Q: Could I have your thoughts on the new CON DEB issue- assume it ranks above the common dividend - but at 7.5 % still high risk ? Ok for a limited investment
5i Research Answer:
At $40M it is a relatively small issue, and is mostly being used for the redemption of an existing convertible debenture. It is convertible at $8.50. The stock was last above $8.50 in August 2022. It does rank higher but note convertibles can also be redeemed for stock at the company's discretion. This is a rare occurence but can set up dilution in a declining-stock scenario. The small size of the company adds some risk but we would consider it an OK investment for higher-risk income investors.