At the end of the five-year term, if the issuer does not redeem the rate-reset preferred shares, the shareholder can choose to:
Continue holding the shares at the reset fixed rate.
Convert them intofloating-rate preferred shareswith rates tied to a benchmark (e.g., prime or LIBOR).
This conversion offers flexibility to the shareholder based on market conditions.
A. Exchange for a specified number of common shares: Rate-reset preferred shares do not have this feature.
B. Exchange for a fixed-rate preferred share: The fixed-rate component is reset, not exchanged.
C. Exchange for an unsecured bond: This is not a feature of rate-reset preferred shares.
[Reference:CSC Volume 1, Chapter 8, "Preferred Shares – Rate-Reset Features" outlines the conversion options for rate-reset preferred shares.]
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