BNET Business Dictionary
Business Definition for: Convertible Preferred Stock
- stocks that give the holder the right to exchange them at a fixed price for another security, usually common stock.
Example: Preferred stocks and other convertible securities offer investors a hedge: fixed-interest income without sacrificing the chance to participate in a company's capital appreciation.
When a company does well, investors can convert their holdings into common stock that is more valuable. When a company is less successful, they can still receive interest and principal payments, and also recover their investment and preserve their capital if a more favorable investment appears.
Conversion ratios and prices are important facts to know about preferred stocks. This information is found on the indenture statement that accompanies all issues. Occasionally the indenture will state that the conversion ratio will change over time. For example, the conversion price might be $50 for the first five years, $55 for the next five years, and so forth. Stock splits can affect conversion considerations.
In theory, convertible preferred stocks (and convertible exchangeable preferred stocks) are usually perpetual. However, issuers tend to force conversion or induce voluntary conversion for convertible preferred stocks within ten years. Steadily increasing common stock dividends is one inducement tactic used. As a result, the conversion feature for preferred stocks often resembles that of debt securities. Call protection for the investor is usually about three years, and a 30â€" to 60-day call notice is typical.
About 50% of convertible equity issues also have a "soft call provision." If the common stock price reaches a specified ratio, the issuer is permitted to force conversion before the end of the normal protection period.
Additional Resources
- Transmedia Europe closes second tranche of 6.5% Convertible Preferred Stock offer
- LONDON, England--BUSINESS WIRE--July 7, 1995--Transmedia Europe Inc. (NASDAQ symbol "TMNE") announced today that a further $1,000,000 had been raised from its Convertible Preferred Stock offering, which has resulted in total gross proceeds of $2,000,000.The Convertible Preferred Stock is convertible into 1.125 shares of Common Stock and has a dividend rate...
- Research articles 1995-07-07
- McMoRan Exploration Co. Declares Quarterly Cash Dividend on Convertible Preferred Stock and Announces Redemption of its 5% Convertible Preferred Stock
- NEW ORLEANS -- McMoRan Exploration Co. (NYSE: MMR) today declares, for the period from April 1, 2007, through June 30, 2007, a cash dividend of $0.3125 per share payable on June 30, 2007, to holders of record as of June 15, 2007, for its 5% convertible preferred stock (OTCBB: MMREP)....
- Research articles 2007-05-29
- ImaginOn Announces Redemption of Series D and Series E Convertible Preferred Stock
- SAN CARLOS, Calif.--BUSINESS WIRE--May 10, 1999-- ImaginOn, Inc. (the "Company") (NASDAQ: IMON) today announced that it has notified holders of the Company's Series D 4% Convertible Preferred Stock and Series E 4% Convertible Preferred Stock of its intention to redeem those shares. The redemption will be completed on or...
- Research articles 1999-05-10
- Aames Financial Corporation Declared Cash Dividend on Series B, Series C and Series D Convertible Preferred Stock
- LOS ANGELES -- Aames Financial Corporation (OTCBB:AMSF), a 50 year old national subprime mortgage lender, declared a cash dividend on its Series B convertible preferred stock, Series C convertible preferred stock, and Series D convertible preferred stock for the quarter ending June 30, 2004. The Company will pay this quarterly...
- Research articles 2004-06-24
- Aames Financial Corporation Declared Quarterly Cash Dividend on Series B, Series C and Series D Convertible Preferred Stock
- LOS ANGELES -- Aames Financial Corporation (OTCBB:AMSF), a 50 year old national subprime mortgage lender, declared a cash dividend on its Series B convertible preferred stock, Series C convertible preferred stock, and Series D convertible preferred stock for the quarter ending September 30, 2004. The Company will pay this quarterly...
- Research articles 2004-08-31
- Aames Financial Sets Record Date for Cash Dividends on Series B, Series C and Series D Convertible Preferred Stock To be Paid Prior to Consummation of the Proposed Reorganization
- LOS ANGELES -- Aames Financial Corporation (OTCBB:AMSF), a 50 year old national subprime mortgage lender, set a record date of October 28, 2004, for a cash dividend to be declared and paid on its Series B convertible preferred stock, Series C convertible preferred stock, and Series D convertible preferred stock...
- Research articles 2004-10-19
- Aames Financial Corporation Declared Cash Dividend on Series B, Series C and Series D Convertible Preferred Stock
- LOS ANGELES -- Aames Financial Corporation (OTCBB:AMSF), a 50 year old national subprime mortgage lender, declared a cash dividend on its Series B convertible preferred stock, Series C convertible preferred stock, and Series D convertible preferred stock for the period ending November 5, 2004. The Company will pay this dividend,...
- Research articles 2004-11-02
- Fitch Rates Chesapeake's Proposed Convertible Preferred Stock 'B+'; Outlook Stable
- CHICAGO -- Fitch Ratings has assigned a 'B+' rating to Chesapeake Energy Corp.'s Chesapeake offering of $300 million of 4.50% cumulative convertible preferred stock. Fitch also rates Chesapeake's senior unsecured debt at 'BB', senior secured revolving credit facility and hedge facility at 'BBB-', and existing convertible preferred stock at 'B+'....
- Research articles 2005-09-09
- Globalstar to Sell $150 Million of Convertible Preferred Stock in a Rule 144A Offering
- NEW YORK--BUSINESS WIRE--December 3, 1999-- Globalstar Telecommunications Limited (NASDAQ:GSTRF) announced today that it has entered into an agreement to sell $150 million of 9% Convertible Preferred Stock due 2011 in an offering exempt from registration. The Preferred Stock will be convertible into shares of common stock at a conversion...
