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U.S. Companies Billions Deep in Distressed Debt Deals

Source: Wall St. Journal

Posted on 11 Aug 2009

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U.S. companies are wading deeper into debt. Case in point: distressed-debt deals, where creditors use their debt positions to take ownership of troubled companies, have reached $84.4 billion in total value this year, a pace close to double that of 2008, according to the Wall Street Journal.

The newspaper, citing data compiled by data provider Dealogic, said 140 distressed-debt deals have been struck during 2009, compared with 102 for all of 2008.

It said the deals involved every sector of the U.S. economy from auto parts maker Delphi Corp to retailer Eddie Bauer and included corporate takeovers, covering several kinds of transactions related to bankruptcies, restructurings, recapitalizations or liquidations.

The total value of distressed-debt deals in 2008 was about $20 billion, according to the paper.