Yes, you alluded to my point (“certain circumstances”): What are these “certain events”? We don’t know. I suspect that that’s just standard legalese referring to stock splits, special dividends, etc.
I’m familiar with “death spiral financing,” also known as “floorless convertibles” (because the conversion price has no floor) – they are one and the same.
It does not state in the filing that BAC can’t short CFC’s stock, but in fact they cannot. At least according to Angelo Moz in an interview regarding the deal. While I’m sure he’d lie about many things, I’m guessing that he wouldn’t lie about this as it’s pretty straightforward. I’m sure this information, and more, will be in the final filing on this deal.
Again, I think this is probably rearranging the deck chairs. But I don’t think there’s anything nefarious about this deal – if it goes south, I think BAC will ride it into the ground and take big losses. If BAC can’t short the common, it’s very difficult to properly hedge this bet, although perhaps they could buy long-dated puts. But as we know, the only perfect hedge is in a Japanese garden…
