What in the world does that mean? Noteholders don't buy stock in the company with which they are a noteholder, EVER. Why on earth would a person buy stock at a price much higher than they received from the company. They are given shares for services or cash investments in the company. Usually at Par value, or at the very least a greatly reduced price from the PPS at the time of the transaction. The post is 100% incorrect. Noteholders do not buy stock, they sell it out of the A/S and it increases the O/S and float. And yes, it is dilution.