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The role of bondholder coordination in freeze-out exchange offers

Author

Listed:
  • Flavio Bazzana
  • Eleonora Broccardo

Abstract

This paper develops a model to assess the potential for unfairness in freeze-out bond covenant exchange offers by highlighting the role played by coordination among bondholders. We show that (i) shareholders have an incentive to always structure an exchange offer unfairly and (ii) the coordination costs are positively related to the unfairness of the exchange offer. By improving coordination, bondholders can obtain better contractual conditions, not only with regard to exchange offers, but also in bond issues.

Suggested Citation

  • Flavio Bazzana & Eleonora Broccardo, 2013. "The role of bondholder coordination in freeze-out exchange offers," Journal of Financial Management, Markets and Institutions, Società editrice il Mulino, issue 1, pages 67-84, January.
    • Handle: RePEc:mul:jdp901:doi:10.12831/73633:y:2013:i:1:p:67-84
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Freeze-Out; Covenant; Bond; Coordination Costs (JEL Codes: G12; G32);
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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