As a defensive maneuver, a firm issues deep-discount bonds that are redeemable at par in the event of an unfriendly takeover. These bonds are an example of:

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A firm issuing deep-discount bonds that are redeemable at par in the event of an unfriendly takeover is an example of a poison put. This is a type of shareholder protection provision that essentially makes the company less attractive to potential acquirers by increasing the cost of the transaction. If an acquirer takes over the company, they will be forced to buy back the bonds at a much higher price than they originally paid for them, causing financial strain on the acquirer.

As a Defensive Maneuver, a Firm Issues Deep-Discount Bonds That