This excerpt taken from the ELN 6-K filed Mar 31, 2006.
Fair Value Conversion Gain
From the date of adoption of IAS 32 and IAS 39 on 1 January 2005 to 28 October 2005, when the cash settlement provision that existed on issue of the 6.5% Convertible Notes was revoked, the conversion option component of the 6.5% Convertible Notes was deemed a liability, and was marked-to-market through the income statement, consistent with the accounting for other derivative assets and derivative liabilities.
As a result of the decline in our share price from $27.25 at 1 January 2005 to $7.97 at 28 October 2005, a fair value gain of $1,136.1 million was recorded in the year ended 31 December 2005 (2004: $Nil) on the conversion option component of our 6.5% Convertible Notes. The market price of the 6.5% Convertible Notes fell from $381.50 per $100.00 of principal amount at 1 January 2005 to $129.10 per $100.00 of principal amount at 28 October 2005.
From 28 October 2005, when the cash settlement option was revoked, the conversion option was recognised as the equity component of a compound financial instrument as part of shareholders equity and will not be subsequently remeasured. The value of the option is fixed at $91.8 million as of 28 October 2005. This $91.8 million increase in shareholders equity represents
94 Elan Corporation, plc 2005 Annual Report