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[Latin, Are due.] A promissory note or bond offered by a corporation to a creditor in exchange for a loan, the repayment of which is backed only by the general creditworthiness of the corporation and not by a mortgage or a lien on any specific property.

Debentures are usually offered in issues under an Indenture, a document that sets the terms of the exchange. A debenture is usually a bearer instrument. When it is presented for payment, the person in possession of it will be paid, even if the person is not the original creditor. Coupons representing annual or semi-annual payments of interest on the debt are attached, to be clipped and presented for payment on their due dates. They may be deposited in, and collected by, the banks of holders of the debentures, the creditors of the corporation.

A convertible debenture is one that can be changed or converted, at the option of its holder, into shares of stock, usually common stock, at a fixed ratio as stated in the indenture. The ratio can be adjusted in light of stock dividends; otherwise the value of converting the debt into Securities would be worth less than retaining the debenture until its date of maturity.

A subordinate debenture is one that will be repaid only after other corporate debts have been satisfied. A convertible subordinate debenture is one that is subject or subordinate to the prior repayment of other debts of the corporation but which can be converted into another form of security.

A sinking fund debenture is one whereby repayment is secured by periodic payments by the corporation into a sinking fund, an amount of money made up of corporate assets and earnings that are set aside for the repayment of designated debentures and long-term debts.


n. a form of bond certificate issued by a corporation to show funds invested, re-payment of which is guaranteed by the over-all capital value of the company under certain specific terms. Thus, it is more secure than shares of stock or general bonds.


noun bond, negotiable instrument, paper money, pledge, title deed
See also: bond, charge, check, contract, draft, instrument, lien, note, pledge, security, specialty


a document, almost invariably by or on behalf of a company, that creates or acknowledges a debt owed by the company. The term includes debenture stock, bonds and other debt securities issued by a company. Companies usually keep a register of debenture holders. It is a word without precise definite signification. Normally, debentures are issued in connection with secured borrowings and incorporate a fixed or floating charge, but this is not strictly necessary, and debentures can be used in connection with unsecured borrowings.

DEBENTURE. A certificate given, in pursuance of law, by the collector of a port of entry, for a certain sum, due by the United States, payable at a time therein mentioned, to an importer for drawback of duties on merchandise imported and exported by him, provided the duties arising on the importation of the said merchandise shall have been discharged prior to the time aforesaid. Vide Act of Congress of March 2, 1799, s. 80; Encyclopedie, h.t.; Dane's Ab. Index, h.t.

References in periodicals archive ?
69-142, the Service determined that the parties had undertaken a valid B reorganization, but that the exchange of the debentures was a separate, taxable exchange.
the economic terms of the proposed tender offer have been publicly disclosed since July 1993, and the company is not aware of any other bidders for the debentures or the company, as a whole; and the company believes it unlikely that there will be a competing bid for the debentures or the company;
This announcement is neither an offer to sell nor a solicitation of an offer to buy any Debentures or Common Stock of the Company.
5 million principal amount of New Debentures are being issued in exchange for the amounts of old debentures listed below.
1,000 principal amount of convertible debentures includes 2,000 common share purchase warrants, where each such warrant entitles the holder thereof to purchase one common share at an exercise price of U.
As described in an Offering Circular dated February 22, 1994, and supplemented on March 9, AFC is offering to issue new 9-3/4% Debentures due April 20, 2004 ("New Debentures") plus cash for all of its presently outstanding debentures as follows:
The Company is offering to purchase the Debentures at a purchase price equal to $1,000 per $1,000 principal amount of Debentures, plus accrued and unpaid interest up to, but not including, the payment date.
Pursuant to the revised terms of the exchange offer and consent solicitation, the Company is offering to exchange up to $30 million aggregate principal amount of its Debentures for $725 principal amount of a new issue of 10% Senior Subordinated Secured Notes due 2003 and $145 in cash per $1,000 principal amount of Debentures, upon the terms and subject to the conditions contained in an Amended and Restated Offer to Exchange and Consent Solicitation being mailed to Debentureholders today.
Fitch affirms the capital trust debentures for Canada Life Capital Trust at 'AA-' with a Stable Outlook:
The debentures will be secured by a first priority security interest in the dual currency notes.
These debentures are convertible into shares of Class A Common Stock of the company at a conversion price of $18.