Debt/Equity Swap
A refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt. Investopedia Says:
There are several reasons why a company may want to swap debt for equity. For example, a firm may be in financial trouble and a debt/equity swap could help avoid bankruptcy, or the company may want to change capital structure to take advantage of current stock valuation.
Covenants in the bond indenture may prevent a swap from happening without consent. Related Terms:
Bankruptcy
Capital Structure
Covenant
Debt
Equity
Equity Swap
Indenture
Swap |