Seeking to raise more capital," Amazon.com plans to sell about $600 million of convertible subordinated notes" (Mutter, 2000, p. 80). Amazon, at the time, was considered a much more substantial risk than it is currently. The issuance of convertible debt seemed very speculative at the time. Mutter even wrote that investors did not like "the equity-like risk assumed by debt holders" (Mutter, p. 80). but, the investment has paid off in the long run.
An additional American company that could be used as an example of one that issued convertible notes is Candescent Technologies.
Based in the United States, it "raised $125 million through the sale of senior subordinated convertible notes to finance a facility for the manufacture of field emission displays (FEDs)" (Brown, 1998, p.17).
Senior convertible notes are less a risk of loss of investment capital than regular convertible notes because, as the name implies, they are senior in stature, and therefore a return of their debt is more of a certainty than other convertible notes, and are definitely much more likely to return capital than ordinary shares or preferred stock.
Preferred shares would be next on the list of any possible return of invested capital, then ordinary shares. Rights to purchase stock give the investor relatively little in the way of return of investment on invested capital, since the investor owned nothing except the right to purchase company stock at a certain price.
Preferred stock is a "class of ownership with priority over common stock" (Miller, 2007, p. 77). It offers the investor the...
The preferred shares will normally have additional rights beyond those offered by common stock. "Preferred shareholders may have an advantage over common stock shareholders in dissolution, bankruptcy or liquidation, for instance" (Miller, p. 78). Preferred shares usually have a dividend with them that must be paid to shareholders before any dividends are paid to common stock shareholders. These dividends can be cumulative or non-cumulative and the shares themselves can be redeemable or non-redeemable.
The investor in ASX shares assumes more of a risk than does the investor who invests in more established exchanges, but the reward could be great. At issue is the lack of viable research on the companies offered therein and the lack of trackability. These factors must be considered, but at the same time, the world is becoming a much smaller place, and navigating the travails of investments halfway across the globe is becoming much easier.
References
Background on the Australian Stock Exchange, (2006) Accessed August 17, 2008, at http://www.gocurrency.com/articles/asx.htm
Brown, P. (1998) U.S. flat panel fab planned, Electronic News, Vol. 44, No. 2220, p. 17
IINET Ltd., Accessed August 17, 2008, at http://www.asx.com.au/asx/markets/PriceResults.jsp?method=get&template=F1001&ASXCodes=iin
Miller, S.E., (2007) Valuing preferred stock, Journal of Accountancy, Vol. 203, No. 2, pp. 55-59
Mutter, J., (2000) Moody's wary of new Amazon offering, Publishers Weekly, Vol 246, No. 7, p. 80
