Highly leveraged transaction

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Highly leveraged transaction (HLT)

Bank loan to a highly leveraged firm.

Highly Leveraged Transaction

A loan to a company or other institution that already has a high amount of debt. A highly leveraged transaction carries a great deal of risk and may increase the likelihood of bankruptcy. A highly leveraged transaction tends to command a large interest rate from the borrower.
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For example, many highly leveraged purchases were done in 2004 with 95% loans and only 5% equity.
The new assignments span the range of debt capital markets, from highly leveraged construction financing to long-term, fixed rate financing.
But too many compensation committees blindly follow competitive practice and ignore the potential unintended consequences of highly leveraged compensation.
But leverage poses risks to firms and their creditors, and the LTCM episode demonstrated that a single firm could become both so large and so highly leveraged that failure of its business strategies could pose risks to the financial system as well.
The county's highly leveraged portfolio of investments, made up of derivatives and reverse repurchase agreements instead of less glamorous but perhaps more prudent investments, left the county bankrupt and unable to meet its budget on December 6, 1994.
Ralph Boeker, president and chief executive officer of Magma, said: "The board believes that California Energy's offer is an opportunistic attempt by a highly leveraged company to acquire Magma at a price that the board of directors has determined to be inadequate and less attractive to Magma and its stockholders than remaining independent.
The significant number of highly leveraged transactions in recent years, coupled with the more recent economic recession, may place many once profitable corporations in a net operating loss (NOL) position.
A recent survey by Kohlberg Kravis & Roberts, a major force in the LBO movement, indicates tax revenues are not diminished by highly leveraged companies.
was entering an economic slowdown, highly leveraged companies are flush with cash and have generally improved balance sheets by reducing debt levels and/or extending maturities,' said Eric Tutterow, Managing Director, U.
Despite continued strong supply and demand fundamentals in most property sectors, the credit crunch of late 1998 - which put an abrupt end to many highly leveraged transactions and forced "name brand" lenders to reconsider their commitments to providing capital for certain transactions has forced a new financing paradigm on virtually all market participants.
based hedge fund, which suffered as much as $4 billion in losses in highly leveraged bond and stock trades.

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