Enterprise & Equity Value
A $300m convertible (conversion price $50) is NET SHARE SETTLED: principal in cash, excess in shares. Stock is at $60. How many shares does it add versus plain if-converted, and what's the debt treatment?
Model answer
Underlying shares = 300/50 = 6m, so conversion value = 6m x $60 = $360m. Under net share settlement the company pays the $300m principal in CASH and delivers shares only for the $60m excess: 60/60 =…
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