Financial Terms By: d Death Spiral Convertible Used by companies that are in such bad shape, that there is no other way to get financing. This instrument issimilar to a convertible bond, but convertible at a discount to the share price at issuance and for a fixed dollar amount rather than a specific number of shares.
What happens if a company has a death spiral?
Ultimately a death spiral results and the company can be forced into bankruptcy. A conventional convertible bond or preferred stock can be converted to a fixed number of shares. Death spiral debt, however, converts into a fixed value paid in shares.
Can a convertible debt be converted to common stock?
This convertible debt, often convertible preferred stock or convertible debentures, can be converted to the common stock of the issuing company at a discount to the market value of the common stock at the time of each conversion.
Is a floating-priced convertible a negative signal?
The issuance of a floating-priced convertible is a negative signal. In contrast to the contract design hypothesis, the convertible has no causal effect on the long-term stock price. 3. The data set Floating-priced convertibles are private placements.
