Conversion price

Conversion price

Applies mainly to convertible securities. Dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock, as specified when the convertible is issued.

Conversion Price

In a convertible security, the price at which the owner is allowed to buy an equal number of common shares in exchange for trading in the convertible security. This price is set at the sale of the convertible security. For example, a company may buy an issue of convertible bonds (a low-risk investment) from another company with the agreement that if the company's stock increases greatly in value, the first company may trade its bonds for the right to a certain number of the company's stocks at a set, low price. This price is the conversion price.

conversion price

The price per share at which common stock will be exchanged for a convertible security. The principal amount of a convertible security divided by the conversion price equals the number of shares that will be received upon exchange. The conversion price is usually adjusted downward for events such as stock splits and dividends. See also adjustment in conversion terms.
Case Study On April 2, 2002, GenCorp, an aerospace, defense, chemical, and automotive products manufacturer, announced it had privately sold $125 million principal amount of five-year subordinated notes that were convertible into shares of the firm's common stock. The notes carried a 5.75% coupon and were sold at their $1,000 face amount. The notes had a conversion price of $18.42, meaning each note could be converted into 54.2888 shares of stock. The number of shares per note is determined by dividing the $1,000 par value by the conversion price. The conversion price of $18.42 represented a 27% premium over the common stock that had closed the prior day on the New York Stock Exchange at a price of $14.50. The conversion price is a key element in valuing a convertible security. The lower the conversion price compared to the market price of the stock, the more valuable the conversion feature. A lower conversion price on the GenCorp issue would have allowed the firm to sell the notes with a lower interest coupon. It would also result in additional shares being issued when the notes were eventually submitted for conversion.

Conversion price.

A conversion price is the predetermined price, set at the time of issue, at which you can exchange a convertible bond or other convertible security for common stock.

The number of shares that you'll receive at conversion is calculated by dividing the face value of the security by the conversion price. However, that number changes if the stock has split or has paid dividends.

References in periodicals archive ?
Clean energy company Valoe Oyj (HEL:VALOE) reported on Tuesday the resolution by its board of directors, under the terms and conditions of the financing arrangement between Valoe and Winance announced on 20 December 2018, to approve the request of Winance to convert a proportion of EUR 20,000 of the convertible notes to the shares in the company at conversion price of EUR0.08 per share.
b) eliminating the condition that the Debentures be redeemable by IOU only when the current market price is 125% of the conversion price;
The Company recently eliminated over $2.3M of secured convertible notes due November 17, 2019 pursuant to an agreement by which the notes were converted into an aggregate of 942,432 shares of underlying common stock at a conversion price equal to $2.48 per share.
(headquarters: Chuo-ku, Tokyo; President: Akihiro Nikkaku; hereinafter referred to as the Company) hereby announces the adjustment of conversion price for the Zero Coupon Convertible Bonds due 2019 and 2021 issued by the Company (the Bonds).
The Debentures will be convertible at the holder's option into common shares of the Corporation (the "Shares") at any time prior to the earlier of the Maturity Date and the date fixed for redemption at a conversion price of $15.00 per Share (the "Conversion Price"), subject to adjustment in certain circumstances.
The Company has the option to get the outstanding principal as well as any accrued and unpaid markup converted into equity if WRLD issues and sells its equity shares to investors while this Note remains outstanding at a conversion price equal to 70% of the price paid per share for equity securities by such investors,' read the notification.
- Initial Conversion Price of HK$1.58 per Conversion Share represents a 18.4% premium of the average closing price as of the past 10 consecutive trading days;
As per the terms of the issuance, the conversion price was OMR 0.121, calculated at a 20 per cent discount on the weighted average closing price of Bank Sohar's shares for the three months prior to 28 April 2017.
This investment will be in the form of convertible perpetual preferred stock with a conversion price of $5.00 per share and a dividend that accrues, or is payable at Avon's option under certain circumstances in common shares or cash, at a rate of 5% a year.
The loan may be converted, at the option of the lenders, into Atlas Mining common shares at the conversion price of P8.2946 per share (subject to adjustments as provided under the loan agreements.
The conversion price for the bonds is P624.625 a share.
DSI will also increase its share capital by issuing bonds amounting to Dh55 million to enter strategic partner where the conversion price is the market price for the shares at the date of conversion.