I think you are of the mistaken belief that the redemption...

I think you are of the mistaken belief that the redemption premium applies no matter what.

In actual fact the redemption premium only applies if the company chooses to repay or convert the notes before the maturity date.

The redemption premium is there to protect the note holder in the event that the company begins making a healthy profit and the SP sky rockets. In that situation the company may choose to repay some or all of the notes in cash (from the profits) as this would minimise dilution to existing holders. This would deprive the note holder of significant capital gains as well as the remaining interest payments.

However, a less bullish scenario will see the company make periodic repayments until the maturity date, at which point it will either repay or extend the notes, or convert the notes to equity at 3 cents per share. The redemption premium is no longer applicable at that point because the notes would have matured.