전환사채 (jeonhwan sachae)

Bonds that the holder can swap for new shares at a set price, which can dilute shareholders.

전환사채 (jeonhwan sachae, CB) are convertible bonds: the company borrows money, and the lender may later swap the bond for new shares at a set conversion price. A related type is the bond with warrants (신주인수권부사채, BW).

Many smaller Korean companies use them. Conversion adds new shares, and Korean CBs often allow the conversion price to be lowered if the share price falls (리픽싱, refixing), which means more new shares. Filings show the conversion price and when conversion can start.

Also called: CB · convertible · 신주인수권부사채 (BW)