Examples of Equity Subscription Rights in a sentence
The discussion herein assumes that the Existing Equity Subscription Rights are respected as options (including the discussion above regarding the calculation of gain or loss).
In the event that the Existing Equity Subscription Rights and Warrants each constitute “securities” of Parent for U.S. federal income tax purposes, each holder of Existing Equity Interests generally will not recognize any gain upon the receipt of Existing Equity Subscription Rights and Warrants in exchange for such holder’s Existing Equity Interests.
A holder computes its gain as equal to the difference, if any, between (i) the sum of the aggregate fair market value of New Common Shares, Existing Equity Subscription Rights and Warrants the holder received in exchange for its Existing Equity Interest, and (ii) the holder’s adjusted tax basis in such Existing Equity Interest exchanged therefor.
Regardless of the characterization of the Existing Equity Subscription Rights and Warrants, a holder of Existing Equity Subscription Rights and Warrants generally would not recognize any gain or loss upon the exercise of such Existing Equity Subscription Rights and Warrants.
In a recapitalization exchange, a holder’s tax basis in the New Common Shares, Existing Equity Subscription Rights and Warrants should equal such holder’s adjusted tax basis in its Existing Equity Interest increased by any gain recognized in the exchange allocated among the securities based on their relative fair market value.
In general, the holder’s holding period for the New Common Shares, Existing Equity Subscription Rights and Warrants would include the holder’s holding period for its Existing Equity Interests, except to the extent that the Existing Equity Subscription Rights and/or Warrants are not treated as a security, in which case, the holding period for such Existing Equity Subscription Rights and/or Warrants should begin the day following the Effective Date.
A holder’s aggregate tax basis in the New Common Shares received upon exercise of an Existing Equity Subscription Right and/or Warrant should be equal to the sum of (i) the amount paid upon exercise of the Existing Equity Subscription Rights and/or Warrant, as applicable, and (ii) the holder’s tax basis in the Existing Equity Subscription Rights and Warrants.
The characterization of the Existing Equity Subscription Rights as the exercise of an option to acquire New Common Shares may impact, among other things, assuming the exercise of such rights, a holder’s tax basis in the New Common Shares received.
A holder’s Eligible Claim Amount (Equity Subscription Rights) will be rounded up or down to the nearest increment of the Eligible Claim Amount (Equity Subscription Rights) held by such holder to determine such holder’s actual entitlement.
The Holders of Senior Notes Claims shall have the right, but not the obligation, to exercise their Equity Subscription Rights as set forth herein.