Yes any conversions will follow the haircut. Part of the reason for making this a community effort supported by votes and reward pool funds is so no individual has to risk their own funds on what might be money-losing, yet the conversions still get done and the SBD supply gets reduced.

That said, the haircut is usually reflected in the market price. Right now you can buy SBD for $0.70 and the haircut is about 30%, so this is a break even (currently), not a loss.