Bitdeer shares declined significantly on Thursday after the firm revealed a private placement deal to sell $300 million convertible senior notes due 2032. The development triggered immediate concerns about the firm’s dilution. In response, the firm’s shares declined by more than 18.43% in pre-market sessions, dipping below $7.83.
According to the firm, the notes will be offered to institutional investors. In addition, the investors will have the opportunity to purchase an extra $45 million in notes.
This means the firm will be raising a total of $345 million. Bitdeer will decide whether to pay the investors in cash, stocks, or a combination of both.
The firm’s shares continued to decline by about 15%. Investors reacted to the firm’s plans to increase the number of shares in the future. Convertible debt is a significant concern for stocks since the investors may convert their shares to stocks in the event the firm’s stocks appreciate.
Bitdeer Moves Ahead With Capped Calls, Share Sale
Bitdeer plans to engage in capped call transactions with financial institutions. This strategy is intended to reduce the dilution from the potential conversion.
In addition, it will help to enhance the effective conversion price. However, capped calls may cause additional price fluctuations around the offering period.
The firm also revealed a registered direct offering of its Class A ordinary shares. The shares will be sold to certain holders of the firm’s existing 5.25% convertible senior notes due 2029.
The firm will determine the number of shares to be sold at the time of execution. However, the firm did not reveal the financial details.
The company will use the funds from both issues for various actions. The funds will be used for the capped call transactions, according to the company.
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It also plans to use the funds to repurchase a part of the 2029 notes via private negotiations. The rest of the funds will be used for data center expansion and computing services development.
Bitdeer Ties Deals to New Notes Amid Strong Results
Bitdeer indicated that the direct sale and repurchase of the notes are dependent on the new issue. This suggests that the issuance of the new notes is not dependent on any condition. The company also did not indicate any other condition for the transactions.
The announcement comes at a time when the company recently reported robust results for the fourth quarter. The company reported $224.8 million in revenue for the quarter. This is up by 226% from the previous year.
The company also reported $70.5 million in net income. This is up from a loss of $531.9 million in the previous year. The income was due to higher mining output and increasing service activities.
The company mined 1,673 Bitcoin for the quarter. It also maintained a managed hashrate of 71 exahash per second. Of the total managed hashrate, 55.2 EH/s came from self-mining. The company also indicated that it had around 2,000 bitcoin at the end of the year.
Recent disclosures suggest that the company had lower holdings of Bitcoin this year. The company sold some assets to finance its expansion plans. The company, however, did not release any updated figures.
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