As an example, and though this would never happen, consider the following. If the issuer issued the bonds with a yield of 7% when the government of Canada bond is trading with a yield of 5% (a 200 basis point spread), and the issuer decided to call the bond the next day, the issuer would have to pay the greater of par or pay a price based on a yield of 50 basis points over the government of canada bonds.
The minimum according to the agreement must be par. So, if the bond is called the next day, the issuer would have to pay either par or a price equivalent to the bond trading at a yield of 5.5% (assuming the yield on the government of Canada bond remained at 5%). Since you can assume the investor paid par to buy the bond, the issuer would be paying a call price equivalent to a 5.5% yield in this scenario, a much higher price than par.
