Cipher Digital Sets Terms for $850M Zero-Coupon Convertible Note Offering
Cipher Digital Inc. (CIFR) set conversion terms for an $850 million offering of zero-coupon convertible senior notes. The data center operator established an initial conversion price of approximately $15.31 per share, representing a 35% premium over Tuesday's closing price of $11.34. The transaction is scheduled to close on Friday, with managing underwriters holding an option to purchase up to $150 million in additional notes within 13 days.
Shares of Cipher Digital fell 6.83% to $10.56 on Wednesday, continuing a decline after dropping over 12% during Tuesday's trading session. The zero-interest notes carry no regular yield or principal accretion, but give holders an option to request a cash buyback on November 1, 2030. Cipher expects net proceeds of roughly $835.1 million, allocating $89.7 million to capped call transactions capped at $28.35 per share to mitigate potential shareholder dilution. Simultaneously, the company plans to exchange about $165.9 million of its 1.75% convertible notes due 2030 for approximately 40.7 million common shares.
Management intends to deploy the remaining proceeds to increase its equity stake in the Barber Lake project, build out its high-performance computing pipeline, acquire additional development sites, and fund general corporate activities. Investors will watch for the final closing of the offering on Friday and any subsequent execution of the underwriters' purchase option.
Key points
- Cipher Digital Inc. (CIFR) set terms to issue $850 million in zero-coupon convertible senior notes closing Friday.
- The initial conversion price is set at about $15.31 per share, representing a 35% premium over Tuesday's close.
- Net proceeds of roughly $835.1 million will support the Barber Lake project and high-performance computing expansion.
- The company allocated $89.7 million for capped call transactions capped at $28.35 per share to hedge dilution.
- Cipher Digital shares dropped 6.83% to $10.56 on Wednesday following a 12% decline on Tuesday.
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What are the terms of Cipher Digital's convertible note offering?
Cipher Digital is issuing $850 million in zero-coupon convertible notes with an initial conversion price of about $15.31 per share. Holders can demand a cash buyback on November 1, 2030, and the deal is expected to close Friday.
How will Cipher Digital use the funds raised from the notes?
Net proceeds of $835.1 million will fund an increased equity stake in the Barber Lake project, expansion of the high-performance computing pipeline, acquisition of new sites, general corporate uses, and $89.7 million for capped calls.
Why did Cipher Digital stock decline following the announcement?
Shares fell as investors reacted to potential equity dilution from the convertible note pricing and an accompanying exchange of $165.9 million in older convertible debt for approximately 40.7 million common shares.