Model: Redemption by conversion The summarized balance sheet of XY as on 31 March 2011 stood as follows:
|
Liabilities |
Rs.in |
Assets |
Rs. in |
|
Share Capital: |
|||
|
20,00,000 Equity Shares of 10 Each, |
200 |
Fixed Assets |
640 |
|
General Reserve |
300 |
Debenture Redemption Fund |
160 |
|
Debentures Redemption Fund |
200 |
Investment |
|
|
12.5% Convertible Debentures |
400 |
Cash and Bank Balance |
200 |
|
4,00000 Debentures of 100 Each |
Other Current Assets |
800 |
|
|
Other Loans |
200 |
||
|
Current Liabilities and Provisions |
500 |
||
|
1,800 |
1,800 |
The debentures are due for redemption on 1 April 2011. The terms of issue of debentures provided they were redeemable at a premium of 5% and also conferred option to the debenture holders to convent 20% of their holding into equity shares as a pre-determined price of Rs.15.75 per share and the payment in cash. Assuming that:
- Except for 1,000 debenture holders holding 1,00,000 debentures in all, the rest of them exercised the option for maximum conversion
- The investments realize Rs.176 lakh on sale
- All the transactions are put though, without any lag, on 1 April 2011.
Redraft the balance sheet of the company as on 1 April 2011, after giving effect to the redemption. Show your calculation in respect of the number of equity shares to be allotted and the cash payment necessary.