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 ?
Debtor countries implement debt-equity swap programmes for different purposes.
The creditors are planning to dispose of their combined 97.5 percent stake in the electronics company, most of which they acquired as the result of a debt-equity swap while the company went through a debt restructuring program.
(ADPnews) - Oct 1, 2009 - Czech financial and investment group PPF Group said it bought on Wednesday 50% plus one share in Russian consumer electronics retailer Eldorado in a debt-equity swap worth USD 300 million (EUR 206m).
The European Commission opened, on 15 September, a formal investigation into Romania's plans to grant a 135 million debt-equity swap and a state guarantee of 339.2 million for the chemical producer Oltchim.
In a debt-equity swap, resistance may come from both creditors, who stand to lose their guaranteed interest payments and security interests in exchange for shares, as well as shareholders of the company, who might not wish to see their ownership diluted.
Including debt-equity swap, debt forgiveness, and debt sale
Mitsubishi Motors to issue preferred shares for debt-equity swap
The sources said that Mitsubishi's debt-equity swap plan needs to be worked out with banks and may encounter some resistance.
The debt-equity swap means that banks and bondholders will control the business.
The debt-equity swap worth Rs.65 billion approved by the Government for the Karachi Electric Supply Corporation would increase its weightage in the local bourses 100 companies index, making it rank second in composition.
(47) In order for Islamic banks to succeed in swapping debt for equity in some of the LDCs, these should have a debt-equity swap program in place.
At the same time that bids are being made for the company, an automatic debt-equity swap takes place.