People quick question.....if the pruchase price is less than the value of debt outstanding i.e. PP = 1000, Total Net Debt = 1200, thus 200 mil (of hypothetical subordinated notes are underwater/no value) then what happens to that remaining 200 mil? Is it just written off? Do underwater lenders have the opportunity to rollvoer the debt? Whats the deal? Cheers.

If the whole company is getting bought, it would have to be part of a 363 sale process in a restructuring, and the creditors will have to sign off on how the sale proceeds will be distributed. In your scenario, the fulcrum debt holders will be taking a haircut, yes. If it's just the equity being bought (making the company's EV 2200 not 1000) , absent a change of control provision in the debt securities affected, nothing has to change. With a change of control provision (which would be the case 99% of the time), lenders will all have to be taken out unless they agree to roll over their debt.

Purchase Price Less Than Debt Oustanding

NewGuy

King Kong

11y

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Purchase Price Less Than Debt Oustanding

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