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A Mandatory convertible is a particular type of bond that includes binding conversion at maturity. Until maturity, the bond holder receives the coupon at each payment date. At maturity, the bond holder will receive a specic number of shares, dened in the contract, instead of the face value.
In the present case study, the bond holder has also the right to convert the face value into a specic number of shares before the termination date. The bond conversion results in an increase of the outstanding shares and, therefore, in a dilution of the capital.
To the subscriber of \Convertendo BPM 2009/2013-6.75% ", during the Public Oer, is also oered a Warrant option (to subscribe BPM shares). A Warrant is a security that gives he holder the right to subscribe (warrants to subscribe) or buy (warrants to purchase) or sell (sell warrants), on or before the due date, a certain number of shares (additional hares) against the payment of a xed amount or as determined in accordance with predetermined criteria in the case of warrants to subscribe for or to purchase, and vice versa, arning a xed amount or as determined in accordance with predetermined criteria in the case of warrants to sell.
