DAVOLINK Decides to Issue 3 Billion KRW 4th Convertible Bond - Total Potential Dilution Including Existing CBs at 31.64% Raises Shareholder Value Concerns

DAVOLINK decided on July 16, 2026, through a board resolution, to issue the 4th unregistered unsecured private convertible bond to raise 3 billion KRW for operating funds.
The conversion price is set at 826 KRW, 1.4% below the previous closing price of 838 KRW. Full conversion would add 3,631,961 shares, representing a 6.97% dilution relative to current outstanding shares. Including existing outstanding CBs of the 2nd and 3rd series, total potential dilution reaches 31.64%, raising concerns for existing shareholders.
The CB includes a put option exercisable one year after issuance and a call option allowing the issuer to repurchase up to 50% of the bonds. The conversion price can be adjusted downward to a floor of 579 KRW, 70% of the initial price, if the market price declines.
[AI Summary]This CB issuance secures short-term operating funds but the combined potential dilution of 31.64% from all CBs is significantly value-dilutive for shareholders. The conversion price below the current market price creates conversion incentive, and the embedded options may increase capital structure volatility.