A Bond Tender Offer (BTO), also called a Debt Tender Offer (DTO), is a
corporate finance
Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and anal ...
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 the ...
, although still below
face value. 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 corpo ...
*Bond exchange offer
An exchange offer in finance, corporate law and securities law, 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 A mini-tender offer is an offer to acquire a company's shares directly from current investors in an amount less than 5% of issued stock.
Subject to Only Some SEC Regulations
An offer to purchase less than 5% of the company's securities is not gover ...
*Mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
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 corpo ...