Can someone please explain to a non-financial guy what the convertible offering means? Can a regular person get in on it with say $50,000? How does the rate of return work? Is it a safe investment? I don't get any of it.... Thanks.... :redface:
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The offering of these securities will be made only by means of a prospectus supplement and the accompanying prospectus. Copies of the preliminary prospectus supplement and the accompanying prospectus may be obtained from Goldman, Sachs & Co., via telephone: (866) 471-2526; facsimile: (212) 902-9316; email: [email protected]; or standard mail at Goldman, Sachs & Co., Attn: Prospectus Department, 200 West Street, New York, NY 10282-2198;
from Morgan Stanley & Co. LLC, Attn: Prospectus Department, 180 Varick Street, Second Floor, New York, NY 10014, or by telephone at (866) 718-1649 or email: [email protected];
from J.P. Morgan Securities LLC, via telephone: (866) 803-9204; or standard mail at c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717;
or from Deutsche Bank Securities Inc., via telephone: (800) 503-4611; email: [email protected]; or standard mail at Attn: Prospectus Group, 60 Wall Street, New York, NY 10005.
So how does one go buy this bond? Cannot seem to buy any Tesla bonds on Etrade (Last year?), are they a one time thing?
As an investor, is there an advantage to buying convertible bonds compared to other investment methods?
I'm already long TSLA starting at 35/sh (woohoo!) but I can't fathom buying at 250 today so I'd like to know if this is a viable way in presuming long-term confidence in the company.
Basically:
- borrower pays a lower interest rate: downside is reduced interest payments
- bondholder gets stock options: upside is potential share profits
So, the question for the investor is, are the reduced interest payments worth the potential upside from the ability to buy take profits on a rapid increase in the share price (or even just to get access to equity that you wouldn't otherwise have)?
First off, as a long-time lurker who benefitted extensively from the top-notch contributions of the many smart people on this board, I want start with a Big Thank You to all. I bought my first TSLA shares on 28 Sep 2010, one day after I read this Wired article, and I remain heavily invested in it today (on the long side, obviously.)
With that said, on to my question:
How is this equation affected by the fact that, in this deal, converting to shares is at Tesla's discretion? That is, why do the lenders buy these (presumably lower-interest) bonds when they don't get to decide if they get paid in shares?
First off, as a long-time lurker who benefitted extensively from the top-notch contributions of the many smart people on this board, I want start with a Big Thank You to all. I bought my first TSLA shares on 28 Sep 2010, one day after I read this Wired article, and I remain heavily invested in it today (on the long side, obviously.)
With that said, on to my question:
How is this equation affected by the fact that, in this deal, converting to shares is at Tesla's discretion? That is, why do the lenders buy these (presumably lower-interest) bonds when they don't get to decide if they get paid in shares?
"The rich expected conversion premiums on the Tesla convertibles indicate the company effectively is selling high-priced calls on its high-priced stock attached to its high-priced (that is, low-yielding) bonds."
Tesla said:The convertible senior notes due 2019 will be convertible into cash, shares of Tesla’s common stock, or a combination thereof, at Tesla’s election. The convertible senior notes due 2021 will be convertible into cash and, if applicable, shares of Tesla’s common stock (subject to Tesla’s right to deliver cash in lieu of such shares of common stock). The interest rate, conversion rate and other terms of the notes are to be determined.