Convert market returns as issuers promise not to do what Perpetual Energy did

, Economic

Last Friday, S&P downgraded Perpetual Energy.

A $90 million offering of convertible debentures — the second since issuers introduced new investor friendly rules this year — is set to close Tuesday when Calgary-based Kelt Exploration receives the gross proceeds.

The debentures come with a five-year term, pay five per cent annually and are convertible at $5.50 a share — a 45 per cent premium to the $3.78 share price just prior to the deal being announced.

Investors were attracted because of the yield and the upside in the share price given the prospects for Kelt’s underlying business.

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