RE:RE:RE:RE:RE:RE:Q3 is outStratocheif wrote: Ive been burned so many times with convertible debentures. I used to have dozens of them in my portfolio. Now just 2 or 3 and they are with the most secure companies. Big mistake not to get rid of ivq debentures last year. Now i have to go thru it. When a company runs into problems all they have to do is convert those debentures into shares. No one can stop them. Why would they redeem them? They arent obligated to like with secured bonds.And even with those the same thing can happen. Happened to me at least half a dozen times. You get a pile of shares and if the company continues to decline you end up with pennies on the dollar. I own some of these but i certaintly wouldnt buy any more. Any comments?
Well, in the terms, the debentures aren't payable in shares and Invesque needs to pay them back at the end of the term. Invesque would have to negociate with holders to have them convert to shares. Usually, holders will only agree to shares if there isn't enough liquidities to pay for them.
In the eventuality that it happens (convert to shares), you can always short the stock and cover on issuance of shares which should get your money back even if the share price spirals down.
I've never had a debenture not pay out so far (converted to shares) but I do pick my spots. In Invesque's case, I wouldn't go for the V series. Only with the U series which could be redeemed as early as when the deal with Symphony closes.