The advantage to the debt holder is more drawn out over time in that they get to participate in the capital appreciation of the stock. for example, you bought a convertible debenture for $100 that converts into 2 common shares at a time when the price of the stock was trading at $42. the price of the stock shoots up to $65. now normally this would have little effect on a straight debenture holder, but in your case you would own a debenture that cost you $100 that can be converted into 2 common shares with a total value of $130 ($65 per share x 2 shares = $130 value).now this advantage appeared the moment the price of the stock exceeded the conversion price. the actual conversion simply means that the participation in the capital appreciation of the company has been converted from debt to equity for the investor.