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To: ild who wrote (209560)	12/13/2002 5:48:26 PM
From: mishedlo	Read Replies (2) \| Respond to of 436258

Since most convertible bonds are also callable, the company can force the bond holders to convert the bonds to common stock by calling the bonds. This is known as 'Forced Conversion'. When a bond is converted to common stock, the corporate debt is reduced. What was formerly debt has now been converted to equity. Of course, converting debt (bonds) into stock (equity) has the effect of diluting the equity. The company didn't get any larger with the additional stock. But each stockholder's piece of the pie got smaller. If the company's stock declines to a price which makes the convertible feature of the bond worthless, as long as the company is solvent, the bond will trade based on its yield - like any other bond. There is a price level to which a bond will fall and fall no further as long as the company can pay its interest and the principal upon maturity. OK I am MU The maturity date hits. People are not forced to buy MU at $45. WTF does this mean to MU? MU has debt that is due and needs to refinance? Needs to sell more convertables but now share price is 15 instead of 45? How much did MU lose on this deal? Thanks.