Craig Supermarkets, Inc. has convertible debentures ($1,000 par value) that are callable at 108% of par value. The conversion price of the debenture is $40 per share, and the Craig common stock currently is selling at $55 a share. The company ____.

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Since the conversion price is $40 and the current stock price is $55, the convertible holders would want to convert their debentures into stock. If the company were to call the debt, the convertible holders would be forced to convert, which would increase the number of outstanding shares, but it would also reduce the amount of debt on the company's balance sheet. Therefore, the company could force conversion by calling the issue.