Word: junks
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Firms like Drexel Burnham Lambert, which specialize in helping takeover artists float junk bonds, are another powerful new Wall Street force. Junk bonds are corporate IOUs issued by companies without established credit records, and are therefore considered risky. In the past two years some $27 billion in junk bonds have been issued. Both raiders and corporate executives who wish to take their companies private use them to raise the needed money. "Junk bonds completely changed the nature of the game," says Michael Dingman, president of Allied-Signal, a high-tech giant formed last summer in the friendly merger...
...million parting settlement, or golden parachute, he still talks like a bitter man. "The whole thing was crazy," he says. "Here we built a great American corporation. Then through this process the stock ended up in the hands of arbitragers, who forced the sale of the company. And junk-bond financing made it all possible...
Takeover artists, arbitragers, junk bonds and all the other elements of merger finance have created a mood of high uncertainty in corporations. Rather than planning new products or considering new markets, many executives are spending their time looking around at whom they might take over or who may try to take them over. In a less frenetic period, RCA might not have been so eager to find a merger partner. The motto of these executives could be borrowed from the legendary baseball pitcher Satchel Paige: "Don't look back. Something might be gaining...
...consolidation craze has created opportunities for sudden Croesus-style riches. For aiding Pantry Pride in its fight for Revlon, financial advisers and lawyers stand to gain more than $100 million. The winners include Drexel Burnham, which sold the junk bonds to finance the deal and is earning an estimated $60 million...
...junk food store," said one observer, who asked to be called "a local chess player...