Penn National Gaming 0% coupon convertible preferred stock?

Question

How does Fortress capital make any money if they are buying a 0% coupon 7-yr convertible preferred stock? Surely stock price will be greater than $67 in 7 years, right? Am I missing something here?

Answer 1

They hope that what the Preferred is convertible into will rise in value and make the lost interest in the mean time worth while.

Answer 2

A 0% coupon bond is bought at a steep discount to offset the no interest payments.