Warrant bond
One option bond ( English bond with warrants ) is a bearer bond with additional rights, specifically a bond , in addition to the right to claim (interest and repayment) in a warrant , a subscription right to shares securitized .
backgrounds
A conditional capital increase is a prerequisite for issuing a bond with warrants .
Bonds with warrants usually have a term of between 10 and 12 years. When the bond with warrants is issued, in addition to the interest and repayment modalities, the conditions for the subscription of shares are also specified - i.e. the subscription ratio , the subscription price and the subscription period . A certain number of shares can then be acquired at the subscription price within the subscription period . Exercising the option is independent of the bond. Because of the additional option right, the nominal interest rate on the option bond is comparatively low.
For companies , bonds with warrants are an inexpensive form of financing, as the attached warrant can lower the interest payments compared to a normal bond. If the option is exercised, the settlement in shares does not affect the company's liquidity.
For investors, this financial derivative combines the properties of a bond with those of the share. If the share price rises, a higher return can be achieved with the warrant due to the leverage effect . In the event of falling share prices, the warrant becomes worthless in extreme cases, but the interest payments and repayments of the bond remain unchanged.
Differentiation from convertible bonds
In contrast to a convertible bond , the bearer bond of a bond with warrants remains in place until the end of the term, even if the option is exercised. The convertible bond, on the other hand, ends as soon as the respective investor has made use of his conversion right. Even if the option right of a bond with warrants is not exercised, it is possible to sell it separately from the bond, as the option right is usually listed separately on the stock exchange.
Stock exchange trading
The option bond can be traded on the stock exchange. Can be traded
- the bond with warrant, one then speaks of "cum warrant",
- the bond without a warrant, which then corresponds to an ordinary bond and is called "ex warrant", and
- only the warrant, which is then referred to as a "warrant".
Legal treatment
The legal treatment corresponds to that of a convertible bond: Because the issue of the bond with warrants affects the rights of the previous shareholders of a stock corporation , a bond with warrants may only be issued on the basis of a resolution by the general meeting . The resolution requires a 3/4 majority of the capital stock represented ( Section 221 (1 ) AktG ). The provisions of Section 221 AktG also apply to bonds with warrants, which is why shareholders are entitled to subscription rights for bonds with warrants in accordance with Section 221 (4) and Section 186 AktG. If an investor exercises his option right during the option period, the company must offer him new shares. This requires a resolution on a conditional capital increase in accordance with Section 192 (2) No. 1 AktG. Please note the restriction of Section 192 (3) AktG: The nominal amount of the capital must not exceed 50% of the amount of the current share capital.
