Business and Personal Finance Dictionary

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• TRUST PREFERRED STOCK UNITS
  
  Each unit of Salomon's TruPS issue of 7/3/96 consists of a 9.25%, mandatorily redeemable preferred security of the SI Financing Trust I ("the Trust") and a contract requiring the holder to purchase in 2021 (or earlier, at Salomon's option) 1/20 of a share of Salomon's 9.5% Series F Preferred Stock. Salomon set up the Trust to issues the TruPS and common shares and invest the proceeds in Salomon's 9.25% secured debt. Also, Salomon contributes 0.25% each year under the terms of the purchase contract. This structure allows Salomon to deduct interest coupon payments to the trust, which pays preferred dividends to investors who would prefer dividends to coupons.
  
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