There is a lot more significance to this than meets the eye.

Posted Jan 7, 2004 6:37 UTC (Wed) by robla (subscriber, #424)
In reply to: There is a lot more significance to this than meets the eye. by BrucePerens
Parent article: Red Hat borrows $500 million

If they buy the stock at $18, and it goes down to $6, the investor is out the difference.

If they buy the debentures at $25/share, and the stock goes down to $6, the investor can still get their $25+0.5% interest out of it. Not a great investment, but not a loss as above. It's a lower risk investment (with a smaller reward).

Rob