A freeze-out bond exchange offer occurs when a firm wants to replace an existing bond, issued with a covenant, with a new bond that does not have this kind of restriction. If the bondholders are not fully coordinated, the shareholders can make an unfair exchange offer to capture wealth from the...

A freeze-out bond exchange offer can occur when a firm wants to replace an exist- ing bond, issued with a covenant, with a new bond that does not have this type of restriction. If the bondholders are not fully coordinated, the shareholders can make the exchange offer unfair to capture wealth...

Covenants are particular clauses in debt contracts of firms that restrict business policy, giving creditors the possibility of putting precise actions into force – normally early repayment – when the covenants are violated. The main purpose of covenants given in the literature is to resolve...