What is compulsory convertible debentures?

[amara]

I would like to know what is compulsory convertible debentures. Could someone please explain how they work and their importance in finance?

 

[Gsusangrey]

A Compulsorily Convertible Debt (CCD) is a financial instrument that, according to its design, will be obliged to change into the equity shares of the issuing company on a specified date or occurrence. It is initiated as debt, with fixed returns, however, ends up as ownership (equity), providing the company with a repayment of no obligation.

 

[BlissCore]

Compulsory Convertible Debentures (CCDs): These are forms of debts under which after a specific time, they are converted into equity shares in the issuing company. They enable the investors to receive fixed interest in the short-term and in the future they become shareholders, which would result in their gaining profit in case the company expands. The importance of CCDs in finance is because they enable companies to raise funds without directly diluting equity and attract investors seeking future returns as well as safety.

 

[brook]

Compulsory Convertible Debentures (CCDs) are financial instruments that are similar to loans but have to transform into equity shares after a period. The investor is paid interests until the conversion period and they are used by companies to raise funds without immediate dilution of ownership.

 

[Shane Warne]

Compulsory Convertibles Debentures (CCDs) are hybrid securities, which appear like loans but after a non-renewable time, they automatically transform into shares. Debt safety is blended with equity potential returns as investors receive an interest until they convert into shareholders.

 

[Lucas]

Compulsory Convertible Debentures (CCDs) are debt instruments that automatically convert into equity shares of a company after a specified period.