| Commentary

48.1 General

| Commentary

48 Convertible debentures

48.1 General

Convertible debentures occupy an intermediate position between equity financing and debt financing. They are debentures which are capable of being converted, at the option of the debenture holder, into shares of the company. Thus, they start their life as a form of debt financing, but they may at some later stage be turned into equity. Convertible debentures provide a prospective investor in a company with a very convenient means of hedging his bets. If the company is not particularly successful, then he can keep the investment in the form of a debenture, giving him a contractual

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