CONVERTIBLE DEBENTURE

A Convertible Debenture is a debt instrument like a promissory note issued by a private or public company that is convertible into common stock of the company based on certain terms and conditions, including some sort of agreed upon pricing formula. The terms and conditions of the Convertible Debenture provide the holder (the investor) with certain rights and privileges that typically give the holder an advantage over common stockholders. The conversion into common stock can either be at a fixed rate, or a floating rate based on the closing bid price of the company’s common stock. It can even be based on a formula that provides some sort of anti-dilution privilege to the holder.

Convertible Debenture Funding and another financing structure known as Convertible Preferred Stock are sometimes used by investors because it gives them a little more protection that just doing a straight common stock purchase. These two financing structures, as well as Equity Line Funding, are probably the most commonly used funding structures by small public companies.

There are a number of PIPE Funds and Special Situation Funds that will use these structures to fund companies looking for growth capital or to make an acquisition.

The common stock underlying the debenture would either need to be registered in a registration statement with the United States Securities and Exchange Commission or would need to qualify for an exemption pursuant to Rule 144.

Private Placement Funding.
Learn more about how companies are accessing Private Placement Funding to fund their capital needs. Also, get information on how to locate funding sources, comply with important regulatory requirements and get tips on how to structure the deal with investors.

Tips on Raising Capital.
One of the most difficult tasks small companies face is raising capital. Get some useful tips that might give you an extra edge on sourcing capital and structuring a transaction with interested investors.

Reverse Merger Funding.
A Reverse Merger, if done properly can provide a fast alternative to going public through a direct listing. It can help a company raise needed funding by providing access to the capital markets. These types of funding transactions have become very popular over the years with hedge funds.