Convertible debentures offer the opportunity for investors to convert debt into stake in a company. In this Lexpert article, Adam Bata explains the fundamentals of these debt instruments, how they work in Canada, advantages and disadvantages, and the critical role of lawyers in guiding the process.
But why do investors engage in convertible debentures? Bata explains that “[a]n investor may want to purchase a convertible debenture to have the benefit of interest accruing until such time as the debenture converts to equity on a future financing round or sale transaction, typically at a discount to that transaction price.”
Read the full article: Convertible debenture basics: How investors and companies can benefit according to the law
