NISM Series XV : Research Analyst Certification Exam Notes
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Share Consolidation - Share consolidation is the reverse of stock split. In a share consolidation, the company changes the structure of its share capital by increasing the par value of its shares in a defined ratio and correspondingly reducing the number of shares outstanding to maintain the paid up/subscribed capital. A stock consolidation of 5:1 means consolidation of 5 existing share into 1 share. Accordingly, face value of shares will go up 5 times of the original face value and no. of outstanding shares will become one fifth the original number.
Loan Restructuring - Loan or debt restructuring is a mechanism available to companies in financial distress who are unable to meet their obligations to their lenders to restructure their debt by modifying one or more of the terms of the loans. This may include the amount of loan, rate of interest, the mode of repayment: funds and/or equity in the company, and the term of the loan and so that the repayment obligation is within the payment capacity of the borrower
Buy Back of Shares - A company may deploy excess cash on the balance sheet in various ways. It may use the money to expand business and grow or reduce its liability by paying back/reducing its borrowings, if any, and/or to distribute to the shareholders. If it chooses the third option, management needs to choose between homogenous distribution of this money among all shareholders through dividend or it would offer a choice to the shareholders to have the money through selling their shares back to the business or in kind in terms of enhanced value of each share in terms of Earning Per Share (EPS) and Book Value Per Share (BV).
Delisting of Shares - Delisting of shares refers to the permanent removal of the shares of a company from being listed on a stock exchange. Delisting may be compulsory or voluntary. In a compulsory delisting, the shares are delisted on account of non-compliance to regulations and the clauses of the listing agreement by the company. In a voluntary delisting, the company chooses to get the shares delisted and go private.
Share Swap - Swap, simply means, exchange of something. Accordingly, share swap means exchanging one set of shares with another set of shares. Term share swap is often used during a merger or acquisition of a company when acquiring company uses its own stock as cash to purchase the business. Each shareholder of the acquired company receives a pre-determined amount of shares from the acquiring company
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