A structured convertible that constitutes a variation of mandatory convertible securities (originally issued by Smith Barney), as a vehicle to provide growth potential of an underlying (equity) stock subject to a targeted growth rate- specifically, a quarterly appreciation cap of up to 20%. Targeted growth enhanced terms securities (TARGETS), once issued, neither can be redeemed by the holder or nor called by the issuer prior to its prespecified, scheduled maturity.
Such securities were trust preferred (trust structured preferred, trust-issued preferred stock) with mandatory conversion as forced by the issuer.
By categorization, TARGETS belong to the broader group of PERCS (preferred equity redemption cumulative securities) which includes various types of dividend enhanced mandatory convertible preferred stocks, with a typical maturity of three years. The dividends for such securities are cumulative, and exceed those of the underlying stock. Holders have priority over common stocks in case of bankruptcy prior to maturity, or until the issuer redeems them by exercising its call option and forcing conversion to equity before maturity.
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