spottail is spot on. By law, (not that paim cares),
when the ISSUER (= paim) of a bond or CD
decides to pay it off early,
they have to pay the full amount
that would be due at maturity,
which, in this case is 2011,
with the 'conversion rate' of 0.0010
($1000 CD = 1,000,000 common shares of paim).
CD holders who wanted to convert yesterday
would have lost 90% of the "value",
because the conversion rate would be reduced to 0.0100
($1000 CD = 100,000 common shares of paim).
I'm not sure that paim can legally make you take paim shares,
instead of the "face value" in Dollars of Cash,
but, as long as paim trades above 0.0010 ,
it's better to take the shares, and sell them ASAP,
before they crash below 0.0010 ,
due to the extra-quick dilution from a big pile
of CD forced-converters selling their new shares ASAP.
Bottom Lines:
1. Don't throw the CD's away.
2. They are now worth 10x what they were yesterday.
3. But, if they are now worth less than $50,
don't pay the TA, and they will probably just go away
on the drop-dead date listed in the PR.
4. If they are held by a Broker, or in an IRA,
THEY will probably pay the $50, and debit your account,
unless you remove them, before the PR date,
(unless it changes, another frequent paim trick).
5. But, don't remove them from an IRA,
especially if you are under-age for IRA withdrawlas (55?),
because that will wake up the IRS, forever,
and you will owe taxes and penalties,
on the 'value' of the CD, (which they will determine),
which is actually worth less than zero,
if you know that it's worth less than $50.
IMPORTANT NOTE: All or the above is just my opinion.
I am not an accountant, or a lawyer, or a financial adviser.
(But, I probably know more than most of them, because,
I am retired and rich, while they are still working,
because they need the money. So, if their advise is so good,
why aren't they retired, and on a Caribbean cruise.)
Averaging-down is profitable, for shorters, only.
