1. What is happening with WITS’s CB Issuance?

WITS is issuing ₩24 billion worth of CBs to secure funds for investments in new business areas, including electric vehicle charging stations and wireless chargers. The payment date is August 22, 2025, and the conversion price is set at ₩7,025, significantly higher than the current share price of ₩1,012.

2. Why did WITS issue convertible bonds?

With a negative operating cash flow of ₩82.088 billion in the first half of 2025, WITS is facing funding challenges. The CB issuance is intended to alleviate short-term financial pressures and secure investment resources for new growth engines. However, with an already high debt-to-equity ratio of 111.24%, there are concerns that the CB issuance could exacerbate financial burdens.

3. How does the CB issuance affect investors?

  • Potential Stock Dilution: The high conversion price relative to the current share price poses a risk of stock dilution if the share price rises, triggering a large conversion of CBs into shares.
  • Increased Financial Burden: The CB issuance could further increase the debt-to-equity ratio, raising concerns about the company’s financial health.
  • Growth Potential: The funds raised could fuel investments in new businesses, potentially driving future growth. However, the success of these ventures is uncertain, and investors should carefully assess the risks.

4. What should investors do?

  • Gather Information: Carefully review the company’s plans for using the funds, its business outlook, and its strategies for enhancing shareholder value.
  • Monitor Financials: Keep a close eye on the company’s profitability and financial health following the CB issuance.
  • Maintain a Long-Term Perspective: Consider the long-term growth potential of the new businesses and the company’s overall vision when making investment decisions.
  • Manage Risk: Be mindful of the potential for stock dilution and increased financial burden, and manage risk through diversification.