Straight debt meeting certain requirements described in IRC §856(m)(2), unless the REIT holds (either directly or through controlled TRSs) certain other securities of the same corporate or partnership issuer that have an aggregate value greater than 1 percent of such issuer’s outstanding securities;
Straight debt securities (i.e., a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the interest rate (and interest payment dates) are not contingent on profits, the borrower’s discretion or similar factors (except as provided in Code section 856(m)(2)(B)) and (ii) the debt is not convertible, directly or indirectly, into stock, but excluding any such securities issued by a corporation or partnership if the Guarantor or any of its Controlled TRSs hold securities of such corporation or partnership other than securities described in clauses (a) through (f) of this sentence that have an aggregate value of more than 1% of the corporation’s or partnership’s outstanding securities);
Straight debt securities do not include any securities issued by an entity taxed as a partnership or a corporation in which we or any controlled taxable REIT subsidiary hold non-“straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. “Straight debt” securities include, however, debt subject to the following contingencies: • a contingency relating to the time of payment of interest or principal, as long as either (1) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or
Examples of Straight debt in a sentence
Straight debt, in turn, would have been better for the firm than convertible bonds if the stock performs well, since shareholders would then not have to share their residual claim with convertible bondholders.
Straight debt and syndicated loans represent the primary funding sources in this type of family firms.
Straight debt seems to be a financing solution for firms facing information asymmetric problem, but Stein (1992) argues that the excessive debt can lead to costs of financial distress.
Straight debt may be an incentive of firms to overinvest in risky but high return project in order to maximize the wealth transfers from creditors.
Straight debt, however, may result in the loss of the manager’s control benefits when the firm runs into financial distress.
More Definitions of Straight debt
Straight debt. ’ means any written uncondi- tion proceeds. Exceptions to the requirement
Straight debt securities (i.e., a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the interest rate (and interest payment dates) are not contingent on profits, the borrower's discretion or similar factors (except as provided in Code section 856(m)(2)(B)) and (ii) the debt is not convertible, directly or indirectly, into stock, provided that "straight debt" securities do not include any securities issued by a corporation or partnership if the Company and any of its controlled TRSs (i.e., TRSs in which the Company owned, directly or indirectly, more than 50% of the total voting power or the total value of the stock) hold securities including, for this purpose any equity securities of a partnership, of such corporation or partnership other than securities described in clauses (a) through (f) of this paragraph 17 that have an aggregate value of more than 1% of the corporation's or partnership's outstanding securities);
Straight debt means (A) any written unconditional promise to pay on demand or on a specified date a sum certain in money if: (1) the interest rate (and interest payment dates) are not contingent on profits, the borrower's discretion, or similar factors and (2) there is no convertibility (directly or indirectly) into stock; provided that, (B) (i) the issuer of a security is an individual, (ii) the only securities of an issuer which are held by the REIT or a Taxable REIT Subsidiary of the REIT are described in (A), or (iii) the issuer is a partnership and the REIT holds at least a twenty percent (20%) profits interest in the partnership.
Straight debt is a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the interest rate (and interest payment dates) are not contingent on profits, the borrower's discretion or similar factors, and (ii) the loan is not convertible into stock. Code Section 1361(c)(5). However, a loan will not fail to satisfy the "straight debt safe-harbor" solely by reason of the fact that the time of payment of such interest or principal is subject to a contingency, but only if any such contingency does not have the effect of changing the effective yield to maturity of the loan, as determined under Section 1272 of the Code, by more than a de minimis amount. The de minimis amount is the greater of 1/4 of 1 percent or 5 percent of the annual yield to maturity of the note. Code Section 856(m)(2)(ii). In addition, if the issuer of the debt instrument is a corporation or partnership, debt issued by such entity will not qualify under the safe harbor if the REIT holding such debt instrument, and its taxable REIT subsidiaries, also hold more than a de minimis amount of securities of the issuer other than securities not taken into account for purposes of the 10% Value Limitation (including straight debt securities). Code Section 856(m)(2)(C). Treasury Regulations Section 1.1272-1(b)(i) prescribes the method for determining the yield to maturity for debt instruments which are not subject to a contingency. For debt instruments not subject to contingencies, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments to be made under such a debt instrument, produces an amount equal to the issue price of the debt instrument. Where the debt instrument is issued for money, the issue price is the amount paid for the instrument. The methods for determining the yield to maturity of a loan subject to one or more contingencies is prescribed in Treasury Regulations Section 1.1272-1(c). The method for determining the yield to maturity on a loan subject to a contingency varies depending on the nature of the contingency. Where the contingency is an option in favor of the issuer of the debt instrument which is exercisable on one or more dates during the term of the debt instrument and that, if exercised, would require payments to be made on the debt instrument under an alternative payment schedule or schedules, the yield to maturity is determined by deeming an option held by the issuer of a debt ...
Straight debt means a written unconditional obligation, regardless of whether it is embodied in a formal note, to pay a sum certain on demand, or on a specified due date, if it:43
Straight debt securities, meaning a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the interest rate and interest payment dates are not contingent on profits, the borrower's discretion, or similar factors and (ii) the debt is not convertible, directly or indirectly, into stock, which term includes debt subject to the following contingencies:
i. a contingency relating to the time of payment of interest or principal, as long as either (A) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (B) neither the aggregate issue price nor the aggregate face amount of the issuer's debt obligations held by the Company exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and
ii. a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice,
Straight debt securities exclude any securities issued by a corporation or a partnership if the Company and any of its Controlled TRSs hold securities of such corporation or partnership other than securities described in clauses (a) through (f) of this paragraph 15 that have an aggregate value of more than 1% of the corporation's or partnership's outstanding securities;