On Thursday, Bitcoin mining giant MARA Holdings (NASDAQ: MARA) announced that it had successfully closed a $1 billion convertible senior notes offering on November 20, 2024. The offering includes an additional $150 million in notes issued when initial purchasers exercised their full 13-day option on November 19.
The zero-interest convertible senior notes, maturing March 1, 2030, 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 sale.
The company has outlined specific plans for the proceeds, allocating $199 million 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 they won’t bear regular interest or accrete in principal amount, MARA may pay special interest semi-annually, beginning March 1, 2025, if it fails to meet reporting obligations or under specific circumstances. The company maintains the right to redeem the notes after March 5, 2028, at 100% of principal value, provided MARA’s stock price stays at least 130% above the conversion price for a specified period and minimum outstanding notes of $75 million remain.
Noteholders have conversion options and protective provisions. They can 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 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.
The transaction could significantly impact MARA’s stock trading patterns. The company warned that 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 substantially affect the stock’s market price, particularly given its historical trading volumes, and potentially influence the new notes’ effective conversion price.
The notes and any resulting common stock issuances haven’t been registered under the Securities Act or other jurisdictions’ securities laws, limiting their sale to qualified institutional buyers under exemption provisions.
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