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Int. J. Financial Stud. 2015, 3(3), 230-243; doi:10.3390/ijfs3030230

Bond Indenture Consent Solicitations as a Debt Management Tool

1
Faculty of Department of Finance, Banking and Insurance, Appalachian State University, Boone, NC 28608, USA
2
Faculty of Department of Management, Appalachian State University, Boone, NC 28608, USA
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Academic Editor: Nicholas Apergis
Received: 15 May 2015 / Revised: 6 July 2015 / Accepted: 10 July 2015 / Published: 22 July 2015
View Full-Text   |   Download PDF [210 KB, uploaded 22 July 2015]

Abstract

Many companies in recent years are seeking new ways to manage their debt liabilities. Companies with outstanding debt securities can engage in a variety of transactions with bond holders. Choices will depend to some extent on whether or not the company has access to cash and is able to purchase in the open market or through cash tender offer, or if without cash, by making an exchange offer of new securities for existing securities. Often in either case, there is a bond indenture consent solicitation needed to waive or amend existing bond terms, the announcement of which signals management’s intent to the market. Given the increasing prevalence of this practice as a debt management tool, this study seeks to determine whether it is truly perceived to be value enhancing by stockholders. Using an event study of 50 companies announcing bond indenture consent solicitations, we find that shareholders do benefit, and companies appear well served by this practice. View Full-Text
Keywords: bond indenture consent solicitations; bondholder coercion; debt risk management bond indenture consent solicitations; bondholder coercion; debt risk management
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Anderson-Parson, J.A.; Keasler, T.R.; Byerly, R.T. Bond Indenture Consent Solicitations as a Debt Management Tool. Int. J. Financial Stud. 2015, 3, 230-243.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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