SYDNEY – In a move signaling confidence and a strategic pivot, IREN Limited (NASDAQ: IREN) has announced the pricing of a $500 million offering of convertible senior notes due 2029. The deal, structured as a private offering to qualified institutional buyers under Rule 144A, underscores IREN’s ambition in the evolving landscape of Bitcoin, AI, and next-generation computing.
**Deal Highlights: A Look Under the Hood**
* **Size Matters:** The offering, initially announced at $450 million, has been upsized to $500 million, demonstrating strong investor appetite. The notes carry a 3.50% coupon with a 30% conversion premium.
* **Capped Call Strategy:** IREN is employing capped call transactions alongside the notes. This move is designed to hedge against potential dilution if the notes are converted, with an initial cap price set at $20.98 per share – a 100% premium over the 30% conversion premium embedded in the notes.
* **Timeline:** The deal is slated to settle on June 13, 2025, pending standard closing conditions. Additionally, the initial purchasers have an option to purchase up to an additional $50 million in notes.
**Follow the Money: Proceeds and Plans**
IREN estimates net proceeds of approximately $486.1 million from the offering (or up to roughly $534.9 million if the initial purchasers fully exercise their option). The company plans to allocate these funds strategically:
* **Hedging the Bet:** Roughly $48.9 million will be used to fund the capped call transactions.
* **Prepaid Forward Play:** Another $92.5 million will be dedicated to funding the prepaid forward transaction.
* **War Chest:** The balance will be channeled into general corporate purposes and working capital, positioning IREN for continued growth. Additional proceeds from the underwriters exercising their options will also be placed in the capped call transaction.
**Breaking Down the Notes: Terms and Conditions**
The notes themselves are senior, unsecured obligations, bearing a 3.50% annual interest rate paid semi-annually, starting on December 15, 2025. They mature on December 15, 2029, unless bought back, redeemed or converted earlier.
* **Conversion Rights:** Before September 17, 2029, conversion can only occur under specified conditions. After that date, noteholders can convert at any time until the second trading day before maturity. Conversions will be settled in cash, ordinary shares, or a combination, at IREN’s discretion.
* **Conversion Rate:** The initial conversion rate is 73.3229 ordinary shares per $1,000 principal amount, equating to an initial conversion price of approximately $13.64 per share. This represents a roughly 30% premium over the $10.49 per share closing price on June 10, 2025. The conversion rate is subject to adjustments based on certain events.
* **Redemption and Repurchase:** IREN can redeem the notes for cash at its option on or after June 20, 2028, if the share price exceeds 130% of the conversion price for a specified period. If a “fundamental change” occurs, noteholders have the right to require IREN to repurchase the notes for cash.
**Deeper Dive: Capped Calls and Market Plays**
To mitigate potential dilution, IREN is leaning into capped call transactions with financial institutions. These instruments provide a layer of protection, but with a specific cap price. The cap price of the capped call transactions is set at $20.98, or the equivalent of a 100% premium.
* **Hedging Dynamics:** Option counterparties might engage in derivative trades and share purchases, potentially impacting IREN’s share price.
* **Observation Period:** The counterparties can readjusted their hedging positions or buying or selling IREN shares after the deal is set and before the maturity of the notes.
* **Cash Settlement:** The capped call transactions will be solely cash-settled until shareholder approval is secured.
**Prepaid Forward: A Calculated Move**
Simultaneously, IREN is entering a prepaid forward share purchase transaction, involving the purchase of roughly $92.5 million of its ordinary shares for settlement shortly after the note maturity.
* **Facilitating Hedges:** This move aims to facilitate derivative transactions with investors, creating short positions and potentially raising the initial conversion price.
* **Market Impact:** The prepaid forward could influence IREN’s share price, especially if investors utilize it for hedging.
* **Investor Dynamics:** Neither IREN nor its forward counterpart will control how investors use derivative transactions linked to the prepaid forward.
**The Fine Print: Regulatory Considerations**
The notes and any shares converted are not registered under the Securities Act and cannot be offered or sold without specific exemptions.
**Forward-Looking Statements:**
This announcement contains forward-looking statements, which involve risks and uncertainties, including the completion of the offering. Actual results could differ materially.
**About IREN**
IREN is a vertically integrated data center business focused on next-generation computing applications, currently running on 100% renewable energy
* **Power & Land portfolio:** 2,910MW of grid-connected power secured across >2,000 acres in the U.S. and Canada, with an additional multi-gigawatt development pipeline.
* **Next-Generation Data Centers:** 660MW of operating data centers expanding to 885MW in 2025, underpinning three verticals: Bitcoin Mining, AI Cloud Services and AI Data Centers.
* **Bitcoin Mining:** one of the world’s largest and lowest-cost Bitcoin producers with 41 EH/s of capacity, expanding to 50 EH/s in 2025.
* **AI Cloud Services:** delivering high-performance cloud compute to AI customers with 1,896 NVIDIA H100 & H200 GPUs.
* **AI Data Centers:** end-to-end design, construction and operation of data center infrastructure tailored for AI workloads, with 50MW (IT load) of liquid-cooled capacity scheduled for delivery in 2025.
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