On January 1, 2016, LoL Corp. issued a 10% convertible bonds with a face value of P4M maturing on December 31, 2025. Each P1,000 bond is convertible into ordinary shares of LoL at a conversion price of P25 per share. Interest is payable half-yearly in cash. At the date of issue, LoL could have issued nonconvertible debt with a ten-year term bearing a coupon interest rate of 11%. On January 1, 2021, the convertible bond has a fair value of P4.4M. LoL makes a tender offer to the holders to repurchase the bonds for P4.4M. The holders of the P2M bonds accepted the offer. At the date of repurchase, LoL could have issued non-convertible debt with a 5-year term bearing a coupon rate of 8%. There purchased of the bonds on January 1, 2021 decreased equity by A.P76,630 B.PO C.P37,710 D.P439,530
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
On January 1, 2016, LoL Corp. issued a 10% convertible bonds with a face value of P4M maturing on December 31, 2025. Each P1,000 bond is convertible into ordinary shares of LoL at a conversion price of P25 per share. Interest is payable half-yearly in cash. At the date of issue, LoL could have issued nonconvertible debt with a ten-year term bearing a coupon interest rate of 11%.
On January 1, 2021, the convertible bond has a fair value of P4.4M. LoL makes a tender offer to the holders to repurchase the bonds for P4.4M. The holders of the P2M bonds accepted the offer. At the date of repurchase, LoL could have issued non-convertible debt with a 5-year term bearing a coupon rate of 8%.
There purchased of the bonds on January 1, 2021 decreased equity by
A.P76,630
B.PO
C.P37,710
D.P439,530
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