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debt restructuring
(redirected from Debt-for-equity)

   Also found in: Wikipedia 0.04 sec.
Debt Restructuring
A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.

Notes:
Companies use debt restructuring to avoid default on existing debt or to take advantage of a lower interest rate.

A company will often issue callable bonds to allow them to readily restructure debt in the future. The existing debt is called and then replaced with new debt at a lower interest rate.

Companies can also restructure their debt by altering the terms and provisions of the existing debt issue.


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.

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To avoid the spectre of looming insolvency many companies are resorting to debt-for-equity swaps or similar real estate-related transactions to keep creditors from the door.
a leading marketer of branded optical products and costume jewelry, announced today that it has successfully completed its turnaround by arranging a $52 million debt-for-equity swap and a $4 million equity investment.
 
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