Financial Times FT.com

Bondholders urged to take investment cut

By Henny Sender and Nicole Bullock in New York

Published: November 18 2008 00:03 | Last updated: November 18 2008 00:03

Heavily indebted companies owned by private equity firms, including Harrah’s Entertainment and Realogy, are asking their bondholders to accept a big cut in the value of their investments or risk falling behind other creditors in getting repaid.

Such offers are allowed under a provision of the relevant debt issues called an “accordion feature” – which says the company can issue additional senior debt and relegate existing bondholders to a more junior position in the capital structure.

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