Turners (TNR) bonds

[Snoopy]

Turners 6.5% offered is towards the bottom end of this range. I don't think that is compelling enough, when there is every chance that interest rates will be higher in two years than they are now. I won't be renewing by TNR bonds as a fixed interest investment. However, I will be renewing by TNR bonds!

So what is the thinking behind my apparent tautology?

There is another way of looking at the TNR bonds, that is as an option to purchase TNR shares in two years time. The maximum you will pay for these shares is $3.75. But the real advantage could be if the share price does not advance. This will trigger option (b). The bond to share conversion price would be:

"a 5% discount to the average daily volume weighted price of Shares in the 90 days prior to the maturity date as determined by an independent advisor appointed by Turners."

IOW bondholders have a window for potentially buying some cheap and brokerage free Turners shares in two years time, or getting their capital back. It is for this reason that I will be buying some bonds. However, the risk profile as I see it has changed. So my TNR overall holding (shares and bonds) after the new bond issue will be made up of 2/3 shares and 1/3 bonds, whereas before it was 1/10 shares 9/10 bonds.

SNOOPY