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debt financing (LBO (leverage buyout, investors purchase the firm equity…
debt financing
LBO
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The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.
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repayment. provisions
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exercise call provision
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at call date, if the yield is less than coupon rate, the bond will be called back and the price is it par value.
Covenants are restrictive clauses in a bond contract that limit the issuer from taking actions that may undercut its ability to repay the bonds.
prevent the manager doing some risky actions to benefit the equity holders and let debt holders bear the cost. :star:
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types
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secured
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unsecured
lender has a claim against the borrower, but not claim on any particular property owned by the borrower.
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