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PIK -- Payment in Kind Bonds -- Definition Example - InvestingAnswers PIK bonds are used by the issuer to give themselves some breathing room in case the company runs into liquidity problems By triggering the provision to issue the buyer more bonds (more debt ), the company lessens the need to make cash payments on the bond coupon to the bond buyer
PIK -- Payment in Kind -- Definition Example - InvestingAnswers Why Does Payment in Kind (PIK) Matter? Payments in kind in the place of wages are still taxable For example, employees will have payments in kind reported on their W-2 form If a business receives payment in kind as a payment for goods or services, it must include the fair market value of the payment in kind item
Forget Treasuries -- Try These 3 Little-Known Bonds Instead Payment-In-Kind (PIK) Bond A payment-in-kind bond (PIK bond) gives the issuer the option of making interest and principal payments with either cash or additional bonds One of the most famous PIK bond issues came in 1989 when RJR Nabisco issued $1 billion of them as part of Kohlberg Kravis Roberts' well-known leveraged buyout of the company
Mandatory Convertible Definition Example - InvestingAnswers How Does Mandatory Convertible Work? A company may wish to issue common stock but feel that the time is not right to do so, either because of general market conditions or due to the price pressure it might place on the current shares outstanding
Forgivable Loan Definition and Examples - InvestingAnswers Types of Forgivable Loan Multiple types of forgivable loans are issued to persuade borrowers to behave in a certain way (e g work in a specific field, live in a particular area)
The LBO Value Equation - InvestingAnswers Value the Upside Today, Pactiv is actively being courted by one of its competitors, Georgia-Pacific, as well as two different PE firms, Apollo Global Management and Rank Group
How Do Preferred Stocks Work? - InvestingAnswers Are the Dividends Cumulative? Preferred stock dividends also come as either 'cumulative' or 'non-cumulative ' ' With non-cumulative shares, if a company suspends dividend payments, they won't be paid
Warrant Coverage Definition Example - InvestingAnswers How Does a Warrant Coverage Work? Warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securities (usually the issuer 's common stock) at a certain price before a certain time