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 ?
On March 30, the company completed the acquisition of Terra Factor Indonesia and Columbia Chrome Indonesia at a price of Rp 170 billion through debt equity swap.
Of the total, 150 billion yen will come from the flotation of preferred shares and the remaining 140 billion yen will be procured via a debt equity swap.
Consider the case of a debt equity swap in which external government debt is exchanged by a claim on the capital stock owned by the domestic private sector.
Luxembourg - Being a bondholder in a distressed situation: The debt equity swap route - a vessel fraught with pitfalls?
Finally, we examine the issue of debt equity swaps as one of the best alternatives for surplus funds from Islamic banks.
The provision of debt equity swaps by the banks was appreciated by the board except that proper check and balance be in place to avoid abuse of this facility.
Debt equity swaps involving conversion into equity and debt currency swaps that convert debt into local currency liabilities contribute if they attract additional foreign equity investment or bring about a return of flight capital.