Venus Medtech (02500.HK), a Chinese medical device company, saw its stock price plummet by 5.72% in Friday's trading session following the announcement of a significant financial move. The company revealed plans to issue convertible bonds, which appears to have spooked investors and triggered a sell-off.

According to a statement released by Venus Medtech, the company intends to issue convertible bonds up to a principal amount not exceeding RMB200 million (approximately USD 31 million). The convertible bonds will have an initial conversion price of HK$4.50 per share. This financial maneuver, while potentially providing the company with additional capital, has raised concerns among shareholders about potential dilution of their equity stakes.

The market's negative reaction to this news underscores the delicate balance companies must strike between raising capital and maintaining shareholder value. While convertible bonds can be an attractive financing option for companies, offering lower interest rates compared to traditional bonds, they also carry the risk of diluting existing shareholders' ownership if converted into shares. The sharp decline in Venus Medtech's stock price suggests that investors are wary of this potential outcome and are reassessing their positions in light of this development.