Description: The general theme is that things have been tough for the last little while in the oil patch. But some companies with cash to spare have been taking advantage of the downturn to repurchase their own bonds at “60 cents on the dollar.” Companies like Encana and Repsol SA are reducing their long-term debt through these transactions.
Date: March 28, 2016
1) If you were a CFO would you advise this type of debt-reduction strategy?
2) How will these transactions be shown on the companies’ statement of cash flows?
3) What key financial ratios will be impacted by these buy back transactions?