1. T’way Air Announces ₩40 Billion Convertible Bond Issuance
T’way Air will issue ₩40 billion worth of convertible bonds through a private placement on August 21, 2025. The conversion price is set at ₩1,954, similar to the current stock price, with a coupon rate of 5.50%. Conversion requests can be made starting August 22, 2026.
2. Why Issue Convertible Bonds?
Despite recovering passenger demand after the COVID-19 pandemic, T’way Air is facing profitability challenges due to rising fuel costs, lease expenses, and labor costs. Its high debt-to-equity ratio also adds to its financial burden. This CB issuance is interpreted as a move to improve its financial structure and secure operating funds.
3. Impact on Stock Price
- Positive Impacts:
- Short-term improvement in financial structure.
- Increased investment appeal due to potential conversion if the stock price rises.
- Negative Impacts:
- Potential dilution of conversion value if the stock price falls.
- Concerns about dilution of existing shareholders’ equity upon conversion to common stock.
- Increased burden of interest expenses.
4. Investor Action Plan
Investors should carefully consider the following:
- Stock price trends relative to the conversion price.
- Specific details and effectiveness of the fund utilization plan.
- Impact of macroeconomic variables such as interest rates, exchange rates, and oil prices.
- T’way Air’s competitiveness compared to competing LCCs.
It is crucial to focus on the potential for long-term corporate value enhancement rather than short-term stock price fluctuations and make prudent investment decisions.