Exchange Income strikes cash conversion option under 5.5%, 5.35% notes

By Susanna Moon

Chicago, July 26 - Exchange Income Corp. said it amended its 5.5% convertible unsecured subordinated debentures due Sept. 30, 2019 and its 5.35% convertible unsecured subordinated debentures due March 31, 2020.

The new terms remove the company's option to pay cash to holders who exercise the conversion option attached to the notes, according to a company press release.

If holders opt to convert their notes, the company may no longer pay cash in lieu of shares.

The company's other note series do not provide for a cash conversion option, the release noted.

International Financial Reporting Standards require that the cash conversion option be treated as an embedded derivative.

As the company does not intend to exercise the cash conversion option, it decided that accounting for the cash conversion option as an embedded derivative unnecessarily complicates the accounting treatment of the debentures in the corporation's financial statements.

The company is a diversified acquisition-oriented company based in Winnipeg, Man., that invests in companies in the industrial products and transportation sectors.

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