A debenture is a debt instrument issued by a company to raise funds. A debenture is backed by the general creditworthiness of the issuer, but is otherwise unsecured by any collateral or assets.
Typically, debentures have a fixed rate of interest for a long-term time period.
There are two main kinds of debentures: convertible and non-convertible debentures.
A convertible debenture can be turned into equity shares of the company issuing the debenture after a specific time period elapses.
A non-convertible debenture cannot be converted into equity shares of issuing company. Non-convertible debentures typically have higher interest rates than convertible debentures.
Additionally, there are a variety of other debentures, including:
When analyzing a stock, you need to form an idea of how likely is it to survive a business slump and go on to prosper all the more when economic growth resumes, and very importantly—how much debt it has (including debentures).
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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A: Altius Minerals Corp., $14.11, symbol ALS on Toronto (Shares outstanding: 43.2 million; Market cap: $586.2 million; www.altiusminerals.com), owns royalty interests in 15 operating mines that produce both precious and base metals, including copper, zinc, potash, and both thermal and steelmaking coal. Of these mining… Read More
This Canadian junior spends heavily on the development of a special oil extraction technique. While it has paid down its bank debt, outstanding convertible debentures could put a strain on the company’s ability to extend exploration and development.
ZARGON OIL & GAS (symbol ZAR on Toronto;… Read More
A: Zargon Oil & Gas, $0.51, symbol ZAR on Toronto (Shares outstanding: 30.7 million; Market cap: $16.3 million; www.zargon.ca) produces natural gas and oil in Alberta and North Dakota. Its output is 80% oil and 20% gas.
Zargon continues to spend heavily on the development of… Read More
Pathfinder Convertible Debenture Fund, $12.35, symbol PCD.UN on Toronto (Units outstanding: 10.0 million; Market cap: $124.0 million; www.middlefield.com/path.htm), is a closed-end fund that holds 73.5% of its portfolio in convertible debentures issued by publicly traded Canadian companies. The rest of the fund consists of common… Read More
THE CHURCHILL CORP. $18.02 (Toronto symbol CUQ: SI Rating: Speculative) (780-454-3667; www.churchillcorporation.com; Shares outstanding: 24.5 million; Market cap: $441.8 million; No dividends paid) has completed its $180-million share and debenture issue. The funds will help pay for its $380-million purchase of Seacliff Construction. Seacliff provides… Read More
The Data Group Income Fund, $7.27, symbol DGI.UN on Toronto (Units outstanding: 23.5 million; Market cap: $170.8 million), sells commercial-printing and related services to a wide variety of customers, including Canada Post, Bell Canada, Manulife Financial Corp., Bank of Montreal, Imperial Oil, Ontario Lottery and… Read More
MAJOR DRILLING, $24.94, symbol MDI on Toronto, reports that its revenue rose 46.6% in the three months ended April 30, 2010, to $97.4 million from $66.4 million a year earlier.
The company earned $3.2 million, or $0.14 a share. A year earlier, it lost $4.6… Read More
LEGACY HOTELS REAL ESTATE TRUST $9.39 (Toronto symbol LGY.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) owns 23 luxury hotels in Canada, including the Fairmont Royal York in Toronto and the Fairmont Queen Elizabeth in Montreal. It also owns two U.S…. Read More
When Ottawa moved to put income trusts on an equal footing with corporations, it exempted REITs. We’ve recommended these two REITs for some time, mainly because of the quality of their assets.
We continue to view both as buys.
RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol… Read More
VERSACOLD INCOME FUND $9.10 (Toronto symbol ICE.UN; Aggressive Growth Portfolio, Consumer sector; SI Rating: Extra risk) is one of the world’s leading operators of public refrigerated warehouses. Farmers and food processing companies use these facilities to store perishable foods.
In December 2005, Versacold paid $396.7 million… Read More
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