Why is the company debt market starting to heat up?
As and when any company is struggling, or goes under, owing money to a bank or any third party there is always the chance that you will see the company debt change hands at a fraction of the book value. You may seem deals as low as 10p in the pound to affectively take the debt off a company or a bank's books. This is a market which is starting to heat up as it can be a back door way into taking over a venture.
We have seen Phillip Green enter the Icelandic debt market and offer to buy the debt of Baugur which itself is on the verge of going under. By taking on the debt Phillip Green will be hoping to get cheap control of some of the best assets on the UK high street, which are owned by Baugur. If he owns the debt and they need to answer to him he is in a very strong position to try and takeover all or some of these assets at rock bottom prices in exchange for writing off part of the debt of the whole group.
Watch this space over the next few months as we will see more and more similar deals as the vultures start to circle.
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