I can’t seem to find a definition anywhere. i think it means the amount of interest you lose on an investment by redeeming early instead of holding it to maturity. can anyone confirm if this is right? thanks so much.
clawback is for the issuer Company AF issues $100mm 8% bonds due in 2015 can redeem up to 35% of notes at price of 109% until 2010
^ Hmm… Not sure what that means. A clawback is a provision in a contract to get back something (usually money) that you have already given someone if something bad happens. In this case, an interest clawback could be something like an early withdrawal penalty. I’m a bank and you deposit money with me for 3 years @ 8%. If you redeem early, I am entitled to (some formula)*(amount of interest I have paid you) returned to me. You could call that an interest clawback (personally I would call it an early withdrawal penalty, but that’s beside the point).
It could also be if something good happens. . . say a company is sold on the basis of a multiple of EBITDA. . . if a certain thresehold is exceeded the sellers can get some additional compensation for the sale down the road. It’s not often used but I’ve seen it used as a sweetner to get a deal done. I’ve never heard the term “interest clawback” but JDV’s explanation makes sense.
JustPass Wrote: ------------------------------------------------------- > It could also be if something good happens. . . > say a company is sold on the basis of a multiple > of EBITDA. . . if a certain thresehold is exceeded > the sellers can get some additional compensation > for the sale down the road. > Oh yeah, good…
thanks!