A convertible loan is the act of lending capital (money) with the option of converting it into equity or shares of the borrower entity. In this case, the promoter of the project, funded through GoParity, is the borrower and the GoParity investor has the option, during a determined time or event, to convert the amount borrowed to the promoter into equity or shares in the promotor’s organization.
To convert the debt it is necessary to define the conversion conditions, or price, which determine the amount of equity/shares that correspond to the amount of debt to be converted. The conversion conditions are specified in the loan agreement between the borrower/promotor and the lender/investor.
For example, in the Biovilla project it was established that investors have the option to convert their outstanding capital into Biovilla cooperative shares, at the end of the 12th month of the operation's term. The conditions for conversion are as follows:
And what happens when I convert the debt operationally and contractually? See here.
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Part or all of your original invested capital may be at risk and the return on your investment depends on the success of the project invested in. Consider all risks before investing and read the Key Investment Information Sheet (KIIS) for each investment, available at www.goparity.com. Power Parity, SA is a crowdlending platform authorized and supervised by CMVM (Portuguese Securities Commission). All payments, transfers and funds collection are assured by MangoPay SA, an electronic payments institution authorized and supervised by CSFF (Luxembourg Financial Authority) under the nº 8711.