TLDR
- Bitdeer announced plans to raise $300 million through a private sale of convertible senior notes.
- The company intends to use the proceeds to manage share dilution and expand its business operations.
- The convertible notes are due in 2032 and can be converted into cash, shares, or a combination of both.
- Bitdeer also plans to sell Class A shares directly to holders of its 5.25% convertible notes due in 2029.
- The market reacted negatively, causing Bitdeer’s shares to drop 17% and fall below $8 for the first time since April.
Shares of Bitdeer Technologies (BTDR) dropped 17% on Thursday after the company announced plans to raise $300 million through a private sale of convertible senior notes. These notes, due in 2032, could be converted into cash, shares, or a mix of both at Bitdeer’s discretion. Alongside this, Bitdeer also revealed plans for a registered direct offering of Class A shares.
Bitdeer Technologies Group, BTDR
The company intends to use the funds to address share dilution and expand its business operations. The announcement sent Bitdeer’s stock to below $8 for the first time since April, reflecting investor concerns about the potential impact of these financial moves.
Bitdeer Announces Convertible Senior Notes Offering
Bitdeer’s $300 million convertible senior notes offering has raised concerns about possible dilution of its shares. The company’s decision to sell these notes, due in 2032, comes with the potential for noteholders to convert the debt into equity. The conversion could increase the total share count, leading to dilution if Bitdeer’s stock price rises in the future.
Additionally, Bitdeer plans to use a capped call transaction to mitigate some of the potential dilution caused by the conversion. The capped calls are designed to offset the effect of increased shares, though such measures can introduce volatility in the company’s stock price. The company has also secured an underwriter greenshoe option for an additional $45 million in notes, adding further uncertainty to its financial strategy.
Bitdeer Plans Registered Direct Offering and Repurchase of Convertible Notes
Along with the convertible note offering, Bitdeer intends to sell an unspecified number of Class A shares in a registered direct offering. This offering will be aimed at holders of its existing 5.25% convertible notes due in 2029. The company plans to use the proceeds to repurchase a portion of these notes in private deals and fund the capped call transactions.
Bitdeer’s strategy is to manage the risk of share dilution while securing the necessary capital for its future operations. It aims to use the remaining funds for expanding its data center infrastructure, enhancing its high-performance computing and AI cloud businesses, and developing ASIC-based mining rigs.
The two financial offerings depend on the successful completion of the convertible note sale and related repurchases, but the note offering can proceed independently. This combination of offerings and repurchases is part of Bitdeer’s plan to maintain control over its stock structure while continuing to grow its business.
Despite these efforts, the market reacted negatively, with Bitdeer’s shares falling to their lowest point in several months. The fear of dilution from the new offerings has weighed on investor sentiment, driving the stock down by 17% in early trading.
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Source: https://blockonomi.com/bitdeer-shares-drop-17-as-300m-convertible-notes-raise-concerns/