Certs presented a debate as to whether it is a chocolate mint or a breath mint. The answer was that it’s both at the same time – “two, two, two mints in a single”. Step forward the investing equivalent, the convertible debenture, a cross type of security that has top features of both debts and collateral.
It is a debenture debt, which claims to make set regular payments and has a precise maturity date. Nonetheless it is convertible into equity of the business under certain conditions also. When it works well, it offers the steady income of debt repayment with the prospect of capital appreciation if the common stock rises on the market.
Our simple explanation above inadequately represents the many details and variants possible with convertible debentures. The Financial Post publishes an available list under Market Data openly. The screenshot below shows area of the set of 190 issues on the marketplace almost. Click on Search Database Public Company Documents then, then enter the business name in the search box and Prospectus in the drop down box.
At the money, where stock and conversion prices are very close – Algoma Central’s common stock price is slightly above the conversion price. In the last few months, especially as ALC has risen, the price of its debenture ALC.DB has moved a lot more in sync with ALC. If an ongoing company starts to get into financial difficulty, the stock price will go down, not increase, eliminating any possibility of capital appreciation. … Read the rest