Mandatory Convertible

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Mandatory Convertible

A bond that must be converted into common stock in the company issuing it on or before a certain date. An advantage of a mandatory convertible to the investor is the fact that it guarantees a certain return up to the conversion date, after which there is no guaranteed return but the possibility of a much higher return. A publicly-traded company issues mandatory convertibles when it needs to raise the capital provided by issuing stock, but when doing so would put a strain on the price of existing shares.
References in periodicals archive ?
FCA also announced that it has priced an offering of USD2,500,000,000 in aggregate notional amount of mandatory convertible securities due 2016.
The mandatory convertible securities will be issued at 100 percent of the notional amount and will be mandatorily converted into FCA common shares on December 15, 2016 unless earlier converted at the option of the holder or FCA or upon certain specified events in accordance with their terms.
The source on Wednesday confirmed that was still the case and that the mandatory convertible securities will be the only new shares issued in the IPO.
Primary capital includes common stock, perpetual preferred stock, retained earnings, loan-loss allowance, and mandatory convertible securities. Total capital includes primary capital plus limited-life preferred stock and subordinated debt.
and to distribute that ownership interest to holders of FCA shares and mandatory convertible securities, as further described in the EGM documentation.
M2 EQUITYBITES-December 11, 2014-FCA prices offering of common shares, mandatory convertible securities

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