Debt-for-equity swap

Debt-for-equity swap

A swap agreement to exchange equity/returns for debt returns or the converse over a prearranged length of time.

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 ?
Debenhams is now expected to look at a debt-for-equity swap and a pre-pack administration, with the latter looking more likely.
The debt-for-equity swap will see the firm's long-term borrowings reduced from PS1.35 billion to PS350 million, alongside a new capital raise of PS150 million funded by issuing new money bonds.
It also wants to continue exercising its veto right even if the bank's stake in GM Korea is reduced from the current 17 percent after a possible capital reduction or debt-for-equity swap. The ailing carmaker's Detroit headquarters has accepted the bank's demands, according to the KDB.
China's debt-hit coal industry could get some temporary relief from the country's debt-for-equity swap program, according to the Global limes.
The debt-for-equity swap with bondholders provides $115M in financing so the company can continue to operate while the case winds its way through bankruptcy court.
In the first deal, Akin Gump advised investment firm SVP Global in a debt-for-equity swap by Cory Environmental.
However, it said a proposed debt-for-equity swap in which bondholders agree to cut back on what they are owed in order to reopen contract talks with network operators EE and Vodafone was not an option.
According to the investor, the plan foresees a possible issue of Sucraf shares, via a share issue or a debt-for-equity swap. Such a proposal is expected to be presented to shareholders as early as in the last quarter of 2014 or in the first quarter of 2015 after the convention of an extraordinary shareholders' meeting where the appointment of a new management will be discussed.
e plan would see creditors take a chunk of stock in the company in a "debt-for-equity swap", with some also oered cut-price shares.
Should the court agree to IVG's request, the company plans to exit insolvency proceedings early next year via a debt-for-equity swap.
12 August 2013 - Debt-burdened German real estate company IVG Immobilien AG (ETR:IVG) said its creditors had proposed a debt-for-equity swap that would reduce the Bonn-based property firm's share capital to about 0.5% of its current value.
12 August 2013 a[euro]" Debt-burdened German real estate company IVG Immobilien AG (ETR:IVG) said its creditors had proposed a debt-for-equity swap that would reduce the Bonn-based property firma[euro](tm)s share capital to about 0.5% of its current value.