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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Summary: London [UK], Apr 14 (ANI): A group of Sindhi women on Saturday gathered outside the Pakistan High Commission in London to protest against forced conversion of Hindu girls by Muslim men in Pakistan.
Rehman had probed the matter and concluded that it was not a forced conversion.
MIRPURKHAS -- Dozens of people belonging to Hindu community, under the banner of Bheel Sujag Council, held a protest demonstration outside local press club against the abduction, forced conversion, and marriage of underage Hindu girls here on Saturday.
When it comes to cases of forced conversion, these are mostly reported from Sindh.
Mississauga [Canada], April 1 (ANI): Canadian Sindhi Community staged a protest in Mississauga on Sunday against forced conversion and marriages of Hindu girls in Pakistan.
Swaraj responded to Fawad, 'I only asked for a report from Indian High Commissioner about the kidnapping and forced conversion...
Regarding the conversion controversy, the court observed that 'the alleged impression of forced conversion, therefore, needs to the probed by both the federal and provincial government of Sindh in a fair and transparent manner'.
Summary: Lahore (Pakistan) [India], Mar 31 (ANI): Protests erupted here on Saturday over the forced conversion of two Hindu girls who were allegedly abducted from their home in the Sindh province on the eve of Holi on March 20.
KARACHI -- Expressing its concern over increasing cases of violence against women, the Sindh Commission on the Status of Women (SCSW) through a statement called upon religious and political leaders to use their platforms to create awareness of forced conversion and to help curb such violations of human rights.
"Forced conversion of Hindu girls in Pakistan: The age of the girls is not disputed.
'We have always spoken out against forced conversion,' he said.
Police arrest 12 persons in Ghotki forced conversion case