You are the CFO of RealNetworks on July 1, 2008. The companys stock price is $9.74 and

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You are the CFO of RealNetworks on July 1, 2008. The company’s stock price is $9.74 and its convertible debt (as shown in Table 15.8) is now callable.

a. What is the value of the shares the bondholders would receive per $1000 bond if they convert?

b. What is the value per $1000 bond they would receive under the call?

c. If you call the bonds, will the bondholders convert into shares or accept the call price?

Table 15.8:

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Feb 21, 2024 10:00 AM

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You are the CFO of RealNetworks on July 1, 2008. The companys stock price is $9.74 and

Question:

Convertible Subordinated Notes Issued under Rule 144A Aggregate principal amount: Proceeds net of offering costs: Coupon: Conversion ratio: Call date: Call price: Maturity: $100 million $97.0 million 0% 107.5650 shares per $1000 principal amount July 1, 2008 100% July 1, 2010

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a Value of shares per 1000 bond upon conversion Conversion ratio 1075650 shares per 1000 princ...View the full answer

Fundamentals Of Corporate Finance

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