PIK loanWord格式文档下载.docx

1、 2 PIK toggles 3 Leveraged buy-outs 4 PIK bonds 5 Examples 6 See also 7 References 8 External linksReturn and interesteditPIK lenders, typically special funds, look for a certain minimum internal rate of return, which can come from three major sources: arrangement fee, PIK, and warrants. There are a

2、lso minor sources, like a ticking fee. The arrangement fee, usually payable up-front, contributes the least return and is more aimed to cover administrative costs. PIK is interest accruing period after period, thus increasing the underlying principal （i.e., compound interest）. The achieved selling p

3、rice of the shares acquired under the warrant is also a part of the total return of the lender. Typically, refinancing of a PIK loan in the first years is either completely restricted or comes at a high premium （i.e. prepayment protection） to suit internal requirements of investing funds.Interest on

4、 PIK loans is substantially higher than debt of higher priority, thus making the compound interest the dominating part of the repayable principal. In addition, PIK loans typically carry substantial refinancing risk, meaning that the cash flow of the borrower in the repayment period will usually not

5、suffice to repay all monies owed if the company does not perform excellently. By that definition, PIK lenders prefer borrowers with strong growth potential. Because of the flexibility of the loan, also in the long term, there are basically no limits to structures and borrowers. Plus, in most jurisdi

6、ctions the accruing interest is tax deductible, providing the borrower with a substantial tax shield.PIK toggleseditWith a PIK toggle note, the borrower in each interest period has the option to pay interest in cash or to PIK the interest payment. Sometimes, the borrower may also be able to PIK some

7、 portion of the interest （usually half） while paying the rest in cash; at times, only some of the interest may be paid in kind and the rest is cash-only. This feature allows the issuers to reduce cash interest payments for a period if necessary. The documentation often provides that if the PIK featu

8、re is activated, the interest rate is increased by 25, 50 or 75 basis points.In some cases, cash payment or PIK is at the discretion of the borrower; in other cases, it is determined by a cash flow trigger. These are sometimes derisively referred to as PIYW （“Pay If You Want”） and PIYC （“Pay If You

9、Can”）.Leveraged buy-outseditIn leveraged buy-outs, a PIK loan is used if the purchase price of the target exceeds leverage levels up to which lenders are willing to provide a senior loan, a second lien loan, or a mezzanine loan, or if there is no cash flow available to service a loan （i. e. due to d

10、ividend or merger restrictions）. It is typically provided to the acquisition vehicle, either another company or a special purpose entity （SPE）, and not to the target itself.PIK loans in leveraged buy-outs typically carry a substantially higher interest and fee burden than do senior loans, second lie

11、n loans, or mezzanine loans of the same transaction. With yield exceeding 20% per annum, the acquirer has to be very diligent in assessing whether the cost of taking out a PIK loan does not outbalance his internal rate of return of equity investment.Before the credit crunch of Summer 2008, several l

12、everaged buy-outs have seen some secured second-lien term bank loans coming with PIK or, more frequently, PIK toggle features, in order to support the firms ability to cover cash interest during the initial period after the leveraged buy-outs. If the acquired company performs well, the PIK toggle fe

13、ature allows the equity sponsor to avoid giving extraordinary returns to the PIK debt, which might happen if the debt were strictly PIK. The PIK toggle largely disappeared in the wake of the credit crunch, though in early 2013 there were signs of a tentative comeback.1 Toward mid-year PIK toggle loa

14、ns returned in force as the high yield bond market in the U.S. and - relatively speaking - Europe shifted into high gear.2PIK bondseditIn modern finance, when a bond pays in kind （PIK）, it means that the interest on the bond is paid other than in cash. The most common form of this is for the princip

15、al owed to the bondholder to be increased by the amount of current interest. Other forms of PIK arrangements are also found, such as paying （transferring to） the bondholder an amount of stock （in the company issuing the bond or in another, typically related, company） with value equal to the current

16、interest due.Often such arrangements are referred to by the acronym PIK. Most bonds pay cash, not in kind, coupons.PIK can be used as a verb （e.g. the bond PIKed） or an adjective （e.g. that bond is PIKable）. Where a previously PIKed amount is revoked （as is permissible in some agreements）, this is k

17、nown as unPIKing.ExampleseditMain article: Glazer ownership of Manchester UnitedOne high profile use of PIKs involved the controversial takeover of Manchester United Football Club in England by Malcolm Glazer in 2005. Glazer used PIK loans, which were sold to hedge funds, to fund the takeover, much

18、to the displeasure of many of the clubs supporters,3 because the burden of the debt was placed on the club itself, not the Glazers.See alsoedit Negative amortization, a similar arrangement in mortgage loans Zero-coupon bond In kindLook up payment in kind in Wiktionary, the free dictionary.References

19、edit1. Europes CFOs Do the PIK Toggle Again. CFO Insight. Retrieved 15 February 2013.2. PIK Toggle Bonds Gain Traction In Europes High Yield Mart. Forbes.3. Credit crisis one year on: Risky debt notes could be a losing gameExternal linksedit PIK toggle bonds historical volume | High Yield Bond Prime

20、r Travelport Holdings Limited Plans to Issue $1.1 Billion in Term Loans Under a Senior PIK Facility Company Enters Into $854 Million Senior Secured Credit Facilities and $300 Million Holdings Senior PIK LoansRetrieved from https:/en.wikipedia.org/w/index.php?title=PIK_loan&oldid=708028644 Categories

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24、Privacy Policy. Wikipedia is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.Negative amortizationFrom Wikipedia, the free encyclopediaThis article has multiple issues. Please help improve it or discuss these issues on the talk page. （Learn how and when to remove

25、these template messages）This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. （November 2008） （Learn how and when to remove this template message）The examples and perspecti

26、ve in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. （December 2010）（Learn how and when to remove this template message）In finance, negative amortization （also known as NegAm, deferred interest or graduated payment

27、mortgage） occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases. As an amortization method the shorted amount （difference between interest and repayment） is then added to the total amount owed to the lender. Such a practice would have to be agreed upon before shorting the payment so as to avoid default on payment. This method is generally used in an introductory period before loan payments exceed interest and the loan becom