The early extinguishment of debt refers to situations in which debt (of any type) is retired (i.e., the money is paid back to the lender(s)) prior to the maturity date.
Convertible bonds can be converted into (i.e., exchanged for) shares of stock at the option of the bond holder.
The conversion feature is valuable and allows the company to sell the bonds at a higher price.
Convertible bonds are often used in merger and acquisition (M&A) transactions.
The conversion feature enables small companies and companies with lots of existing debt to access the bond market (a major source of capital for companies).
Convertible bonds are an indirect way to issue new stock if existing shareholders are resistant to the idea of directly issuing new stock.
A stock warrant gives an investor an option to purchase a stated number of shares of common stock at a specified option price, often within a given period of time. Warrants are similar in concept to stock options (which are typically given to executives as a form of compensation) except, in this case, the warrant is attached to a bond.
Unlike the conversion feature of convertible bonds, warrants can be separated from the bonds. When convertible bonds are converted, the original bonds are eliminated and replaced with stock. When bonds have detachable warrants, the investor keeps the bonds and also receives shares. There is effectively two different securities when a bond has a detachable warrant.