Definition

A bond provision allowing holders to demand early repayment at par if certain events occur, like a change of control or credit downgrade. The bondholder's nuclear option when they don't like new management's plans.

Example Usage

When the private equity firm acquired the company, bondholders exercised their poison put provisions, forcing immediate repayment of $800 million.

Origin

Corporate finance terminology combining 'poison pill' defensive tactics with 'put' options.

Fun Fact

Poison puts can make leveraged buyouts prohibitively expensive or even impossible, serving as a hidden takeover defense for bondholders.

Source: Bond indentures and M&A

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