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Discuss the scheme of reduction

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Reference no: EM131536817

Question: *The following is the Balance Sheet Manufacturing Co. Ltd.: at 31st March, 1962, of the Irish

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The company has, until recently, made trading losses. Debenture Interest is a year in arrears. Buildings and Plant are old, and fresh capital is required to set the business on a sound footing. A scheme of reduction is agreed as follows:

(a) The Ordinary Shares to be consolidated into 23,520 Shares of 10/- each.

(b) The rate of interest on the Preference Shares is to be reduced to 5 % and the 100,800 Preference Shares will then be consolidated into 33,600 shares of £1 each.

(c) The Debenture holders, in view of interest due, will accept 3,600 of the new Ordinary Shares.

(d) A further 52,880 Ordinary Shares will be issued for cash to the directors and their friends.

(e) Buildings and Plant are to be reduced to £35,000 and £25,000 respectively.

Reference no: EM131536817

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