debt conversion

Debt conversion is a financial strategy where a borrower exchanges existing debt, such as loans or bonds, for different types of securities or equity in the company. This process reduces the borrower’s debt burden and can improve cash flow, while investors may receive ownership stakes or shares instead of just repayment. It’s often used in situations where a company wants to strengthen its balance sheet or avoid default, allowing both parties to benefit from a mutually agreed restructuring of the original debt agreement.