ou are the CFO of RealNetworks on Julyâ 1, 2008. Theâ company's stock price is $9.74 and its convertible debt is now callable. See the tableâ below:
Convertible Subordinated Notes
Issued under U.S. SEC Rule 144A
Aggregate principal amount
â$100 million
Proceeds net of offering costs
â$97.0 million
Coupon
â0%
Conversion ratio
107.5650 shares per $1,000 principal amount
Call date
Julyâ 1, 2008
Call price
â100%
Maturity
Julyâ 1, 2010
a. What is the value of the shares the bondholders would receive per $1,000 bond if theyâ convert?
b. What is the value per $1,000 bond they would receive under theâ call?
c. If you call theâ bonds, will the bondholders convert into shares or accept the callâ price?
ou are the CFO of RealNetworks on Julyâ 1, 2008. Theâ company's stock price is $9.74 and its convertible debt is now callable. See the tableâ below:
| Convertible Subordinated Notes | |
| Issued under U.S. SEC Rule 144A | |
| Aggregate principal amount | â$100 million |
| Proceeds net of offering costs | â$97.0 million |
| Coupon | â0% |
| Conversion ratio | 107.5650 shares per $1,000 principal amount |
| Call date | Julyâ 1, 2008 |
| Call price | â100% |
| Maturity | Julyâ 1, 2010 |
a. What is the value of the shares the bondholders would receive per $1,000 bond if theyâ convert?
b. What is the value per $1,000 bond they would receive under theâ call?
c. If you call theâ bonds, will the bondholders convert into shares or accept the callâ price?
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