Aside from the cash for shares at $8, which only a lunatic would exercise, I would like to test my understanding of the debt instrument exchange.
Am I correct that bondholders can essentially "self-call" their bond, benefiting Xerox by having the obligation to pay interest removed? If yes, what is the value to the bondholder who now holds a variable dividend equity position based on their bond par value in a company that may not recover?
@OP yes, but only if it makes economic sense for the bondholder.
Bondholders aren’t “self-calling” bonds out of generosity, they’d only surrender debt if the bonds are already impaired and equity upside looks better than staying in debt. In that case, Xerox benefits because interest and principal disappear; the bondholder accepts equity risk in exchange for optional upside.
If the stock never recovers, no one converts, the debt stays, and the warrants expire.