The funding will remain as convertible notes with no valuation cap and no discount.
One useful tool: convertible notes that turn into equity upon a startup's next valuation.
You can also argue convertible notes split the incentives of the investor and entrepreneur- never a good thing.
FORBES: When Convertible Notes Make Sense For Consumer Companies
The proceeds of this financing along with existing cash will be used to repay the 2013 Convertible Notes.
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King said Suntech had been counting on proceeds from a GSF sale to help pay off convertible notes due in 2013.
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"Convertible notes mean investors can no longer drag their heels, " says Graham.
While the three main reasons presented above are all pros to using convertible notes in consumer, there are definite downsides to these instruments.
FORBES: When Convertible Notes Make Sense For Consumer Companies
The investment by Wanxiang Group Corp. involves convertible notes and warrants that if exercised could leave it with an 80 percent stake in the Waltham, Mass.
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Convertible notes are especially useful for high-growth consumer companies.
FORBES: When Convertible Notes Make Sense For Consumer Companies
But during the War legislation and executive orders compelled private U.S. banks to transfer their gold coin reserves to the Fed in exchange for Federal Reserve Notes convertible into gold.
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Second, CHK is extending the average maturity schedule of its debt by replacing senior notes due to mature over the next six years with convertible preferred shares that come with no maturity date.
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