Example of 6% calculation:
Assumptions:
On Sep 18 2020:
Mr. X owns 100,000 PASO stocks
1 for 250 = 400 prefd. stocks
Prefd stocks is $15/share
Common stock price = $15/250 = 0.06/share
Prefd. stock value = 400*15=$6,000
6% interest = $6,000*6%=$360
On Sep 18, 2021, Mr. X will get $360 interest
On Sep 18 2021, if common share price 0.50c and the conversion ratio remains 250 for 1 (for example) and if you calculate interest using equivalent common share, the interest will be:
100,000x0.50=$50,000x6%=$3,000
or if the share price is 0.05/c on Sep 18, 2021, then the interest will be:
100,000x0.05=$5,000x6%=$300
As you can see, the interest amount changes depending common stock price increase/decrease even though the 6% rate remains same. In reality, Mr. X will continue to get $360 interest on his 400 prefd. shares regardless of common share price at the time.
That's why you don't convert preferred to common to calculate interest on preferred. Until you really convert to common, the interest calculation will be done using $6,000 in this example, regardless of common stock price at the time.
Hope it makes sense!