On November 20, 2024, MARA Holdings, a Bitcoin mining giant listed on NASDAQ, was able to close a $1 billion convertible senior notes offering. An additional $150 million in notes were issued when initial purchasers exercised their full 13-day option on November 19. The zero-interest notes, maturing on March 1, 2030, were sold privately to qualified institutional buyers under Rule 144A of the Securities Act. After the deduction of discounts and commissions, MARA netted approximately $980 million from the sale.
The company has specific plans for the proceeds from the offering. $199 million will be allocated to repurchase $212 million of its existing 2026 convertible notes through private negotiations. The remaining funds will be used to acquire additional bitcoin and support general corporate purposes such as working capital, strategic acquisitions, asset expansion, and debt repayment. These senior notes come with distinct features, including the possibility of special interest payments if certain obligations are not met, and the company’s right to redeem the notes after March 5, 2028.
Noteholders have conversion options and protective provisions, including the ability to require MARA to repurchase their notes on December 1, 2027, or upon fundamental company changes. The notes are convertible into cash, MARA common stock, or a combination at the company’s discretion. The initial conversion rate is set at 38.5902 shares per $1,000 of notes, with a conversion price of $25.9133 per share – representing a premium over MARA’s volume-weighted average price of $18.1848 on November 18.
The transaction could have a significant impact on MARA’s stock trading patterns. Holders of the existing 2026 convertible notes who agree to the repurchase may need to adjust their hedge positions by purchasing MARA common stock or engaging in derivative transactions. This activity could greatly affect the stock’s market price, given its historical trading volumes, and influence the effective conversion price of the new notes.
It is important to note that the notes and any resulting common stock issuances have not been registered under the Securities Act or other securities laws, making their sale limited to qualified institutional buyers under exemption provisions.
In summary, MARA Holdings’ successful convertible senior notes offering has provided the company with a substantial amount of funding for various purposes, including repurchasing existing notes, acquiring bitcoin, and supporting general corporate needs. The unique features of these notes, along with the conversion options and protective provisions for noteholders, highlight the strategic nature of the deal. The potential impact on MARA’s stock trading patterns and the limited sale of the notes to qualified institutional buyers are important factors to consider moving forward.
