forced conversion


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Forced conversion

Occurs when a convertible security is called in by the issuer, usually when the underlying stock is selling well above the conversion price. The issuer thus assures the bonds will be retired without requiring any cash payment. Upon conversion into common, the carrying value of the bonds becomes part of a corporation's equity, thus strengthening thebalance sheet and enhancing future debt capability.

Forced Conversion

In a callable convertible security, a situation in which the issuer calls the security, which requires the holder to exercise the conversion option and exchange the security for common stock. An issuer may authorize a forced conversion when interest rates decline and it can issue the same amount of debt at a lower cost of capital. However, a forced conversion may not be advantageous to the security holder because common stock is riskier and the combination of dividends and capital appreciation may not equal the coupon rate the holder was receiving prior to conversion.

forced conversion

The call for redemption of a convertible security at a price lower than the market value of the underlying asset into which the convertible may be exchanged. The investor finds it more favorable to exchange the convertible for the underlying asset than to give up the security for cash at the call price. For instance, suppose a $1,000 principal bond with a call price of $1,080 is converted into 20 shares of stock selling at $70 each. The bond is worth $1,400 in underlying stock. If the issuer calls the bond, the investor will be forced to convert before the call becomes effective.
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The court also directed the Sindh government and police to submit detailed reports till December 10 in respect of 36 cases including forced conversion of Hindu boys and girls into Islam, 14 gang rape cases, kidnapping of eight girls and a robbery in a temple in Dhirki Sindh.
Forced conversion of Swiss franc mortgages would create a moral hazard and make restructuring of non performing loans (NPLs) more challenging, Moody's ratings agency said on Monday.
A forced conversion without considering the income situation or the debt service capability of the customer is a severe retroactive interference with existing contracts.
Paul urged the authorities concerned to review existing rules regarding forced conversion if, the minority community feels insecure with prevailing set of rules and regulations and said legal experts can guide us for necessary adjustments for the purpose through competent authorities as per requirement.
During previous proceedings, the bench in its order had observed that though undoubtedly both girls, Faryal Bibi (Rinkle Kumari) and Hafsa Bibi (Dr Lata), had performed Nikkah and joined their husbands but there were allegations of forced conversion.
Additionally, the convertible debenture reflects management's intent to reduce financial leverage as reflected by the forced conversion feature included with the debenture.
THE alleged kidnapping, gangrape, forced conversion and trafficking of women in western Uttar Pradesh came up in the Supreme Court on Friday, which warned an NGO not to give a religious colour to the issue.
HRCP is acutely concerned over escalations in religious and sectarian violence and demands that the government launch and sustain a robust effort by civilian and military authorities to adequately respond to the growing menace, especially the oppression of the Ahmedis, the killing of the Shias, and the kidnapping for ransom and forced conversion of the Hindus.
Further, the deal includes several favorable provisions, including under varying circumstances redemption at our option utilizing cash or common stock, forced conversion, or allowing the preferred stock to remain outstanding.
Islamabad, Aug 18( ANI ): Pakistan President Asif Ali Zardari has ordered Sindh Chief Minister Sindh Qaim Ali Shah to make an amendment to the constitution against forced conversion of minorities in the state.
Recently, India's serious concerns on the matter of abduction, forced conversion and marriage of Hindu girls against their will to Muslim men in Pakistan have been conveyed to Pakistan.
The meeting of Senate Standing Committee on Minorities, he said that kidnapping of minorities and forced conversion of religion has been noticed strictly and legislation would be ensured in this regard.