Hi noexam
Here is a useful link which explains a lot about convertible notes.
https://www.upcounsel.com/convertible-notes
Normal standard terms are conversion at maturity date. However sometimes, date of conversion depends on the terms and conditions which are in fine print and not visible in the ANN. However, what is interesting, and a pointer, is that BB says in the ANN that one of the attractions is minimum dilution, as issue of shares to Bergen will not be at current prices.
Like I said before, normal standard terms are conversion at maturity date.
Here is an example of a standard template of convertible notes where conversion is at maturity date
https://www.pandadoc.com/convertible-note-agreement-template/
Check Section II where is says:
"Conversion
- Mandatory Conversion. This Note shall convert into equity as defined below, issued by the Company at the time when this note reaches Maturity (as defined below), at a price equal to the “Conversion Price,”
Regardless of date of conversion, it is in the interest of the holder of convertible notes (Bergen), that they do not do things that collapse the SP to such levels that they end up making a loss of their investment. (specially so as there is no provision of interest (zero), and entire profits on investments depends on SP after the time conversion takes place, and they actually decide to sell.
As such it does not make sense to think that Bergen would be selling and running for the hills, unless they think that the project is unviable.
In all the cases that Bergen involvement was co-incidental to the company collapsing, the company was going to collapse anyway as a result of change of circumstances, and the project becoming unviable post investment (Not because of Bergen). Since more number of high risk start ups fail as opposed to successful ones, unfortunately, Bergen have been unfairly associated with failures.
In a lot of cases where the company's fundamentals have been strong, it has been a win-win for both Bergen, and the developing company.
One thing to remember is that Bergen operate in a very high risk environment, and without interest on the convertible notes. They themselves risk loosing capital in each venture. As such their business model can only work with compensating winners with very high margin of profit. So a habitual banking with say 10% profits does not work as a viable model for Bergen given the other losses they might make in other high risk investments.
Cheers
Boc
(20min delay)