MARA Holdings, Inc. (NASDAQ: MARA) has declared the pricing of an $850 million offering of zero-coupon convertible senior notes due 2031. According to MARA Holdings, the proceeds will primarily be used to acquire Bitcoin and repurchase existing convertible notes due in 2026.

Details of the Offering

The notes will be sold in a private offering to institutional buyers under Rule 144A of the Securities Act of 1933. MARA has also granted purchasers an option to acquire an additional $150 million worth of notes. The offering is set to close on December 4, 2024, subject to customary closing conditions.

These senior unsecured notes will not bear regular interest, and the principal will not accrete. However, special interest may be applicable under certain circumstances and will be payable semi-annually. The notes will mature on June 1, 2031, unless repurchased or converted beforehand.

Conversion and Repurchase Terms

The notes are convertible into cash, MARA common stock, or a combination thereof, at MARA’s discretion. The initial conversion rate stands at 28.9159 shares per $1,000 principal, equivalent to a conversion price of approximately $34.5831 per share, representing a 40% premium over the recent stock price.

Holders may require MARA to repurchase their notes for cash on June 4, 2027, and June 4, 2029, or upon certain fundamental changes. MARA also retains the right to redeem notes for cash, provided specific stock price conditions are met.

Utilization of Proceeds

MARA expects net proceeds of approximately $835.1 million, potentially rising to $982.5 million if additional notes are purchased. Approximately $48 million will be allocated to repurchase $51 million of its 2026 convertible notes, with the remaining funds directed toward Bitcoin acquisition and general corporate purposes, including strategic acquisitions and debt repayment.

Market Implications

In connection with the repurchase of existing notes, MARA anticipates that note holders who have hedged their equity risk may unwind their positions, potentially impacting the market price of MARA’s stock. Such activities could alter the effective conversion price of the new notes.

The offering highlights MARA’s strategic focus on expanding its Bitcoin holdings and enhancing its financial structure through innovative financing mechanisms.

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