TeachMeFinance.com - explain Scaling down
Scaling down -- Cutting down or reducing proportionately
or on a scale, as scaling down interest.
If a company has two or more issues of bonds not bearing
the same rate of interest and in a reorganization of the company
or a refunding of its bonds the rates of interest on the
bonds are reduced proportionately the operation of reducing
the interest is called scaling down the interest. The term scaling
down does not apply when there is only one issue of bonds
upon which the rate of interest is to be reduced, unless the rate
of interest on this issue is to be reduced a certain amount at the
end of each successive specified period. If the rate of interest
on a single issue of bonds is simply made lower without provision
for a further lowering the operation is described as reducing
or cutting down the interest. If a company which has two or more classes of stock lowers
the dividends on them proportionately the operation is described
as scaling down dividends.
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