Organigram Holdings Inc. DB
(TSXV: OGI.DB)
So now let’s take a look at what could happen to our debentures of the share price does take off and go above the conversion price. In this scenario, we would collect out interest payments just as we did above until the price goes above the conversion price and we convert our debentures into shares. You would end up with some of the interest payments (possibly all) and then the ability to acquire shares for a cheaper price that you bought the equivalent amount of debentures. Essentially you would have shares that are worth more than the initial debenture investment you made. So for example, if the shares were worth $7.05 that would be an extra $1.63 on top of the conversion price which equated to about 30%. If we stick with our initial $10,000 investment as per about then that is a gain of about $3,000 plus the accrued interest you would have received on top of that. This is what that scenario could look like:
Note: That because the debentures are tradable you will see the prices fluctuate. The price fluctuation is not likely to be near as drastic as you will see within the common shares. At the end of the term you will receive the debenture initial investment back, plus the interest along the way (assuming they do not get converted or default) so at the end of the day the price fluctuations can really just be labeled noise.
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