In our situation, we have currently 500 CSU.DB debentures and only 250 warrants. So, in a Redemption call scenario, we should be prepared to Buy 250 additional warrants in the market, if we want to swap/buy to retain the same no. of 500 debentures ownership. Is this correct ? And, for this reason, there could be a huge demand for these warrants, when called for redemption, because, a large no. of debenture holders, may not necessarily already have those warrants.
Will the New Debentures be listed as a separate security, in addition to the existing debentures CSU.DB ?
Thank You
Just some clarifications. (i) The warrants do not allow to BUY the debentures, only swap. CSU has issued rights, though, which do allow debenture purchase. (ii) The redemption needs five year's notice. So, yes, a loss would occur but amortized over five years. (iii) Yes, to swap a full amount an investor needs to have the full amount of warrants. (iiii) The last question is interesting. It is possible there would be a spike in demand for warrants on rememption, and this is where the 'no listing until redemption' could come into play. The warrants' value will still depend on many factors, and the lack of redemption only has so much value (right now $37 divided by five years, not considering the time weighted value at all and interest payments during the five years). So yes, there could be a spike but we think it will be limited because of this.