Debt/Equity Swap

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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 ?
In a debt-equity swap, resistance may come from both creditors, who stand to lose their guaranteed interest payments and security interests in exchange for shares, as well as shareholders of the company, who might not wish to see their ownership diluted.
Including debt-equity swap, debt forgiveness, and debt sale
Mitsubishi Motors to issue preferred shares for debt-equity swap
The sources said that Mitsubishi's debt-equity swap plan needs to be worked out with banks and may encounter some resistance.
The debt-equity swap means that banks and bondholders will control the business.
A number of Muslim countries could benefit from a debt-equity swap program engineered and facilitated by the leading Islamic banks.
The debt conversion programme may be categorised into (1) conversion of debt service; (2) conversion of existing debt into a new form of debt, called debt-debt swap; and (3) conversion of existing debt into an equity, called debt-equity swap, wherein debt service would be replaced by a dividend according to the terms and conditions of the equity ownership.
The Bush Administration's nominee to succeed Elliott Abrams as Assistant Secretary of State for InterAmerican Affairs speaks not a word of that languaguage and, by all accounts, wouldn't know the difference between a debt-equity swap and a coca field.
According to the sources, DSME creditor banks have held a series of working-level meetings since Monday with the state-run Korea Development Bank (KDB), which is DSME's largest shareholder and main creditor, over the government's request for a debt-equity swap on 80 percent of their unsecured loans to DSME worth 700 billion won.
Clientis Zuercher Regionalbank took its Triba stake in May 2009 in a debt-equity swap, Valiant said.
under which the trading house operates, said earlier in the day that it has received 370 billion yen in financial aid from key creditor banks in debt-equity swap deals.
Marconi has restructured its finances with a debt-equity swap to tackle its pounds 4bn debt mountain.