What is convertible equity (or a convertible security)?
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What is convertible equity (or a convertible security)?
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Re: What is convertible equity (or a convertible security)?
#2So its just a mandatory convertible zero interest bond? Why is it called convertible equity?
Re: What is convertible equity (or a convertible security)?
#3So its just a mandatory convertible zero interest bond? Why is it called convertible equity?
Because you redeem it for equity at a rate defined in the next round but within the cap and discount parameters.
Re: What is convertible equity (or a convertible security)?
#4So its just a mandatory convertible zero interest bond? Why is it called convertible equity?
Because you redeem it for equity at a rate defined in the next round but within the cap and discount parameters.
Wouldn't a mandatory convertible be converted at the current valuation as well though? Forgive me if I'm being obtuse, my experience is with convertible bonds that are backed by publicly traded equities, not private equities.
Re: What is convertible equity (or a convertible security)?
#5[deleted]
Re: What is convertible equity (or a convertible security)?
#6Earlier quoted context omitted.
Because you redeem it for equity at a rate defined in the next round but within the cap and discount parameters.
Wouldn't a mandatory convertible be converted at the current valuation as well though? Forgive me if I'm being obtuse, my experience is with convertible bonds that are backed by publicly traded equities, not private equities.
There is a legal delta between debt and equity as contract classes. What this post is describing is a 'bastardization' of these classes. The net result, is ultimately, an equity contract. It is a "weakened" or "attenuated" option to a convertible note (already, an attenuated alternative to convertible preferred stock). Maybe the OP or PG will chime in with more color.
here is the relevant bits, at least in part
3. Convertible equity is “equity” and probably can be characterized as qualified small business stock, which may have a tax benefit for investors.
4. Convertible debt with a maturity date longer than one year creates problems for California-based investors due to licensing requirements under the California Finance Lenders Law. Making it equity removes this issue.