I see we had another lack luster quarterly earnings release. I also see that Kyndryl borrowed 500 million bucks. to cover the 500 million debt due in November of 2024. Basically they are using debt to cover debt. Kyndryl is using senior notes. It's a selling of debt to investors. They specifically reference it as senior notes for a reason. Senior notes have a higher claim on a companies asset's in case of bankruptcy. This type of debt trumps other debts like Junior or Subordinated debt. This company is in trouble
4 replies (most recent on top)
Wouldn't surprise me if IBM was the original debtor, being paid back by Kyndryl. I would just be another way IBM is exploiting the Monster they created. It has been shady from day one of Kyndryls creation.
Senior notes are a wall street and investment banking creation. If you really delve into what senior notes are you will get a definition but you won't find a creation date. Corporations and investment banks love to use them, but not too quick to claim them.
I wonder how much of that original loan repayment found its way back to IBM's pocket. Sounds like it was just another way for IBM to milk Kyndryl a little more. There must be a reason why IBM continues to hold Kyndryl stock. The last I checked it was around 19 to 20 percent ownership. This maybe the reason why Kyndryl and IBM won't make a clean break from each other. Kyndryls creation from day one always smacked of shadiness by IBM.
Why wasn't the original debt renegotiated, with the lienholder. Seems that would of made better financial sense. If I had to spitball it for a reason why it wasn't done. The simplest reason would be. The original debt holder, found it to risky. They may have felt that Kyndryl may not be a company with any longevity to it or it has some form of bankruptcy in its future. Senior Notes are a desperate move used by companies in financial distress. That new loan is definitely gonna be an anchor around their fiscal necks.