MARA Holdings Closes $1 Billion Offering: What Does This Mean for the Company?
On Thursday, November 20, 2024, Bitcoin mining giant MARA Holdings (MARA) announced that it had successfully closed a $1 billion convertible senior notes offering. This significant transaction also included an additional $150 million in notes issued when initial purchasers exercised their full 13-day option on November 19, 2024.
The zero-interest convertible senior notes are set to mature on March 1, 2030, and were sold privately to qualified institutional buyers under Rule 144A of the Securities Act. After deducting purchasers' discounts and commissions, MARA netted approximately $980 million from the offering.
Proceeds Allocation: Repurchases and Bitcoin Acquisition
The company outlined specific plans for the proceeds. A portion, approximately $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, including working capital, strategic acquisitions, asset expansion, and debt repayment.
These senior notes come with distinct features. While the notes won’t bear regular interest or accrete in principal amount, MARA may pay special interest semi-annually beginning March 1, 2025, should the company fail to meet its reporting obligations or in other specified circumstances. The company retains the right to redeem the notes after March 5, 2028, at 100% of principal value, provided that MARA’s stock price remains at least 130% above the conversion price for a specified period and that a minimum of $75 million in notes remains outstanding.
The notes include conversion options and protective provisions. Holders of the notes can require MARA to repurchase their notes on December 1, 2027, or upon a fundamental change in the company. The notes are convertible into cash, MARA common stock, or a combination thereof, at the company’s discretion. The initial conversion rate is 38.5902 shares per $1,000 of notes, setting the conversion price at $25.9133 per share—representing a 42.5% premium over MARA’s volume-weighted average price of $18.1848 on November 18.
This transaction could significantly impact MARA’s stock trading patterns. The company cautioned that holders of the existing 2026 convertible notes who agree to the repurchase may need to adjust their hedge positions, which could involve purchasing MARA common stock or engaging in derivative transactions. This adjustment activity could substantially affect the stock’s market price, particularly given its historical trading volumes, and potentially influence the new notes’ effective conversion price.
Key Notes on the Offering
It's important to note that the convertible senior notes and any resulting common stock issuances have not been registered under the Securities Act or the securities laws of other jurisdictions. This limits their sale to qualified institutional buyers under the exemption provisions of Rule 144A.
This offering represents a pivotal moment for MARA Holdings as it navigates the complexities of raising funds, repurchasing debt, and positioning itself for further growth in the competitive Bitcoin mining market.