No definition directly, and they can take many forms. I did find a definition on a debenture, which is (paraphrase) A debenture is a borrowing instrument for a company, which is similar to a bond, that is backed by the company's good credit as opposed to a bond which is backed by the assets of the company.
In my very brief education on the matter, the one example I have learned is:
What can make it floorless is if it can convert to stock with no set price of conversion. i.e; lets say you have $100,000 debenture and it converts to stock, if it converts to the equivalent number of shares that would equal $100,000 PLUS INTEREST, it can be considered floorless. At a $20 per share price, it's 5,000 shares. At a 10$share price it's 10,000 shares.
But as Zeev said, there can be many conditions that make it floorless and preferred shares can also be floorless since they can have the same bad juju conditions associated with them.
Again, this is my very basic understanding, i'm just trying to learn here. |
