Debt Equity Swap

Debt Equity Swap - An exchange for a specified amount of equity, or stock certificate is a debt equity swap. The monetary value determined is by the current market rates, but management has the option to offer a higher exchange. This is for the purpose of enticing the shareholders to participate in the venture. When the swap has taken place, the original asset class, classified as defunct. The corporation is then obligated to honor the certain contractual obligations. The corporation will issue equity to avoid making coupon and face value payments in the future. A lending institution or bank authorizes the set financing requirements.