Hoi, JP

[Snee]

What does:


It is a means of raising funds. They pay interest during their life and the buyer gets his money back in 2016 or he/she can convert them to ordinary shares to a similar value (usually at a slight discount to make the shares an attractive option and thus reduce cash liability in 2016) Actual annual earnings and conversion discount not yet available.

Mean in english?

[Biggles]

What does:


It is a means of raising funds. They pay interest during their life and the buyer gets his money back in 2016 or he/she can convert them to ordinary shares to a similar value (usually at a slight discount to make the shares an attractive option and thus reduce cash liability in 2016) Actual annual earnings and conversion discount not yet available.

Mean in english?

:snooty:

[Mr JP Fugley]

I'd ask Les if I were you, mate.

However I'm not you, I'm me. So you should probly do something else.

I hope that clears things up for you.

[Biggles]

If you must know convertible stocks come under Sources of Finance for business.

Businesses can raise money through share flotations but these are expensive to set up and no guarantee anyone will buy them at the rate offered. Shares once issued don't have to get a dividend so they are cheap to service during a rough patch.

They can get loans and pay interest plus pay the loan back at the end of the period. Cheap to set up but depends on interest rates and the willingness of the bank to lend.

Convertibles are a hybrid. They pay interest and the buyer can treat it as a loan and get all their dosh back at the end - However, usually some of the share options are taken and this reduces the cash payout by the company with the bonus that an agreed rate exists for the shares.

There are things called Debentures which are like fixed rate of interest loans - hardly ever used these days.

Feck I've bored even me :(

[Snee]

Convertibles sounds like something halfway between bonds and regular stocks, like.

Or did I get that wrong :unsure:

[Snee]

http://img.photobucket.com/albums/v38/snorlax/mao-poster.jpg

[Biggles]

Convertibles sounds like something halfway between bonds and regular stocks, like.

Or did I get that wrong :unsure:

That is the gist of my ramblings yes. Can be popular because they are flexible. You can take all cash, all stock or a mixture of cash and stock.

[Snee]

Sorry for asking, like. I'm tired or something, 'cos I reaally didn't get it.

[Biggles]

No problem :)