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Gold/Mining/Energy : Arconenergy, Inc. (Long Term Investors and Fundamentals)
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To: rinkerj who wrote (98)2/9/1998 8:24:00 PM
From: Ga Bard  Read Replies (1) of 1757
 
ALso the company can issued perfer and avoid interest payment all together that generally are associated with this type of financing.

subordinated debenture

An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before holders of subordinated debentures can receive a settlement. Frequently, this settlement amounts to relatively little. Because of the risk involved, the issuers have to pay relatively high interest rates in order to sell these securities to investors. Many issues of these debentures include a sweetener such as the right to exchange the securities for shares of common stock. The sweeteners are included so that interest rates on the subordinated debentures can be reduced below the level that would be required without them. Subordinated debentures without the conversion option appeal to risk-oriented investors seeking high current yields.

convertible security

A security that, at the option of the holder, may be exchanged for another asset, generally a fixed number of shares of common stock. Convertible issues frequently are fixed-income securities such as debentures and preferred stock. Their prices are influenced by changes in interest rates and the values of the assets into which they may be exchanged. Convertible securities vary in price to a greater degree than straight debt but to a lesser degree than the underlying asset.

Please note that in the proper sense of the wording issuing preferred share is a convertible same as the B and the A.

Just trying to explain that some terminology is so misunderstood on the internet.

Gary
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