Cipher Digital shares fell 4.88% to $10.78 during Wednesday's premarket trading, according to Benzinga Pro data. The decline followed the data center operator's announcement of an $850 million convertible senior notes offering and plans to exchange existing debt for shares. Cipher Digital priced the private offering of 0% convertible senior notes due 2032 on Wednesday. Initial purchasers have an option to buy an additional $150 million in notes, potentially increasing the offering to $1 billion. The transaction is expected to close on Oct. 16, subject to customary conditions.
The new notes mature on Nov. 1, 2032, and carry no regular interest payments. The initial conversion price is approximately $15.31 per share, a 35% premium to Cipher Digital's Tuesday closing share price of $11.34. Cipher Digital can settle conversions with cash, shares or a combination of both. Cipher Digital expects approximately $835.1 million in net proceeds before offering expenses. Net proceeds could increase to $982.5 million if purchasers exercise the additional purchase option in full.
Cipher Digital also expects to exchange approximately $165.9 million in outstanding 1.75% convertible senior notes due 2030 for roughly 40.7 million common shares. The exchange could increase the outstanding share count and potentially dilute existing shareholders. Cipher Digital entered into capped call transactions with financial institutions to limit dilution from the new convertible notes. The capped call transactions have an initial cap price of $28.35 per share, a 150% premium to Tuesday's closing price. Cipher Digital expects to spend approximately $89.7 million of the offering proceeds on the capped call transactions.
Cipher Digital plans to use the remaining proceeds to fund an additional equity investment in the Barber Lake project and accelerate the company's high-performance computing strategy. Cipher Digital also intends to support near-term project development, expand the pipeline of data center sites and fund general corporate activities. The financing comes as Cipher Digital expands the company's focus on industrial-scale data centers designed for high-performance computing workloads. However, the planned share issuance and potential dilution could weigh on investor sentiment despite the expansion plans.
Cipher Digital Shares Drop 4.88% Amid $850M Convertible Notes Offering
BenzingaShare
Summary
Cipher Digital (NASDAQ:CIFR) shares dropped 4.88% to $10.78 in premarket trading after the firm announced an $850 million convertible senior notes offering. The move includes swapping existing debt for shares, which may raise the share count and dilute current holders. Investors are watching how this affects the digital asset market and whether altcoins to watch will react to similar moves.
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