Debt Regear/ Refinancing/ Recapitalisation
Can someone please explain the difference between:
1. Debt Regear
3. Debt Recapitalisation
Are they same/ similar, what are the differences?
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But bc I’m nice:
Sorry miseread thought you meant div recap, debt recap is when you keep the quantum of the tot debt the same but you refinance it under different terms (ie you take out RCF + TL in exchange of Notes)
thanks!! whats the rationale behind a regear? Trying to understand the commercial aspects: 1. because for example your asset is worth more? 2. because asset becomes less risky?
would it be correct that you would do a refi because you get better terms? (curious as to why these "better terms" weren't available at the initial debt draw? resulting in the need for a refi?
Would say a regear is done mostly to avoid any potential stress / distress situation, and to free up FCF reducing the interest payments. More or less what URW wanted to do a year or so ago but got stopped
Correct on the refi, but can also be done when you are about to encounter maturities and you want to extend them
on your second sentence/questions:
terms can get better because; i) the company's financial situation has improved and they are lower-risk; ii) market interest rates have gone down, thereby meaning Borrower can refi at a lower rate
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