Thanks for the wiki link to the Convertible_bond article.
The key phrases that stood out to me were [note >>highlights<<]:
* Convertible bonds are also considered debt security because the companies agree to give fixed or floating interest rate as they do in common bonds for the >>funds<< of investor.
* From the issuer's perspective, the key benefit of >>raising money<< by selling convertible bonds is a reduced cash interest payment.
Taking Ken at his word that each company [MDCN and EGOH, which became GSFI] received a note, or convertible bond, in the other -- that means that NEITHER company received "funds" or "cash" for those bonds. Instead, each received a bond for a bond.
I don't see anything in that transaction other than a blatant attempt to created future wealth out of nothing.
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