In the October 26, 1992, prospectus summary of the Staples 6% convertible subordinated debentures due 1999, the offering stated: “Convertible into Common Stock at a conversion price of $40 per share . . .” If the par value is $1.000,
a) What is the conversion ratio?
b) What is the difference between a soft put and a hard put?
a')conversion ratio = Par value /conversion price
= 1000/40
= 25
b)In case of Debenture embedded with soft put ,redemption can be done through issuance of cash ,subordinated notes ,common stock or combination of any of these securities .
In case of hard put ,redemption can be done through issuance of cash only .
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