Inca One Resources (IO.V) has announced it’ll issue up to C$325,000 in convertible debt. The debt will have an annual coupon of 10% paid quarterly in arrears and during the first year of the term, the holder can choose to convert 25% of the principal amount into common shares of Inca One at a fixed price of C$0.125. Inca has the right to redeem the convertible securities after three years.
Issuing convertible bonds which might be redeemed are a good way to raise additional cash for Inca One and it allows the company to ramp up its production efforts during those three years to generate sufficient to repay the loans when necessary.
Disclosure: The author holds a long position in Inca One Resources. Inca One is a sponsor of the website. Please see our disclaimer for current positions.