Poison Put

See: Poison Pill.

A poison pill is a strategy to protect a company from a takevoer. A poison put represents a particular tactical method to achieve the goal. Like picking cyanide vs. arsenic.

The put in question gets attached to the company's bonds. It's a provision that allows the bondholders to demand repayment if a takeover happens before the bonds are due. So the bonds can get repaid in full...but the option only exists in case of a takeover.

The situation makes a potential takeover much more expensive. Any incoming owners would be faced with a possible big debt repayment bill if bondholders exercise the put. It gives current stockholders leverage against a takeover.