From the '04 Annual Report with regards to the convertible notes:
During the second quarter of fiscal 2003, the Company issued $600 million in principal amount of its 1.25% Notes with interest payable on June 15 and December 15 beginning December 15, 2003. The 1.25% Notes are due in June 2008. Each note, which may be converted at anytime by the holders prior to maturity, is convertible into 55.172 shares of the Company's common stock, subject to certain adjustments, plus a cash payment of $300. The Company, at its option, may satisfy the $300 cash payment by issuing common stock if the stock price exceeds $11.65. The 1.25% Notes are callable by the Company at anytime on or after June 20, 2006. At anytime prior to June 20, 2006, the Company may, at its option, elect to terminate the holders' conversion rights if the closing price of the Company's common stock exceeds $21.75, subject to certain adjustments, for 20 days out of a 30 consecutive trading day period. If the Company issues a notice of termination of conversion rights prior to June 20, 2006, the Company will pay additional interest in an amount equal to three years of interest, less any interest actually paid prior to the conversion date, to holders who convert their 1.25% Notes.
We have $600 million of aggregate principal amount in the 1.25% Notes that are due in June 2008. The 1.25% Notes are subject to compliance with certain covenants that do not contain financial ratios. As of January 2, 2005, we were in compliance with these covenants. If we failed to be in compliance with these covenants beyond any applicable grace period, the trustee of the 1.25% Notes, or the holders of a specific percentage thereof, would have the ability to demand immediate payment of all amounts outstanding.
I and Simon discussed on this issue sometime ago. Basically the conversion price is somewhere near $12.72 for everyone $700 of $1000 face valued convertible. Holders had already hedged their holding. The large amount of short interest you see at Yahoo.finance is this hedge result.
I also expect the company paying off this convertible bond by secondary offering on SPWR.