convertible notes questions, page-3

Dr Zaius...you said about BECG:

"my understanding of convertible notes generally is that at maturity the issuing company gets to choose whether to redeem or convert to common equity. holders can choose to get out early on prescribed dates but usually with a penalty."

Not so.

Clause 8(b) states that "On the Maturity Date, the Company must Redeem the notes if they have not been otherwise Converted or Redeemed."

That means pay cash at the face value of 65 cents and the maturity date is 30 June 2010.

On a winding up...Clause 8(c)....the Company must Redeem all of the notes of issue.

The only grey area where the company can force a conversion is in the event of a takeover bid. In this circumstance they have the discretion to redeem or convert or a combination of both.

If they elect to convert in these circumstances, the definition of "conversion" gives them the "absolute discretion to pay to the relevant noteholder, in addition to the issue of one share per note, the value of such excess in respect of the notes that are to be converted."

They'd be playing hard ball and face a revolt if they intended to pay less than the face value of the notes (65 cents).

I'm satisfied that the bases are covered.