While issuing debentures help a company trade on equity, it also makes it to dependent on debt. A skewed Debt-Equity Ratio is not good for the financial health of a company Redemption of debentures is a significant cash outflow for the company which can imbalance its liquidity ...
Medium-Term Notes with a call option allow the companies to initiate premature redemption if they have sufficient cash flows. It also permits them to take benefit of lesser interest rate by reissuing the notes. MTN reduces the risk of reinvesting funds at a lower interest rate in a shorter ...
Hostile bidders, however, can fail this strategy by electing a new board of directors. Also, the dead hand clause (or dead hand poison pills or dead-hand redemption) is a controversial tactic and may be illegal as well. For instance, the Delaware Supreme Court in 1998 called such defensive...