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