Cal. PUC § 3153

If an association with preferred shares of stock purchases the stock or any property, or any interest in any property, of any person, it may discharge the obligations which are so incurred, in whole or in part, by exchanging for the acquired interest, shares of its preferred stock to an amount which at par value would equal the fair market value of the stock or interest so purchased, as determined by the board of directors. In that case, the transfer to the association of the stock or interest which is purchased is equivalent to payment in cash for the shares of stock which are issued.