Convertible Debentures . . .

are debt instruments that entitle the lender to exchange the right to receive principal and interest payments into stock of the borrowing company. Subordinated convertible debentures are sometimes used in lieu of convertible preferred stock to fund a portion or all of a company’s funding needs. These convertible debentures are usually less attractive to growing companies because they accrue interest and require scheduled repayments unless and until they are converted. See: Convertible Preferred Stock, Convertible Securities, Debentures, Subordinated Convertible Debentures, Subordinated Debt, Venture Capital Deal Structures.