Skip to content
Sign inRegister

Ask the Tutor ACCA AFM

Sigria 2 BPP 42

RRichard7y ago
If a bond is given for purchase of a company, who pays back that money? Who pays the interest?
John MoffatJohn MoffatTutor7y ago#1
The company that issues the bond - i.e. the acquiring company. They have to pay back the bond on maturity and they have to pay the interest on it.
RRichard7y ago#2
Oh.....so the acquiring company takes out a loan and the loan is paid back by the combination?? debt financed??
John MoffatJohn MoffatTutor7y ago#3
No they do not take a loan! By issuing debt to the shareholders of the target company, they are owing money to those shareholders as opposed to having paid them cash.
This topic is locked — no new replies.