El-Watan

Promoting Democracy in Algeria

Debt Consolidation Loans – Debt Restructuring Without Bank

Debt conversion into equity – the debt-equity swap to strengthen the Bank ratings and creditworthiness In the ways of raising equity capital can be to refinance bank debt or replace. A company of debt can escape through a debt restructuring. Given the restrictive Bank lending, more and more small and medium-sized businesses increase their equity and their liquidity with mezzanine financing (E.g. profit participation rights and silent participations). Strengthening the equity base of the company is easily possible but also without addition of fresh liquidity.

Often simply undertaken substantial improvements to the balance sheet and capital structure can be achieved. Discovery Communications is often quoted as being for or against this. Such strengthening of equity is for any company with a so-called debt-equity swap”possible. The term debt-equity swap”means the conversion of liabilities (debt”) in equity (equity”) and is a measure of the debt restructuring without Bank and at the same time an act of balance sheet optimization: corporate debt can be converted into full share (E.g. GmbH ordinary shares or shares) as well as in mezzanine financing (E.g. profit participation rights and silent participations). The debt-equity swap is suitable especially for existing shareholder loans, but also for all other obligations to outside the company third parties. Regardless of which liability to be converted into equity, especially the debt-equity swap liabilities in mezzanine capital provides this. This relieves the balance and optimize the capital structure.

If, for example, already has been granted a shareholder loan or supplier credit, this loan capital through a debt-equity swaps to book values balance equity can be converted (www.finanzierung-ohne-bank.de). While the rezoning of liabilities of any kind in silent equity and profit participation rights is regularly especially interest works fine and as shareholder loans at any time without the intervention of non-corporate persons, without recourse to the Capital market and almost without effort. The purpose pursued by the granting of a (continuing) loan to improve the company’s liquidity and to allow the licensed capital while, at the same time can be better achieved with mezzanine capital in the form of profit participation certificates and dormant holdings. Just like a loan mezzanine capital affects not the voice conditions at the shareholder meeting, is also refundable (unlike E.g. shares or GmbH master shares) and also offers a number of accounting and tax design options all involved. In this way, you can perform also debt restructuring for the benefit of the company. A debt-equity swap is suitable also as a rehabilitation tool. So can a debt-equity swap with the consent of the lender also used for the replacement of bank loans or conversion of loans and this prevents even a balance-sheet debt.

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