Final answer:
The bondholders wanted to block the leveraged buyout acquisition from Kohlberg Kravis Roberts to protect their investments and minimize potential losses. Arguments for their case include the risky nature of the transaction and the preservation of value and stability for all bondholders. Arguments against their case include the potential long-term benefits of the acquisition and interference with the company's decision-making process.
Step-by-step explanation:
The bondholders wanted to block the leveraged buyout acquisition from Kohlberg Kravis Roberts because they feared that the transaction would negatively impact their investments. If the leveraged buyout were to go through, it could potentially increase the risk of default by RJR Nabisco, thus jeopardizing the bondholders' ability to receive the promised payments.
Arguments for the bondholders' case include:
- The leveraged buyout is a risky transaction that could lead to financial instability for RJR Nabisco, making it more likely for the company to default on its bond payments.
- The bondholders' main concern is protecting their investments, so blocking the acquisition would be a way to minimize the potential losses.
- By preventing the leveraged buyout, the bondholders are acting in the best interests of all bondholders, as they are seeking to preserve the value and stability of the RJR Nabisco bonds.
On the other hand, arguments against the bondholders' case include:
- The leveraged buyout may actually benefit the company in the long run, leading to increased profitability and stability, which could ultimately result in better returns for the bondholders.
- The bondholders' attempt to block the acquisition may be viewed as an interference in the company's operations and decision-making process.
- If the bondholders' case is successful, it could set a precedent that limits the ability of companies to pursue leveraged buyouts, potentially hindering corporate growth and restructuring.