Convertible Bonds influence on shares outstanding - Aussie Stock Forums

Results 1 to 4 of 4
  1. #1

    Default Convertible Bonds influence on shares outstanding

    Hi I just have a quick question in regards to convertible bonds

    Say for example:
    •Company XYZ has 300m shares already outstanding
    •On the 1st of Jan 2007 the firm decides to issue $350m of convertible bonds which are to mature at the end of 2017 (i.e. 10yr maturity)
    •Each bond has a face value of $1000 and thus there is 350,000 bonds outstanding
    •Conversion Price into ordinary equity (CP) = $10 and hence each bond is converted into 100 ordinary shares (i.e. Face value/CP = 1000/10)
    •Therefore $350m worth of convertibles leads eventually converts to 35,000,000m shares. (i.e. Bonds Outstanding*100)

    So my question is this:

    Do these extra 35m shares which are a result from the convertible bonds count towards the number of shares outstanding for XYZ from the date of the issue (2007) or at maturity (2017)?

    Any help would be much appreciated.

    YT I have seen you have had to incoroporate converitble bond issues into your valuations before, so maybe you have the answer to this question?


  2. #2

    Default Re: Convertible Bonds influence on shares outstanding

    Surely someone is this forum knows the answer; when a firm issues convertible bonds/notes, are they recognised as shares outstanding when they:
    (a) are issued
    (b) mature

    Im thinking the latter but am not 100% sure, any ideas?


  3. #3

    Default Re: Convertible Bonds influence on shares outstanding

    A Convertible Bond has the choice to convert to shares but not the obligation.

    So the shares would only be changed at maturity when or if bonds are converted to shares.

    Do a google on Convertible Bonds for more info.

  4. #4

    Default Re: Convertible Bonds influence on shares outstanding

Similar Threads

  1. Industry super fund vs. SMSF for shares
    By Ferret in forum Medium/Long Term Investing
    Replies: 10
    Last Post: 1st-October-2008, 07:53 PM
  2. Corporate Bonds, Floating Rate & Convertible Notes
    By snabbu in forum General Investment and Economics
    Replies: 2
    Last Post: 28th-February-2008, 10:36 AM
  3. What happens to shares outstanding figure after takeover?
    By Seneca60BC in forum Beginner's Lounge
    Replies: 2
    Last Post: 10th-March-2007, 07:11 PM
  4. Replies: 4
    Last Post: 22nd-January-2007, 07:26 AM
  5. Shares Under $0.20 cents
    By Afterglow in forum ASX Stock Chat
    Replies: 16
    Last Post: 27th-October-2004, 06:44 PM


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Aussie Stock Forums