Controlling Financial Distress Costs in Leveraged Buyouts With Financial Innovations

Tim C. Opler

Financial Management, 1993, vol. 22, issue 3

Abstract: Leveraged buyouts have often been funded in ways which appear to reduce the risk and cost of financial distress. Leveraged buyout financing methods include the use of specialist sponsors, strip financing, covenants which require that excess cash flows be paid to debtholders, and debt provisions which allow deferral of interest payments in periods of financial distress.

Date: 1993
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