The Nuclear Waste of Debt Issuance – Wave Division Plans $150 Million in PIK Bonds to Pay Owners a Dividend

Screen Shot 2014-06-17 at 2.10.06 PMIn 2014, I’ve focused extensively on America’s latest credit bubble due to the fact I believe we have now entered the final “crack-up boom” phase where things just get downright ridiculous. In early May, I wrote an article highlighting the triumphant return of some of the worst practices of the pre-financial crash era in the post: Is the Credit Bubble Popping? Carlyle Group Warns on Frothiness and Junk Bond Deals Get Pulled. In it, I noted two particular types of resurgent debt deals:

The first of these are known as “dividend deals.” For those of you who are unfamiliar with them, you might not believe what they actually are. Basically, dividend deals are when companies owned by private equity firms tap the credit markets, and then a sizable percentage of the money borrowed is used to cut a check to the private equity owners themselves. Often times, the remainder of the debt is used to refinance existing debt.

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