IREN has now locked up $3.6 billion in new capital in two deals priced this week. Approximately $1.6 billion comes from a registered direct equity sale of 39,699,102 shares at $41.12, which is expected to close on December 8.
Additionally, $2 billion came from the pricing of its new convertible debt program, which includes $1 billion of 0.25% notes due 2032 and $1 billion of 1% notes due 2033.
Shares fell 15% after announcing the financing plan on Tuesday and edged higher after pricing in early trading on Wednesday. After a sharp rise this year, IREN is now down nearly 50% since hitting an all-time high a month ago.
IREN bulls may take some comfort as Jim Cramer told investors not to pay attention to companies announcing new financings, specifically mentioning IREN at a time when it just closed one of the largest funding rounds in the mining industry. “Sell now any company that is raising capital like IREN,” Cramer said, warning that the large issuance echoes what he sees as a late-cycle pattern from 1999 to 2000.
Some would say that Cramer, a former hedge fund manager who later became a full-time financial journalist, has become a major contrarian as he issues buy signals near market tops and sell signals at market bottoms.
IREN’s equity proceeds will fund a significant repurchase of the company’s deep in-the-money convertible debt. The company agreed to repurchase $227.7 million of 2030 notes and $316.6 million of 2029 notes for a total of $1.6 billion, reflecting the fact that IREN’s stock price is well above the original conversion price ($13.64 and $16.81). Once repurchased, the note will be extinguished and no longer redeemable.
In addition, IREN will spend $174.8 million on capped call transactions to reduce dilution from the new convertible notes.
The financing represents a radical balance sheet restructuring for the former Bitcoin miner turned artificial intelligence computing provider to cope with volatile markets and the mechanical hedging processes associated with trading.
