debt restructuring

(redirected from Debt for equity swap)

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 ?
China Construction Bank is planning to apply for a license to set up its own bad-loan asset management company (AMC) to focus on debt for equity swap initiatives.
7m up on the previous year as it saw the benefit of the previous year's shareholder debt for equity swap.
said Monday it would cut its factory workforce by 21,000 by end of 2010 and seek to do a debt for equity swap with government for more than half of its government debt as part of its restructuring plan.
United States-based Chrysler LLC's (Chrysler) lenders have reached an agreement with the automaker for a debt for equity swap.
Struggling engineering group Jarvis yesterday said its pounds 378 million debt for equity swap had been completed.
But now bankers close to the negotiations over the debt have revealed that bondholders are near to agreeing a debt for equity swap and securing for themselves a 95pc stake in the company.
He subsequently transferred control to HBOS, part of Lloyds Banking Group, in a debt for equity swap.
The company had to sell off subsidiaries and agree a debt for equity swap with its bankers to prevent financial collapse.
He bought UPC bonds via Liberty's UGC subsidiary in advance of a debt for equity swap at UPC - a move which analysts say he has mirrored with the Telewest offer.
Having recently completed a Chapter 11 Bankruptcy Reorganization, Ormet's operations remain under the control of New York's MatlinPatterson Global Advisors, who received a majority ownership of Ormet stock in a debt for equity swap that was part of the reorganization.
The final option involves a debt for equity swap with an 80 percent trim.
The Scottish multi-millionaire, whose Wyevale group acquired Heighley Gate garden centre near Morpeth this year, bought Newcastle-based Peter Barratt's three-strong chain of centres last year and has shares in the Dobbies garden centre chain, is thought to be preparing to hand over up to 45% of the group's shares to its lender HBOS in a debt for equity swap.