DEFINITION of 'Corporate Refinancing' - Investopedia
The process through which a company reorganizes its debt obligations by replacing or restructuring existing debts. Refinancing involves issuing equity to pay off a percentage of debt.
Debt is replaced or refunded by a company with money that is raised by issuing or creating other borrowing. In restructuring, a company works with its creditor to change the terms of a loan; these terms can include the reduction of interest rates, the improvement of covenants or the extension of the loan's terms or in exchange for common stock shares in the company.
While good for the corporation financial statements, it dilutes the company shares of stock and reduces company stock price in the process.
The process through which a company reorganizes its debt obligations by replacing or restructuring existing debts. Refinancing involves issuing equity to pay off a percentage of debt.
Debt is replaced or refunded by a company with money that is raised by issuing or creating other borrowing. In restructuring, a company works with its creditor to change the terms of a loan; these terms can include the reduction of interest rates, the improvement of covenants or the extension of the loan's terms or in exchange for common stock shares in the company.
While good for the corporation financial statements, it dilutes the company shares of stock and reduces company stock price in the process.