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To mitigate the potential dilution impact from the issuance of convertible debt to our common shareholders, we also entered into a call spread to increase the effective conversion price from $125 to $184 per share.
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For example, if the investors in a $500,000 convertible note seed financing were granted a discount of 20%, and the price per share of the Series A Preferred Stock were $1.00, the noteholders would convert the loan at an effective price (referred to as the "conversion price") of $0.80 per share and thus receive 625,000 shares ($500,000 divided by $0.80).
The conversion price will be $8.50 a share.
The conversion price was well above what was then the market price, at $49.87, although the coupon of 7.25percentt was high considering the conversion feature.
The conversion price on that issue would be reduced to $5.50 under this plan.
As a minimum we suspect 915p would be required (the conversion price of the convertible).
The bonds can be converted to common shares at a specified price, known as the conversion price.
The conversion price is $3.25 per share.
Not sure what conversion price means?
This is a 16percentt decrease from the original conversion price.
I recommend that startups agree the "conversion price" at maturity.
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