Looking at the prospectus for the ABC notes issued in 2007 (ASX code ABSG) it does not look like the note holders have the option to convert unless the company sells assets which contibute more than 50% of EBITDA (a Sale of Core Assets event). On the face of it, it does not appear that the proposed deal with Morgan Stanley will trigger this option for note holders.
Also, assuming most notes are traded on market, there has been very little trade in these notes over the past month. So the idea of hedge funds buying notes and selling stock with a view to converting at a great stock price would appear unlikely.
Correct me if I'm wrong please.
ABS
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