Exchange Offer (Financial Restructuring & Bankruptcy Glossary)

Summary

An offer by an issuer to its existing security holders to exchange existing debt or equity securities for new securities and, in some instances, cash. The primary purpose of an exchange offer is to ameliorate the cash flow problems resulting from the terms of an issuer's existing debt and/or preferred stock by reducing or postponing interest payments or dividend payments; postponing, lengthening, or reducing mandatory principal or redemption payments; or converting existing debt into equity.