trigger to convert note to equity

quoting from ninemsn:

ABC Learning: no share trigger on notes to convert to equity
Thursday Feb 28 13:00 AEDT

ABC Learning Centres said Thursday its $600 million in convertible notes weren't at risk of being triggered into equity.

"The trigger to convert to equity is not associated with changes to the company's share price or market capitalisation," an ABC spokeswoman told Dow Jones Newswires.

She said trigger events are related to a full takeover of the company or sale of a core business, which is defined as a division with more than 50% of the company's earnings.

This implies ABC's Australian operations - which make up more than 50% of earnings - are not up for sale, leaving its UK and US businesses as possible targets.

An industry participant said earlier Thursday that private equity is behind an approach for parts of the childcare operator's business.

A report in The Australian Thursday had said hedge funds were buying the convertible notes to trigger an early conversion and gain control of the company.

Without citing sources, the paper said that if ABC Learning's market capitalization falls to $500 million and the notes are converted, the former note holders will own more than half of the company.

At one point during Tuesday's share price plunge, ABC's market capitalization fell to $550 million.