Redemption of Subordinated Convertible Bonds: When and How to Do It with Great Benefit

Bond repurchase: when and why to do it

The goal of corporate governance is to achieve a reasonable balance of interests between business owners and company management. When there is not enough capital to develop a business, a decision is made to issue bonds, which are essentially debt receipts. And if the company is developing rapidly and does not want to pay extra interest on loans, it can buy-back – the repurchase of its own subordinated convertible bonds.

Experienced managers take such a step, soberly assessing all the benefits and risks, given the financial situation of the company. Sometimes this means the purchase of the enterprise by the administration, since the council will have a large part of the capital.

How to deal with excess liquidity

Liquidity implies the mobile ability of assets to be sold quickly at market value (or close to it). This criterion is the cornerstone of entrepreneurial existence. It is an indicator of the stable financial condition of the company, and this is a decisive competitive factor.
But sometimes liquidity becomes redundant, then buy-back happens. Redemption of bonds is needed in order to:

  • Make a profit by saving interest payments;
  • Change the balance of capital between the owner and the board;
  • Direct the additional funds received to the development of innovations;
  • Get additional finances for maneuver;
  • Avoid financial insolvency and the risk of being absorbed by another company.

The leaders of successful companies constantly monitor the level of liquidity of enterprises, timely make adjustments to their development strategy.

Corporate Innovation

Corporate governance requires flexibility and efficiency of decisions, constant communication of management with business partners, staff. Virtual data rooms will protect the confidentiality of all documentation, and at the same time provide access to important files of interested parties. Studying documents on a cloud service will significantly save time for decision-making during general meetings of shareholders or help organize a constructive dialogue on controversial issues.

The data room provider guarantees the availability of the site, the speed of connecting to the cloud and downloading / downloading documents, provides round-the-clock support. This opens up the possibility of attracting experts from around the world to discuss the current moment or crises.

A virtual data room guarantees the security of M&A transactions. Multilevel cloud protection prevents unauthorized access to it. Investment banking data room supports 24/7. All transaction history is saved. The has taken care of the simplicity of using the cloud: you do not need to install special software for the data room, an intuitive interface helps you easily manage documents.
Data room services are inexpensive, and the benefits are undeniable.

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