Marathon Digital plans a $700M convertible notes offering, with an optional $105M for initial buyers, to restructure debt and fund growth.
Marathon Digital Plans on Bitcoin
Marathon Digital, bitcoin miner, intends to privately issue $700 million in convertible senior notes due in 2030, according to a statement issued on November 18.
The offering includes an additional $105 million purchase option for initial purchasers within 13 days of issuance, subject to market conditions.
The company stated that the purpose of this fundraising is to restructure its near-term debt obligations by redeeming $200 million of senior secured notes that are set to mature in 2026.
Marathon also plans to allocate the funds for strategic investments, asset expansion, and debt repayment, as well as prospective Bitcoin acquisitions and corporate expansion.
Terms of Offer
The semi-annual interest will commence in March 2025, and the unsecured notes will mature on March 1, 2030. Under Rule 144A, they would be privately sold to institutional purchasers, thereby circumventing the requirement for US securities registration.
Additionally, investors have the option to exchange the notes for cash, Class A common stock, or a combination of both. Marathon reserves the right to redeem the notes for cash beginning in March 2028, subject to specific conditions.
In the interim, Marathon anticipates that noteholders who possess existing 2026 convertible notes will liquidate their equity hedges by trading Marathon’s stock or modifying derivatives. This activity has the potential to momentarily increase demand for its stock, which could result in a price increase and an increase in the effective conversion rate for the new notes. Nevertheless, the organization has identified uncertainty regarding the extent of this market activity.
Marathon’s stock price has already experienced a decline of over 6% in pre-market trading after the news of the offering was disclosed, as confirmed by Google Finance data.
Initiatives to raise funds
Marathon has issued its second substantial convertible note this year, following a $250 million raise in August for notes that will mature in 2031.
The company also obtained a $200 million Bitcoin-backed credit line from an undisclosed lender in October to support its general corporate initiatives and capitalize on strategic opportunities.
Marathon continues to play a critical role in Bitcoin mining, as it maintains control over a significant portion of the industry. It is estimated to be worth approximately $2.5 billion, as indicated by data from Bitcoin Treasuries, that it contains more than 27,500 BTC.
Marathon’s continuous endeavors to fortify its financial position and broaden its involvement in the Bitcoin mining sector are illustrated by its most recent funding initiative.
