Advanced English Dialogue for Business – High premium convertible debenture

Listen to a Business English Dialogue About High premium convertible debenture

Layla: Hi Evelyn, have you ever heard of high premium convertible debentures?

Evelyn: No, I haven’t. What are they?

Layla: They’re a type of bond issued by a company with a high premium attached, meaning they are sold at a price higher than their face value, and they can be converted into the company’s stock at a predetermined price.

Evelyn: So, it’s like a mix between a bond and a stock?

Layla: Exactly. It offers investors the security of a bond with the potential upside of converting into stock if the company performs well.

Evelyn: That sounds interesting. What are the benefits for the company issuing these debentures?

Layla: Well, they get the benefit of raising capital at a lower interest rate compared to traditional bonds, and it also provides them with the flexibility to raise equity capital if needed through the conversion feature.

Evelyn: Are there any risks for investors with these debentures?

Layla: Yes, there are risks involved. If the company’s stock performs poorly, the value of the debenture could decrease, and investors might not receive the expected returns.

Evelyn: I see. So, it’s important for investors to carefully assess the company’s financial health before investing?

Layla: Absolutely. Conducting thorough research on the company’s financials and prospects is crucial before investing in high premium convertible debentures.

Evelyn: Can these debentures be converted into stock at any time?

Layla: No, there’s usually a specified conversion period and price determined at the time of issuance.

Evelyn: Thanks for explaining, Layla. It’s a complex topic, but I have a better understanding now.

Layla: You’re welcome, Evelyn. If you have any more questions, feel free to ask!