IREN Limited (NASDAQ:IREN) shares fell 6% on Monday after the company announced plans to launch a $2 billion offering of convertible senior notes.
The company said the proposed notes, due in 2033, will be offered privately to qualified institutional buyers.
Company May Expand Offering by Additional $300 Million
IREN also disclosed that it expects to grant initial purchasers the option to acquire up to an additional $300 million principal amount of the notes.
The convertible notes will represent senior unsecured obligations of the company and will pay interest on a semi-annual basis.
Unless repurchased, redeemed or converted earlier, the notes are scheduled to mature on December 1, 2033.
Under certain conditions and during specified time periods, investors will have the option to convert the notes into company shares.
Proceeds to Support Hedging Strategy and Corporate Purposes
IREN said part of the proceeds from the offering will be used to fund capped call transactions designed to reduce potential shareholder dilution tied to future note conversions.
The remainder of the funds is expected to be allocated toward general corporate purposes and working capital needs.
The company added that it plans to enter into privately negotiated capped call agreements with one or more of the initial purchasers or their affiliates.
These transactions are intended to cover the number of ordinary shares initially underlying the convertible notes.
Derivative Activity Could Impact Share Trading
IREN noted that counterparties involved in the capped call arrangements may engage in various derivative transactions involving the company’s ordinary shares around the pricing of the offering.
According to the company, this trading activity could influence the market price of both IREN shares and the convertible notes.
At the same time as the pricing of the new offering, IREN expects to terminate part of the capped call transactions linked to its existing 3.50% Convertible Senior Notes due 2029 and 3.25% Convertible Senior Notes due 2030.