"Am I off base here? I thought that's what was going on."
Yep, you're off base there. See my prior post.
Toxic CONverters CONvert and sell same day or even short the box and pre-sell some of the tranche in the day or two prior to the next iteration of CONversion and use those shares to cover - before T+3.
They bear NO MARKET RISK - and seek to minimize any such risk - that is the name of the game in floorless CONvertible debt. When the bid is big enuff to swallow X shares, they CONvert enuff of the debt to provide X shares and DUMP into the bid.