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 example of the Light Engineering Utility Trailer (LEUT) highlights the issue of obligating procurement funds within OSD benchmarks and how through proper assessment, planning and focusing on use of resources helped the LEUT program escape the "death spiral."
The one upside to all this is that, although cryptocurrencies may have entered a death spiral, the blockchain economy is here to stay.
One theory suggests death spiral the plane was hit by a stray missile fired from the Royal Aircraft Establishment's range in Dyfed.
Sellers disagreed the ACA is in a death spiral and said what will help stabilize it will be the subsidies to insurance companies that will act as reinforcement to keep them on board.
In this sequel to Death Spiral (Poisoned Pen, 2014), Faith Flores is still dealing with her mother's death and trying to put mystery-solving behind her.
Of course not, but for small and mid-sized independent broker-dealers, a pattern of several large fines paid over the last couple of years can be enough to spur a death spiral.
The policies that have been written have devolved into the expected death spiral. Young, healthy people aren't buying into the system to provide the subsidization needed to support sick people.
Mr Woolfe subsequently quit the party, saying it had fallen into a "death spiral of their own making".
"We may be beginning to see the death spiral of insurance plans in the exchanges."
The measure comes amid Puerto Rico's ongoing financial woes, problems so serious that the island, a territory of the United States, is said to be in a "death spiral" after defaulting on its debts.
In October 2015 astronomers announced that they had discovered a rocky object coming apart in a death spiral around this distant star.
Citigroup did nothing to help the situation by warning of a potential "death spiral" should investors get locked into the stronger dollar/lower commodities/weaker emerging markets cycle that the world appears to be trapped in at the moment.