The advantage of the convert is that the dillution would be based on the convert price ($7.05), so less shares issues. The disadvantage is interest (the 7 year durration is likely not much of an issue, one would expect them to either have cash flow or be hopeless by then).
Yes, they likely will be shorted some. This is a straightforward hedge by the buyers. They want to collect the interest w/o a huge risk. But equity financing (either private or not) leads to shorting and flipping also, so not a huge difference here.
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