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 ?
Debt-equity swaps is an ideal investment for Islamic banks, since it conforms to the Islamic banking philosophy.
Debt-equity swaps have also become popular, as has M & A, either by strategic buyers or financial buyers.
Banks are seldom willing to consider debt-equity swaps, wanting to preserve their capital ratios.
Thankfully, there are innovative means available to that end (substitutional investments, debt-equity swaps, etc.
The Fund s investments focus on rehabilitating operationally strong but financially distressed companies via restructuring, rescheduling, refinancing, debt-equity swaps, liquidity management.
ADM Capital seeks to achieve long-term capital appreciation by focusing on rehabilitating operationally strong but financially stressed companies via restructuring, rescheduling, refinancing, debt-equity swaps, and liquidity management, and will also fund growth opportunities where alternative sources of capital are not available.
These suggestions include case-by-case rescheduling, interest rate capitalisation schemes, debt-equity swaps, debt-nature swaps, debt-education swaps and even debt-AIDS swaps.
Debtor attitudes: Debt-equity swaps are regarded as the most promising blueprint for restructuring.
This in itself creates other moral hazards, of course, and private sector Indonesian debtors would have to share some of the burden in the form of debt-equity swaps, nationalization, and so on if they are to benefit from the scheme.
1989, "Did Firms Undertake Debt-Equity Swaps for an Accounting Paper Profit or True Financial Gain?
Government assets may be allocated price tags for the purpose of debt-equity swaps.
Chile has vigorously pursued a program of debt-equity swaps, aimed, in part, at repatriation of money held abroad.