ACO
Jump to navigation
Jump to search
In finance, a convertible bond is an asset the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. An Automatic Convertible Bond has some unique properties:
- The holder of an ACO would get at an upfront agreed discount at the initial product offering (IPO)
- The holder gets a guarantee to get the stock
- The holder gets a minimum buying price or a maximum price.
ACO was discussed in the MBI training in the context of the Lernout and Hauspie Speech Products case. As there is a minimum and a maximum scenario the holder of an ACO has a significant uplift or downlift. The reason for including this range is to communicate an expected price for the IPO.