A) Afren are not in default; B) Why does paying cash for a business automatically mean the debt is paid off in part or in full...? When you acquire a business, you often buy it lock stock i.e. with the debt. They are paying for the equity in the company to own it, along with all of its liabilities
Just a small observation: "Recapitalisation" -- When a company changes its capital structure (the proportion of equity to debt), This may occur, for instance, as part of a debt restructuring, when a creditor exchanges an outstanding loan for a stake in the company (debt for equity swap). While the aim of a recapitalisation is normally to improve a company's debt/equity ratio, it can also be used to fend off a hostile takeover - in which case the company makes itself unattractive by increasing the level of debt in its capital and using the funds to pay special dividends to shareholders.
Fosun, which recently snapped up Club Med, is reportedly interested in buying up the embattled oil producer. It's backed a $500 million cash deal led by the Afren co-founder Bert Cooper, the Sunday Times said. Nonetheless, it's likely the deal will fail, as Afren's lenders have come up with their own rescue plan.
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