Convertible Bonds

Financial institutions provided their clients with borrowing facilities for the acquisition of these products. At present, following the drop in prices of shares on today, investors must face the compulsory purchase of shares with reductions of between 50% and 75% of their emission value, as well as having to repay the loans they used to finance the purchase of the bonds.

Navas & Cusí, with wide experience in legal procedures against bad banking practice, calls upon the courts of this country for the nullification of the contracts signed and the refund of the significant financial losses by investors as a result of the incorrect marketing of these products on the part of the financial institutions, in cases that have failed to comply with their legal duties of transparency and informationduring the procurement process, omitting the regulations applicable to the institutions that operate in the securities market.

What are convertible and/or exchangeable bonds?

Convertibility means the possibility of transforming one financial asset into another. Thus, a specific obligation (bond) can be converted into a share or into another type of obligation.
Convertible or exchangeable obligations enable the owner to redeem them for shares on a specified date.

Until the conversion or exchange date, the investor receives the interest through the collection of regular bond coupons. The number of shares that will be delivered for each bond or obligation and the way in which prices and dates of the exchange or conversion are determined, are specified in the Informative Leafletpublished by the issuing financial institution.

When the Exchange or conversion date arrives, the investor has two alternatives:

• Exercise the conversion option, if the price of the shares offered in exchange / conversion is less than their market price.
• Keep the obligations until the date of the following conversion option or until their maturity.