As a seasoned researcher with a keen interest in the cryptocurrency market and financial instruments, I find MARA Holdings’ latest move to be quite intriguing. A $1 billion convertible senior notes offering, maturing in seven years, is an ambitious step for any company, especially one as young and volatile as MARA.
Thursday saw Bitcoin mining giant MARA Holdings (NASDAQ: MARA) confirm the successful completion of a $1 billion convertible senior notes offering, scheduled to mature on November 20, 2024. This deal includes an additional $150 million in notes that will be issued when initial purchasers choose to exercise their 13-day option, which they did on November 19.
The zero-percent bond notes, due for maturity on March 1, 2030, were sold privately to institutional buyers who meet certain qualifications, following Rule 144A of the Securities Act. After accounting for the costs and fees incurred by the purchasers, MARA received around $980 million from the transaction.
The business has clearly detailed how it intends to use the earnings, with $199 million set aside for purchasing $212 million of its own 2026 convertible notes through confidential discussions. The remaining amount will be utilized for buying more bitcoin, as well as covering general corporate expenses like working capital, strategic acquisitions, expanding assets, and repaying debt.
These senior notes have unique characteristics. They don’t earn standard interest or increase in their initial amount, but MARA might offer extra payments every six months, starting March 1, 2025, if certain reporting requirements aren’t met or under particular conditions. The company has the option to buy back these notes after March 5, 2028, at full principal value, as long as MARA’s stock price remains at least 30% higher than the conversion price for a specified duration and at least $75 million worth of these notes are still outstanding.
Holders of these notes have the ability to exercise conversion options and take advantage of protective provisions. This means they can force MARA to buy back their notes on December 1, 2027, or under significant corporate events. The convertible notes can be exchanged for cash, MARA’s common stock, or a mix at the company’s discretion. The initial conversion rate is equivalent to 38.5902 shares per $1,000 of notes, which translates to a conversion price of $25.9133 per share – offering a 42.5% premium over MARA’s average price of $18.1848 on November 18.
The proposed transaction might alter the way MARA’s stocks are traded on the market. The firm has cautioned that holders of the current 2026 convertible bonds who opt for repurchase may have to adjust their risk management strategies by either buying MARA common shares or entering into derivative contracts. This action could greatly impact the stock’s value, especially considering its past trading volumes, and possibly influence the conversion price of the new notes.
These notes, along with any subsequent common stock offerings, have not been registered under U.S. Securities Act or securities laws of other jurisdictions. This means they can only be sold to institutional investors who meet certain qualifications, as permitted by exemption rules.
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2024-11-22 18:25