- Research articles 1999-12-03
- McMoRan Exploration Co. Announces Commencement of Public Offerings of Common Stock and Mandatory Convertible Preferred Stock
- NEW ORLEANS -- McMoRan Exploration Co. (NYSE: MMR) announced today that it has commenced public offerings of approximately 11 million shares of common stock and 1.5 million shares of mandatory convertible preferred stock. The mandatory convertible preferred stock has an offering price of $100 per share and will be mandatorily...
- Research articles 2007-10-25
- Electronic Control Security Inc. Announces Dividend on Series A Convertible Preferred Stock
- The Board of Directors of Electronic Control Security Inc. (OTC BB: EKCS) declared the accrued dividend on outstanding shares of Series A Convertible Preferred Stock for the four quarters from issuance through March 14, 2003. The dividend is payable on March 31, 2003, in shares of common stock. Holders...
- Research articles 1970-01-01
- Globalstar to Sell $350,000,000 of Convertible Preferred Stock in a Rule 144A Offering
- NEW YORK--BUSINESS WIRE--Jan. 7, 1999--Globalstar Telecommunications Limited GTL announced today that it plans to sell $350 million of Convertible Preferred Stock in an offering exempt from registration. Loral Space & Communications, which owns 42% of Globalstar L.P., will purchase $150 million of the $350 ...
- Research articles 1999-01-07
- Globalstar to Sell $350,000,000 of Convertible Preferred Stock in a Rule 144A Offering
- NEW YORK--BUSINESS WIRE--Jan. 21, 1999--Globalstar Telecommunications Limited GTL announced today that it has entered into an agreement to sell $350 million of 8% Convertible Preferred Stock due 2011 in an offering exempt from registration. The Preferred Stock will be convertible into shares of common stock at a conversion price of...
- Research articles 1999-01-21
- Andrew Corporation Intends to Convert Outstanding Series 7.75% Convertible Preferred Stock
- ORLAND PARK, Ill. -- Andrew Corporation has announced its intention to exercise its right to cause the conversion of all the outstanding Series 7.75% Convertible Preferred Stock ("Preferred Stock") into shares of Andrew Common Stock ("Common Stock"). The company has 119,114 shares of Preferred Stock outstanding. The current conversion ratio...
- Research articles 2005-02-22
- Glenborough Realty Trust Calls for Redemption of 7 3/4% Series A Convertible Preferred Stock Contingent Upon Merger
- SAN MATEO, Calif. -- Glenborough Realty Trust Incorporated ("Glenborough") (NYSE:GLB) called for the redemption of its 73/4% Series A Convertible Preferred Stock (CUSIP #37803P204) (the "Preferred Stock") by the mailing of a Notice of Redemption on October 27, 2006 to the holders of record of the Preferred Stock. Glenborough intends...
- Research articles 2006-11-09
- Caliber Learning Network, Inc. Completes Closing of $15 Million in Series A Convertible Preferred Stock to Fleming Asset Management
- BALTIMORE--BUSINESS WIRE--Oct. 27, 1999-- Caliber Learning Network, Inc. (NASDAQ: CLBR) today announced it has reached an agreement to sell $15 million in Series A Convertible Preferred Stock to Fleming Asset Management. The net proceeds will be used to fund future development opportunities and general working capital purposes. The...
- Research articles 1999-10-27
- GLOBALSTAR: Globalstar to sell $350,000,000 of Convertible Preferred Stock in a rule 144A offering.
- M2 PRESSWIRE-7 January 1999-GLOBALSTAR: Globalstar to sell $350,000,000 of Convertible Preferred Stock in a rule 144A offering C1994-99 M2 COMMUNICATIONS LTD RDATE:070199 NEW YORK -- Globalstar Telecommunications Limited GTL announced today that it plans to sell $350 million of Convertible Preferred...
- Research articles 1999-01-07
- UniComp Announces Completion of Series a Convertible Preferred Stock Redemption; Company Strengthens Balance Sheet With No Long-term Debt
- Business Editors MARIETTA, Ga.--BUSINESS WIRE--Feb. 1, 2000 UniComp (Nasdaq:UCMP) today announced that all of the Series A Convertible Preferred stock, the only Convertible Series that had been outstanding, has been redeemed. The Convertible preferred holder has received a combination of cash and common stock, thereby retaining UniComp's...
- Research articles 2000-02-01
- Nextel Commences Consent Solicitation and Exchange Offer for Zero Coupon Convertible Preferred Stock Due 2013
- RESTON, Va. -- Nextel Communications, Inc. (NASDAQ:NXTL) announced that it has commenced a consent solicitation with respect to its outstanding Zero Coupon Convertible Preferred Stock Due 2013 Preferred Stock. In order to incent the conversion of the Preferred Stock into class A common stock of Nextel, consents are being solicited...
- Research articles 2005-03-03
- Fitch Rates The South Financial Group Inc.'s Convertible Preferred Stock 'BB'
- CHICAGO -- Fitch Ratings has assigned a 'BB' rating to the mandatory convertible non-cumulative preferred stock issued by The South Financial Group, Inc. (Nasdaq: TSFG, 'BBB-/F3', Negative Rating Outlook). The issuance consists of $250 million in series 2008 convertible preferred stock. These preferred shares pay a dividend of 10.00% and...
- Research articles 2008-05-02
