I need more explanation of what you are saying. If the common fell after the conversion date, didn't the shareholders who converted lose money? After all, they converted based on a higher average price, right? They got $10 worth of common per share of Pref. F, but at the higher common price that prevailed before the last conversion. Furthermore, the common was probably paying less than 12%. Why wouldn't the holders of Pref. F be better off holding the Pref. F, collecting 12% cash, and waiting until the final buy-back at par. At that point they can take their 12% dividends plus the $10 par value and buy common. Unless the common has shot back up, they will own more shares than by converting earlier.
Suprisingly, the day the PIK dividend went ex-div. the price of the common did not change. I bought shares the day before ex-div., collected the div. and did not realize a drop in price of common due to the div. going ex-div. Interesting to note I thought.
""If the common fell after the conversion date, didn't the shareholders who converted lose money?""
Sorry if I gave the wrong impression... I meant the Preferred F dropped. First CMM is bankrupt and not paying anything at this point, but here's on eway to look at how they can force a force like their's to convert. You got 3 share for every 100 common you owned for a dividend of $30 per hundred. Since the common was about $1 that equaled 30 shares of common, roughly. Since AFTER Feb 3 you could not convert your $30 worth of pref. stock you are left with a $10 par pref. paying 12% cash . Well at that time CMM's other cash paying pref. stock B was yielding apprx. 17%, see why you would want to convert? Complicated enough? Of course Pref. stock has no maturity so par value is an important as with a bond. The pref. stock will always trade relative to it's yield not it's par value as I understand it.
So the key is the relative value of PZN's existing debt to decide if the conversion will happen. CMM's pref. was cash paying, PZN is a PIK so you get even more pref....hmmmm.
If shareholders convert and sell their common to buy the higher-yielding preferred, that would depress the common. Isn't there a risk in the CMM example that you would convert at a $1 price per share of common, but so would everyone else. Then you and others would sell those common shares, depressing the price, so you would get less than $1 per share of common (and less than $30 per 100 original common).
Also, my recollection of the proposed PZN Pref. C is that it has a mandatory redemption date, maybe 10 years after issuance, requiring the company to buy it in at par, including accrued dividends. Is that not your understanding?