proratable factor

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Proratable Factor

The percentage of shares that may be exchanged for other stock or cash. This may happen in a bankruptcy or in a takeover. For example, if so many shareholders seek to trade in their stocks at one time that the company lacks to cash to cover it, the company may use a proratable factor to cover at least a proportion of the exchanges. To give another example, if a company is taken over for cash and equity, the proratable factor is used to determine how much of each a shareholder receives for each share of the company that has been taken over. See also: Proration, Exchange ratio.

proratable factor

The proportion of shares tendered by each stockholder that will be accepted for purchase or exchange.