of their indebtedness or a refinancing of the debt, and stockholder approval of an amendment authorizing the additional shares of stock.
ETI had previously announced a proposed debt for equity conversion of up to $5,375,000 of company indebtedness.