InterDigital Inc (IDCC)

[jealmc79]

the hedge is the reason they are able to pay above and beyond the actual conversion price

They are not paying above and beyond anything. The 2027 bonds became exercisable because of the following wording in the bond agreement.

Prior to 5:00 p.m., New York City time, on the business day immediately preceding March 1, 2027, the Notes will be convertible only under the
following circumstances: (1) on any date during any calendar quarter (and only during such calendar quarter) beginning after September 30, 2022 if the
closing sale price of the Common Stock was more than 130% of the applicable conversion price on each applicable trading day for at least 20 trading
days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar
quarter;

If the bonds are converted, and the calls and warrants are exercised at $106.35, IDCC will have gotten the max gain they can get from the call spread transaction. They are still paying cash for the bonds at the rate of $1000/bond. If one bond is converted then they will also exercise the 12.9041 call options associated with that bond. IDCC owns the call options which can be settled in cash or shares. The warrants seem to be separate from the bonds/calls so I don't know how they will play in all this. If they don't close out the warrants at the same time as the calls then things could get interesting.