GREY:ZARFF - Post by User
Comment by
Methodon Nov 06, 2018 3:02pm
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Post# 28932610
RE:RE:ZAR can sell nat gas assets (AECO at C$2.50) & RF the notes
RE:RE:ZAR can sell nat gas assets (AECO at C$2.50) & RF the notesPhilbert77 wrote: Thanks for the post, stockfy. I appreciate the clarification. I have no problem admitting I am a novice in the area of debentures (and oil and gas debentures).
So, correct me if I am wrong, converting the debentures into shares is a worst case scenario as it will completely dilute the shares. They would only do this if they were unable to pay the distribution on the debentures?
They can pay the interest by issuing shares for the trustee to sell who would then pay the debenture holders. Otherwise they will do it at maturity if they can't get a deal with debenture holders for an extension or if they don't get purchased by then.
I don't agree that the debs are impaired unless they trade at par. Lots of companies debs trade below par. That being said, with the risk of conversion to equity reasonably high, it makes sense to buy the debs over the common in my view.