TL;DR
- $350 Million Convertible Notes Offering: TeraWulf Inc. is proposing a private offering of $350 million in convertible senior notes due 2030 to enhance financial flexibility and support growth initiatives.
- Use of Proceeds: The funds will be used for capped call transactions to mitigate stock dilution, share repurchases, and general corporate purposes.
- Market Impact: The offering and associated transactions may influence the market price of TeraWulf’s common stock and convertible notes.
TeraWulf Inc., a leading owner and operator of vertically integrated, next-generation digital infrastructure powered by predominantly zero-carbon energy, has announced a proposed private offering of $350 million in convertible senior notes due 2030. This strategic move aims to bolster the company’s financial flexibility and support its ongoing growth initiatives.
Details of the Offering
The offering, subject to market conditions and other factors, will be made to qualified institutional buyers under Rule 144A of the Securities Act of 1933. TeraWulf also plans to grant the initial purchasers an option to buy an additional $75 million in notes within 13 days of the initial issuance.
The notes will accrue interest semi-annually and mature on February 1, 2030, unless repurchased, redeemed, or converted earlier. TeraWulf intends to use the net proceeds from the offering to fund capped call transactions, repurchase shares of its common stock, and for general corporate purposes.
The capped call transactions are designed to mitigate potential dilution of the common stock upon conversion of the notes and offset any cash payments exceeding the principal amount of the converted notes.
Impact on Market and Shareholders
The company expects the capped call transactions to involve the purchase of common stock and derivative transactions, potentially influencing the market price of both the common stock and the convertible notes.
This activity could affect the ability of noteholders to convert their notes and the value of the consideration received upon conversion.
The Funding Plan and the Share Repurchase Program
The funding plan and the share repurchase program follow TeraWulf’s announcement earlier this month that it sold its 25% equity interest in the Nautilus facility for about $92 million. According to its latest operations update, the firm mined 176 Bitcoin in September, down from 184 Bitcoin in August.
Many miners experienced a significant drop in revenue after the halving, yet Bitcoin mining difficulty increased by 3.9%, reaching a record high of 95.7 trillion on Tuesday. Additionally, the Bitcoin network achieved a new seven-day moving average hash rate of almost 724 EH/s.
TeraWulf’s stock closed down 1.99% at $6.4 on Wednesday and has risen 178.26% year-to-date, according to Google Finance. It is currently the fifth-largest public Bitcoin miner with a market capitalization of $2.44 billion.
