Convertible promissory notes are issued by incorporated companies and grants, in addition to the right to payment of interest accrued, the holder to right to convert the principal of the note into stated form of stocks of the issuing corporation at a given point in time. The investor can profit from increasing share prices or exercise their repayment right.
For example, United Energy offers a convertible promissory note on the basis its Preferred Stocks from the Series C. This note has an interest rate of 7.25% p.a. and has a maximum maturity of 300 days. At that point, the investor can exercise his right to have the principal of the note and the interest earned paid out, or to convert the principal amount into shares.
