Gilt-Edged Market

the conversion date is not taken into account. Conversion terms are announced three weeks

before the conversion date.

On announcement of the conversion terms, the DMO holds open the fixed terms for the

three week offer period, in the form of a fixed price ratio of the two stocks. If the terms move

in bondholders' favour they can convert, whereas if terms become unfavourable they may

choose not to convert. It is not compulsory to take up a conversion offer. Holders of the

source stock may choose to retain it and subsequently trade it, or hold it to maturity.

However the source stock will become less liquid and less widely held after the conversion, ...