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Applies mainly to convertible securities. Means the issuer, if so stated, may substitute a convertible debenture for an existing convertible preferred with identical terms. Most often used when a corporation has an immediate need for equity capital and a low tax rate, and expects either or both conditions to change. This would make the debenture less attractive if the interest tax-deductibility is lost.

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Noncumulative
Limitation on conversion
Issuer
Initial public offering (IPO)
Forced conversion
Exchangeable Security
Exchangeable instrument
Equal shares swap

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Exchangeable

convertible securities

issuer

convertible debenture

equity capital

low tax rate