IREN stock price dropped 6% on Monday, after the company announced a plan to issue convertible notes

Investing.com – IREN Limited (NASDAQ: IREN) stock price fell 6% on Monday, after the company announced plans to issue a total of $2 billion in convertible preferred notes.

The company stated that it intends to privately place the 2033 maturity convertible preferred notes to qualified institutional buyers, and expects to grant the initial purchasers an option to buy up to an additional $300 million principal amount of notes.

The notes will be unsecured senior debt of IREN, paying interest semi-annually, and will mature on December 1, 2033, unless repurchased, redeemed, or converted earlier. Holders of the notes will have the right to convert the notes into shares under certain conditions and during specified periods.

IREN plans to use part of the net proceeds from the offering to cover costs related to capped call option transactions, with the remaining funds for general corporate purposes and working capital.

In connection with the offering, IREN expects to enter into privately negotiated capped call option transactions with one or more initial purchasers or their affiliates. These transactions are intended to cover the number of common shares initially underlying the notes, reducing potential dilution to IREN’s common stock upon conversion.

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The company notes that the counterparties to the options transactions or their affiliates are expected to enter into various derivatives transactions on IREN’s common stock around the time of the notes’ pricing or shortly thereafter, which could impact the market prices of IREN’s common stock or notes.

Meanwhile, at the time of the notes’ pricing, IREN expects to terminate some existing capped call option transactions related to its 3.50% convertible preferred notes due 2029 and 3.25% convertible preferred notes due 2030.

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