You're the CFO of a newspaper company (we're running the Wayback Machine 20 years here) and you stupidly had all 8 tranches of your debt come due the same year.
The problem? That year is 2008. It's November. And you have to refinance $1.2 billion worth of bonds in a market that's just sayin', "Nuh-uh."
Why did you do this? Why did you have all the bonds come due at the same time? Had you laddered them (like...having $200 million come due each year for 6 years sequentially), there'd have been no stress. But this was not the case. At all. And...can you tell this is a true story? The company: Gannett Newspapers, owners of USA Today and a bunch of local papers and TV stations. The company almost went bankrupt, but they were just able to get credit extensions and enough dough to get them into 2009, when their refinancing took hold and their equity bounced big off of a mid-single-digit bottom.
Kids, don't let this happen to you.
Related or Semi-related Video
Finance: What is a second mortgage?4 Views
Finance allah shmoop What is a second mortgage Okay you
know what a first mortgages it's otherwise cleverly named what
is called it is called oh yeah Mortgage it's Just
a loan on a house You paid four hundred grand
for this baby Hundred grand down two hundred fifty grand
in a first mortgage And they're still fifty grand You
owe well where's that fifty large coming from the bank
wouldn't loan you any more on a first mortgage that
was costing you six percent a year Tio you know
to rent that money So you had to get a
second mortgage which should things go awry and you become
a statistic Well that's it's fully behind the first mortgage
in the priority stack of payback So in a bankruptcy
situation the first mortgage first what's called a first mortgage
get it fully paid along with any fees associated with
it and back interest accrued and any other things that
are associated with that first mortgage it stands in line
first in priority Then any cash leftover gets attributed to
that second mortgage So not surprisingly second mortgage money costs
a lot more to rent then first mortgage money because
the risk of non payment in a bad situation is
meaningful E higher especially when the borrowed does this for 00:01:25.136 --> [endTime] a living
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