Debt restructuring can have several impacts on a company:
- Improved Cash Flow: By reducing debt payments, companies can improve their cash flow, allowing them to invest in growth or cover operational expenses. - Potential Dilution of Equity: In cases of a debt-for-equity swap, existing shareholders may see their ownership diluted. - Effect on Creditors: Creditors may receive less than what was originally owed, but it can be preferable to the company defaulting on its obligations. - Market Perception: Successful debt restructuring can improve the market's perception of the company, but the process itself may initially cause concern among investors and stakeholders.