Glossary

Lease Restructure

Lease Restructure is a kind of revision or renewal of existing contract between Lessee and Lessor. A Lessee, for example, may wish to surrender the lease before the expiration date or a Lessor may want to reclaim part or all of a property for refurbishment or redevelopment. Restructuring Lease can often be beneficial to both Lessor and Lessee through the release of latent value or in exchange for compensation. Lease restructuring therefore offers significant business opportunities.

Limit of Indebtedness

The limits of indebtedness prescribed under the provisions of chapter 10 of the Kansas Statutes Annotated may be exceeded when: (1) Payment has been authorized by a vote of the electors of the municipality; (2) provision has been made for payment by the issuance of bonds or temporary notes as provided by law; (3) provision has been made for payment by the issuance of no-fund warrants authorized by law and in the manner, and limited in amount as prescribed by law.

Limitation on Sale-and-Leaseback

A provision in some bond indentures prohibiting or curtailing the issuer's ability to enter sale-and-leaseback agreements. A sale-and-leaseback agreement is an arrangement whereby a company sells a fixed asset to a bank or other institution and then rents it back and maintains usufruct of the asset. This increases the debt-to-asset ratio, which is usually seen as negative. It may be used when a company cannot otherwise obtain financing; in either case it can increase the risk to the bond, and so some bond indentures limit the use of sale and leasebacks.

Limitation on Subsidiary Debt

The limitation on subsidiary debt is relevant in the absence of upstream guarantees and is an important constraint on consolidated leverage and subordination. In Moody’s view, there should be no borrowing at the subsidiary level unless it is permitted ratio debt.

Liquidation Event

It is a term used in corporate finance to describe many different events. The two primary events that fall under the liquidity event are the purchase of a corporation and an initial public offering. A liquidation event is most common with a startup company because a startup company is one that requires little money to get started, but is of high risk and can result in a higher return on investment. A liquidity event is not the same as the liquidation of a company. When a company is liquidated, the business is discontinued and does not change ownership. With a liquidity event, the business is continued, but under new ownership.

Liquidation Event

It is a term used in corporate finance to describe many different events. The two primary events that fall under the liquidity event are the purchase of a corporation and an initial public offering. A liquidation event is most common with a startup company because a startup company is one that requires little money to get started, but is of high risk and can result in a higher return on investment. A liquidity event is not the same as the liquidation of a company. When a company is liquidated, the business is discontinued and does not change ownership. With a liquidity event, the business is continued, but under new ownership.

Liquidity Ratio

A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, higher the value of ratio, the larger the margin of safety that the company possesses to cover short-term debts.

Loan Exchange

Loan Exchange is exchanging the existing loan type for another type of loan. e.g. - Entity exchanges its revolving credit facility to a term loan.

Make-Whole Call

A make-whole call is a type of call provisions in a bond allowing the Issuer to pay off remaining debt before the maturity of a bond. The Issuer makes a repayment along with premium.

Mandatory Early Redemption

Specified dates when a bond issuer is required to redeem all or a portion of the outstanding issues of a bond prior to its maturity. The issuer might be required to redeem all or a portion of the bonds according to the call or prepayment provisions of the of the bond contract. Some types of mandatory redemptions occur either on a scheduled basis, or when a specified amount of money is available in the sinking fund. Bonds may be redeemed at a specified price, usually at par, and the bondholder will receive any accrued interest to the redemption date.

Market Disruption Event

Market Disruption Event to be invoked if issuer generally are experiencing exceptional difficulty in raising funds in the interbank market or are paying materially more for interbank deposits than the displayed screen rates for LIBOR or EURIBOR. In these circumstances the clause enables banks to increase the rates charged to borrowers so that they reflect the actual cost of funds to banks.

Material Adverse Change Clause

MAC clauses are a common means of allocating the risks presented by adverse business or economic developments occurring between the signing and the closing of an acquisition agreement. A MAC clause aims to give the buyer the right to terminate the agreement before completion, or to provide a basis for renegotiating the transaction, if events occur that are seriously detrimental to the target assets/company.

Mezzanine Debt

Debt that incorporates equity-based options, such as warrants, with a lower-priority debt. Mezzanine debt is often used to finance acquisitions and buyouts, where it can be used to prioritize new owners ahead of existing owners in the event that a bankruptcy occurs.