Iren Limited (NASDAQ: IREN) has successfully closed its offering of $1.0 billion aggregate principal amount of 0.00% convertible senior notes due 2031 in a private offering to qualified institutional buyers. The offering was oversubscribed, with the initial purchasers fully exercising their option to purchase an additional $125 million aggregate principal amount of the notes, bringing the net proceeds to approximately $979.0 million.
The convertible notes carry a 0.00% coupon and a 42.5% conversion premium. In connection with the notes, capped call transactions were entered into, expected to provide a hedge upon conversions up to an initial cap price of $120.18 per share, representing a 100% premium compared to the conversion premium under the notes.
The net proceeds from the offering, after deducting discounts, commissions, and estimated offering expenses, are intended to be used for funding the cost of the capped call transactions ($56.7 million) and for general corporate purposes and working capital.
The capped call transactions are anticipated to reduce the potential dilution to Iren's ordinary shares upon any conversion of the notes and/or offset any potential cash payments Iren is required to make in excess of the principal amount of converted notes. The notes were offered and sold to qualified institutional buyers under Rule 144A, and the offer and sale of the notes and any of Iren’s ordinary shares issuable upon conversion of the notes have not been registered under the securities laws.
Iren's decision to secure funds through a convertible notes offering, particularly in a 0.00% coupon environment, reflects the company's strategic approach to capital raising and financial management. The oversubscription of the offering and the additional proceeds from the exercised greenshoe option demonstrate strong investor demand for Iren's securities. The use of capped call transactions to minimize potential dilution and manage cash payments further underscores the company's proactive approach to mitigating risks associated with the issuance of convertible notes.
The successful completion of the offering and the utilization of the proceeds for strategic initiatives are indicative of Iren's commitment to optimizing its capital structure and enhancing shareholder value. The company's engagement with leading financial institutions such as Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC as active bookrunners also underscores Iren's ability to attract prominent underwriters for its capital market transactions. Following these announcements, the company's shares moved 8.45%, and are now trading at a price of $69.56. For the full picture, make sure to review IREN Ltd's 8-K report.
