Convertible Bonds Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Convertible Bonds

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: rkrw who wrote (38)	11/7/2002 9:11:38 PM
From: Rocky9	of 83

Well, this is the first time that I have seen this technique to raise money and lower total debt at the same time. The $115M of new bonds would cost exactly the same interest as the old $200M. The additional $50M of new debt would increase the interest paid, but would provided needed cash. The current balance sheet surely needs help. With only $80M of cash and a pretty significant cash burn, the company would benefit from a reduction in debt. If I were a current bond holder, I'm not at all sure that I would take the offer. The current bond is trading for ~18.5% yield-to-maturity. Would I give that up for 6.52% current return and a relatively low conversion price? I don't know - I would have to know a lot more about the company's outlook. From the company's standpoint, I might have done a SEPR-like conversion at current prices. It would remove both the debt and the interest payments. But, the company won't get any more cash. Plus, it would only make sense if the chance for upside is not really available soon. I would avoid debt if I ran a company (and just issue more common), but I don't.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next