Distressed Firms Have a New Controversial Way to Get Rescue Cash
- Double-dip financings have let more firms raise new money
- Staples, Mauser Packaging could be next, Barclays says
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A new complex maneuver that can help rescue companies in financial trouble is likely to gain steam as firms grapple with maturity walls and weaker earnings, according to Barclays Plc strategists.
The move, known as a “double-dip,” helps struggling firms raise cash by issuing debt out of an empty subsidiary, having the parent company guarantee that debt, and sending the proceeds from the debt deal back to the parent company via an inter-company loan, which then becomes another form of collateral for the obligation.