Investor Presentaiton
Pre-IPO investment in convertible instruments (cont'd)
Current Practice in Dealing With Convertible Instruments (cont'd)
d) Redemptions and Early Redemptions
‣
Certain convertible instruments give holders the option to redeem early at a price enabling
the holders to receive a fixed internal rate of return (IRR) on the principal amount of the
instruments redeemed.
Upon maturity, all outstanding instruments will be payable at a price including the same.
fixed IRR.
▸ (note: IRR is the interest rate needed in the discounting of cash flows to their present
value so the investment's net present value is equal to zero)
Exchange regards the IRR on the principal amount of the convertible instruments to be
redeemed as compensation for the investment and risk undertaken by the holders.
Early redemption is allowed and should be distinguished from other cases where the
holders do not undertake any risk and the investment money is not yet paid.
CHARLTONS
易周律师行
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