Guestlogix Inc T.GXI.R

GXI.DB, 7%, 31 Dec.19, conv. at $1.35 at bargin price!

[Royal10]

These convertible débentures are yielding near 12% at $85.00! They were issued on Dec. 22, 2014 at $1000.00 per Debenture. Today's bid is $80.00! I accumulated a lot at an average of $89.00! Solid investment!

[oddcrowd]

The interest paid to debenture holders is a charge against profit...so the return is directly related to profit.  Look at the profit figures here......I don't think GXI.DB can be described as a solid investment.

[Royal10]

My view is that these debentures are undervalued and I expect that they will trade back at parity ($100.00) after the closing of the public offering next week (Jan. 22, 2015). In the next 6 months I anticipate that the common stock will trade over the exercise price ($1.35). Then, the debentures will trade at premium, well over $110 with a 12% yield (based on actual price of $83.00).

[oddcrowd]

If I understand you right, that is a good return but it is based on the need for the underlying stock price to hit $1.35 Surely you are better off buying shares as that will provide almost 100% return in the same period. Have I missed something?

[yiotta]

   Yes,I think maybe you missed something.If you buy the common shares and the price goes down,you lose money.If you buy the debentures and the shares go down,you get your 60%, give or take, in simple interest and in 2019 you get all your original investment back.If things go really bad, as a debt holder you sit much higher in the pecking order as far as claims against remaining assets

[oddcrowd]

This was useful as an explanation: https://www.investinganswers.com/financial-dictionary/bonds/debentures-1047  This was probably done to get funds and avoid further dilution of the stock, I imagine.  Although the net effect is going to be negative for shareholders as they finance the interest payments for many years on these funds 'borrowed', and for no return.  Looks like