Problemin september 2014 twitter raised 18 billion in a, Ask an Expert

Finance

Problem:

In September 2014, Twitter raised $1.8 billion in a convertible bond offering. The offering includes a 5-year tranche, with notes due in 2019 carrying a .25% interest rate and 7-year notes due in 2021 carrying a 1% interest rate. Twitter's stock price was $52.57 at the time.

The conversion rate is 12.8793 shares per $1000 bond. Calculate the conversion price in dollars and the premium as a percentage. Then discuss reasons to explain the size of the premium. Also explain why Twitter decided to issue convertible bonds instead of regular bonds.
Provide all calculation and formulas.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146418

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