WBL's CB

WBL: you can view the financial link btwn CB and mother share in this way. The CB have an offer price of $1.95. Conversion ratio of 0.4367 means every $1 in princpal amount of CB can be converted to 0.4367 WBL shares. Therefore, an investor has to convert 2.29 CBs to get 1 WBL share. This will cost him 2.29 x $1.95 = $4.47. WBL shares are now traded at $4.33 So using the CB approach, you are paying a premium of $0.14 per WBL share. This premium is to compensate for the option value embedded in the CB, as well as the 2.5% coupon till maturity in Jun 2014.