Page 289 - FM Integrated WorkBook STUDENT 2018-19
P. 289
Sources of finance
Hybrids – loan notes with warrants
Give the bond holder the right to subscribe at a fixed future date for a certain
number of ordinary shares at a predetermined price.
– the loan notes are not converted. They remain in place after the
subscription date
– can be used to make the debt more attractive and able to set a low
coupon rate
– holder gets right to buy shares at attractive price
– holder can sell on the warrants, effectively reducing the cost of purchasing
the debt
279
