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Am I wrong in reading this will add 20b in debt to EA the company, and not the purchasers? Because it seems like just servicing that debt will immediately put
by jmuguy 1y ago
Am I wrong in reading this will add 20b in debt to EA the company, and not the purchasers? Because it seems like just servicing that debt will immediately put the company in a bad position.
- mdavidn 1y agoThat is how a leveraged buyout works. See: Toys "R" Us.
- hollerith 1y agoIt doesn't matter much whether the purchasers personally hold the debt or the debt is held by EA, which is wholly owned by the purchasers.
- burnt-resistor 1y agoStep 1. Take out a giant loan. Step 2. Buy a company on credit. Step 3. Stick company with the loan used to buy it. Step 4. RIF, cut costs, reduce quality, break contracts, and discontinue goods and services. Step 5. Sell everything of value. Step 6. Send that company into bankruptcy. Step 7. Rinse, lather, and repeat.
- amelius 1y agoNobody fixed that exploit in the law yet?
- mdavidn 1y agoI don't understand why the creditors agree to this.
- leovingi 1y ago1) the creditors package up that debt and then sell it off to the next batch of suckers 2) the creditors are first in line to be reimbursed if the company goes belly up, so they are fine with it as long as the assets the company owns are worth more than the debt