Debt Offerings

Sometimes a company may desire to retire all or a portion of its debt securities.  In doing so, the company can make an offer to its debtholders to purchase bonds at a specific price during a set time.  This can be an opportunity for capital restructuring or refinancing and usually involves an individual or small number of chosen investors from the private sector.  It can be a cost-effective way for small businesses to raise capital without “going public”.

However, if a non-shareholder group is offered this option (example: large banks, mutual funds, insurance companies and pension funds) it can create concern on the part of existing shareholders since it can be similar to the effect of a company doing a stock split.

Before taking any action such as this, it would be wise to consult an attorney to have a more complete picture of any legal issues that may arise.