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Two part question: Suppose Wal-Mart bonds have no covenants. How would Wal-Mart bondholders be hurt if...

Two part question:

Suppose Wal-Mart bonds have no covenants. How would Wal-Mart bondholders be hurt if Walmart unexpectedly merges with Ameristar Casino Inc.?

f Wal-Mart’s bonds were convertible into stock, how would the bondholders be able to benefit from the merger with Ameristar Casino Inc.?

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Answer #1

1. A) If Walmart bonds have no covenants and if Walmart merges with ameristar casino Walmart bond holders are able to get the fixed interest stated in bond. how ever after getting acquired by pinale entertainment this company doing decently and listed 818 rank in Fortune 500 companies list. and recorded a profit of $63.1 million which ultimately bond holders not able to enjoy such huge profits. they are entitled to only interest rate which is mentioned at the time of issue.

2.A) How ever if bonds having option to convertible into stock profits of ameristar combined with the Walmart and bond holders might be rewarded with bonus shares or right shares or high dividend payout as company performance is decent. and the intrencic value of the shares are increase because of reserves and surplus of the company.

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