COERCIVE TENDER AND EXCHANGE OFFERS IN DISTRESSED HIGH-YIELD DEBT RESTRUCTURINGS - AN EMPIRICAL-ANALYSIS

This paper examines a recent sample of public workouts for distressed high-yield debt. The nature of holdouts and the effectiveness of coerc ive tactics in alleviating the holdout problem is analyzed. Tender off ers are in relatively less financial distress, exhibit more severe hol douts, and are more coercive than exchange offers. Tender offers also have higher completion rates and fewer Chapter 11 filings. Security pr ices react positively to announcements of tender offers, negatively to exchange offers. Evidence suggests that coercion is not detrimental t o bondholders, and may benefit security holders by increasing the like lihood of a less costly, out-of-court restructuring.