4.05 @ 4.2% vs 3.80 @ 6.0% An important distinction for a convertible debenture in our case is the common equity dividend.
They have to account for the dividend rate in setting the conversion price. As an investor can buy the common equity directly and earn the dividend.
In essence, they raised the money at an actual interest rate of 4.2% and a $4.05 actual stock price (including dividends). But they have to account for the 1.8% dividend yield that the debenture holders miss and embed into the conversion price. So they include that in the total coupon payment.
So it was...
1.8% dividend yield
4:2% interest payment
Or in other words, the equivalent would have been: the conversion price was $4.05... and the debenture holders received 4.2% in interest as well as also received the $0.05 annual dividend until the period of conversion.
And for shareholders that have been on this for 2 years, they ultimatey are selling back the shares they bought at the depths of pandemic for double the price we bought back the shares for.
I really see this as a savvy move to enable us to complete a third platform acquisition. If we can do another deal of an ETC like business with attractive multiples... that would be better than waiting until after the infrastructure bill passes and even more attention gets placed on how governments will have to pay for these debts.
And because this is unsecured they can provide senior loans secure by the ITS business at a lower interest rate and complete the acquisition.
The fourth platform will have to wait until the Apple settlement/judgment or WiLan capitalizes on the other major wireless or semiconductor licenses.