1. The CB Issuance: What Happened?

Daeoceal Metal is issuing ₩10 billion worth of convertible bonds to Deeplab Korea through a private placement. The conversion price is set at ₩1,585, with a coupon rate of 5% and a conversion period from August 11, 2026, to July 11, 2028. This represents 10.13% of the company’s total equity.

2. Why Issue Convertible Bonds?

The CB issuance is likely aimed at alleviating financial burdens stemming from prolonged management disputes and securing operating funds. With the company facing liquidity challenges following poor Q1 2025 results, the CBs offer a means of raising capital.

3. The Impact: What Does it Mean?

  • Financial Impact: While offering short-term liquidity improvement, the CBs introduce increased debt and potential dilution.
  • Stock Price Impact: A short-term positive impact is possible, but the long-term effect depends on CB conversion and earnings improvement.
  • Future Outlook: Resolution of the management dispute, global economic recovery, raw material price stabilization, and the success of export expansion strategies are key factors influencing the company’s future.

4. Investor Action Plan

Investors should carefully consider the advantages and disadvantages of the CB issuance. Avoid being swayed by the potential for short-term stock gains and instead conduct a thorough analysis of factors like management dispute resolution, potential for earnings improvement, and global economic outlook before making investment decisions. Continuous monitoring of the management dispute’s outcome is crucial.