The important features of the debentures are:
A debenture has a face value which is the amount paid per debenture. This face value may be divided into different parts say Part A, Part B, recto understand the concept we take an example of a debenture of face value of Rs.200 with Part A of Rs.20, Part B of Rs.90, and Part C of Rs.90.
These different parts of a debenture have different terms with respect to conversion of redemption.
For the typical debenture under consideration, the coupon rate is 14 per cent. Part A of Rs.20 will be converted into one equity share on allotment at a premium of Rs.10 per share. Part B is converted into two shares at a premium of Rs.35 per share, one year after allotment. Part C remains as a debt and is redeemed at the end of the sixth, seventh and eighth year; from the date of allotment in three equal installments and a premium of five rupees is payable along with the first installment.
The idea of the scheme is quite simple. During the period of project implementation, the company is not in a position to serve the equity by way of dividends, as it does no team any profits. On the other hand, it can capitalize the interest during this period and claim depreciation. During this period, most of the money is in the form of debt. The date of conversion is fixed to coincide with the expected date of project completion. After the second conversion,the company retains a cheap debt at 14 per cent per annum.The shares, issued at premium do not increase the company's equity size substantially. The investor, on the other hand, is thrilled to receive the
companies' shares and quite often sells offt he part C at a discount.
Part C is called the non-convertible part of debenture or Khokha. The non-convertible debenture often comes with a detachable warrant, which has a validity period. Within that period, at any time, the company can offer the warrant holders equity shares at a predetermined price. This war-rant can be separately traded on the stock exchange and is not related to the non-convertible debentures.
The debentures can be independently traded on the stock exchanges for a price
A debenture has a face value which is the amount paid per debenture. This face value may be divided into different parts say Part A, Part B, recto understand the concept we take an example of a debenture of face value of Rs.200 with Part A of Rs.20, Part B of Rs.90, and Part C of Rs.90.
These different parts of a debenture have different terms with respect to conversion of redemption.
For the typical debenture under consideration, the coupon rate is 14 per cent. Part A of Rs.20 will be converted into one equity share on allotment at a premium of Rs.10 per share. Part B is converted into two shares at a premium of Rs.35 per share, one year after allotment. Part C remains as a debt and is redeemed at the end of the sixth, seventh and eighth year; from the date of allotment in three equal installments and a premium of five rupees is payable along with the first installment.
The idea of the scheme is quite simple. During the period of project implementation, the company is not in a position to serve the equity by way of dividends, as it does no team any profits. On the other hand, it can capitalize the interest during this period and claim depreciation. During this period, most of the money is in the form of debt. The date of conversion is fixed to coincide with the expected date of project completion. After the second conversion,the company retains a cheap debt at 14 per cent per annum.The shares, issued at premium do not increase the company's equity size substantially. The investor, on the other hand, is thrilled to receive the
companies' shares and quite often sells offt he part C at a discount.
Part C is called the non-convertible part of debenture or Khokha. The non-convertible debenture often comes with a detachable warrant, which has a validity period. Within that period, at any time, the company can offer the warrant holders equity shares at a predetermined price. This war-rant can be separately traded on the stock exchange and is not related to the non-convertible debentures.
The debentures can be independently traded on the stock exchanges for a price
Source: Indian Advisory Stock Exchange
My name is Fajar. I live in Bedono in Central Java I was in a very chronic financial issue and terminal health situation some few weeks back. After all my search for assistance from friends and neighbors proved abortive, I feel there was no one who truly cares. I became so exhausted due to lack of funds to expand my business and my 2 kids aged 5 and 8 were also not good looking due to lack of proper care as a result of finance. One faithful morning I saw an old time friend of my late husband and I told him all I have been going through and he said the only way he could help was to direct me to a good loan officer in USA that also helped him, He explained to me on how he was financially down and how he got boosted by this loan officer ( Mr Pedro who grant him 7,000,000.00 USD loan at an affordable rate of 2% rate . He further assured me that they were the only legit loan firm he found online. He gave me their email & That was how i applied and was also granted a loan and my life changed for the good. CONTACT THE ONLY GENUINE LENDER Mr Pedro VIA Email: pedroloanss@gmail.com to resolve your financial mess.
ReplyDelete