Portfolio, Investment & Restructuring
Debt-for-equity Swaps in Shipping
Summary
A debt-for-equity swap converts all or part of a creditor claim into shares or another ownership interest.
Why this matters in ship finance
It can reduce debt burden but transfers the lender into an equity-risk and governance position.
The concept
Conversion terms determine valuation, dilution, voting rights, tax effects and creditor equality. Directive (EU) 2019/1023 supports national preventive restructuring frameworks, not automatic conversion rights.
How it is used in practice
Model post-conversion balance-sheet solvency, equity control, management incentives and exit returns under multiple vessel-value scenarios.
Practical issues
A debt-for-equity swap requires valid corporate actions and stakeholder consents; debt cancellation and ownership changes can have separate tax consequences.
How ShipFinance.ai uses this concept
Compare recovery under retained debt, partial conversion and full equity participation.
Key takeaways
- Claims can be reallocated without creating new enterprise value.
- Governance and dilution affect value.
- National restructuring and corporate law control execution.