A Bond Tender Offer (BTO), also called a Debt Tender Offer (DTO), is a
corporate finance
Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analy ...
term denoting the process of a firm retiring its debt by making an offer to its bondholders to repurchase a specific number of
bonds at a specified price and specified time. Firms use these offers to refinance or
restructure their current
capital structure
In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt (borrowed funds), and preferred stock, and is detailed in the ...
.
On the open market, many debt securities trade below their face value, thus making repurchase of debt attractive to a firm. In the case of a BTO, the firm offers to buy bonds above their
market value
Market value or OMV (open market valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with ''open market value'', ''fair value'' or '' fair market value'', although t ...
, although still below
face value
The face value, sometimes called nominal value, is the value of a coin, bond, stamp or paper money as printed on the coin, stamp or bill itself by the issuing authority.
The face value of coins, stamps, or bill is usually its legal value. Ho ...
. However, these are generally non-negotiable with the offeree since only a minimum amount of the bond repurchases are allowed.
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See also
*Tender offer
In corporate finance, a tender offer is a type of public takeover bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corp ...
*Bond exchange offer
In finance, corporate law and securities law, an exchange offer is a form of tender offer in which securities are offered as consideration instead of cash.
In a bond exchange offer, bondholders may consensually exchange their existing bonds for ...
* Mini-tender offer
*Mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...
References
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Corporate finance
Tender offer
In corporate finance, a tender offer is a type of public takeover bid. The tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corp ...