Kapital Endorsement for Zero Interest Agreement

Kapital Endorsement for Zero Interest Agreement or can be shortened as K.E.Z.I.A.

As can be seen from the terminology, it means a document, or just say a financial instrument, like a bond or share, that can turn loan/debt/liability into capital ("kapital" in German) through some market valuation with a zero interest agreement for some agreed terms and conditions. In short, the lender can have ownership but has to give up the interest outstanding.

For example, a company had a $1,000,000 loan with 5 year maturity and floating rate interest. In the third year, the company thinks that the interest cost served to the lender would seem to be high and may damage the profitability. The company then offer the lender to consider converting the loan into shares for some agreed value but forgetting the remaining 2 years interest.

Is it fair? It's just a fictional financial instrument anyway. Nonetheless, I would do some further digging on this.


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