Metropolitan Life Insurance Company, Swiss Bank Corporation, and several other holders of RJR Nabisco bonds filed suit against the company to prevent it from completing the leveraged buyout...

Order id: PPa020315_259271_1
When the acquisition of one company by another company takes place by using large amount of debt
usually 90% or more to pay off the acquisition price and other related cost. In this case, the assets of the
acquired company are either used as collateral to borrow the debt amount or the assets are sold after
the transaction of buyout is successfully completed to decrease the debt content in the total capital .
Many of the reasonable people consider buyout transaction to be a harsh action wherein the assets of
the company are used to buy that company. The debts used for the buyout purpose are of highly risky
nature such that great risk of non-payment is added to the investment portfolio of existing bondholders
of the acquired company.
The following are some benefits of leveraged buyout from the view point of...