death spiral


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Death Spiral

A loan that investors give to a publicly-traded company in exchange for convertible bonds. The convertible bonds give the investor a right to buy shares in the company at a low, agreed-upon price. However, issuing these bonds creates more shares outstanding when they are converted, which results in a drop in the share price. The low share price encourages more bondholders to convert their bonds to equity, which causes a further drop in price and the process continues. Because of this disadvantage, companies only engage in death spirals if they badly need cash.

death spiral

The deteriorating financial condition and associated stock price of a cash-starved company that can raise capital only under the most onerous of terms. Restrictions and high interest charges on new capital cause the company to end up in an even worse financial position.
References in periodicals archive ?
The supply-driven business models of the past will make way for customer-centric business models and utilities that fail to innovate and adapt will face the Utility Death Spiral in the next 10 years.
The Court describes this death spiral as premiums rising, people (generally the healthier people) forgoing health insurance based on the increased premium cost, and insurers leaving the market altogether.
If the court buys Carvin's case on subsidies, ''the states are being told either create your own exchange or we'll send your insurance market into a death spiral,'' Kennedy said.
This historic death spiral for an overtaxed and -regulated economy can be reversed before a collapse, but it requires courageous leadership.
Despite popular reports of a looming utilities death spiral , in which consumers migrate off the grid or use it only as backup, Accenture research shows it to be unlikely and uneconomic for a large number of consumers due to natural limitations on viability and cost constraints.
Notts County scored, we conceded and I said to my wife, 'This has got a death spiral written all over it' - and sure enough we were relegated.
They enter the dreaded 'donor death spiral,'" said Rob Reger, senior vice president at the Irving, Texas office of data firm Epsilon.
But a series of bad trades in early January 2008 created a death spiral of losses Kerviel could not cover.
2014] that the Officer Corps is in a blind, intellectual death spiral is weighty indeed, but ignores the vast body of debate going on in the junior and senior ranks of our nation's military.
For months, President Bush has been promising an honest accounting of the situation in Iraq, a fresh look at the war strategy and a new plan for how to extricate the United States from the death spiral of the Iraqi civil war.
He will talk about the "Miracle in Madisonville," the story of a county in a death spiral in the 1990s, with eight factory closings.
Some of these were easily gotten over, and others began the death spiral toward the curtain being pulled.