What impact will this utilization of this debt have on the value of the company?

A company’s use of debt can both positively and negatively impact its value. A business can increase its value by taking on additional debt. This can help it to fund growth and expansion. Conversely, building up too much debt could put strain on the company’s finances and creditworthiness which may limit their ability to raise funds in the future. If they were approved for funding, the interest rate could be higher as lenders want to know that their money is going to be paid back.

A high debt level can also reduce shareholder value, as any earnings generated need to be used not just for operational expenses but also repayment of loans. The cash left over for dividends, or any other form of shareholder return can negatively impact the stock value. It is crucial that companies take on debt with caution and keep their balance sheets manageable to avoid damaging their value over the long term.