> In this case, downside protection for early backers appears to take the form of a $1 billion convertible note that changes into equity on the last day of this year. The note is held by major shareholder SoftBank, according to We’s regulatory filings. We’s prospectus offers only a vague price for the conversion, so it is impossible to tell exactly how much or whether shareholders will be diluted, says Nori Gerardo Lietz, senior lecturer of business administration at Harvard Business School in an unpublished paper seen by The Wall Street Journal. But because the conversion appears to happen after the IPO, buyers of its shares in the offering could take a hit.
How is this not something material that should be disclosed as part of the initial filing?