Cipher Digital stock drops 12% following $850 million debt offering

Investing.com -- Shares of Cipher Digital Inc. (NASDAQ: CIFR) fell 12% on Tuesday after the company announced plans to raise $850 million by selling zero-interest convertible debt—bonds that can later be traded for company stock—maturing in 2032. Alongside the new offering, the company is also swapping out some of its older debt due in 2030.

The new bonds will be offered privately to large institutional investors, who have a 13-day window to purchase an additional $150 million of the debt. Unlike traditional loans, these bonds will not pay regular interest and are set to mature on November 1, 2032.

Cipher Digital plans to use the newly raised money to fund its Barber Lake project, expand its high-performance computing sites, and cover general corporate expenses. A portion of the funds will also be used for financial strategies designed to protect the value of the company’s existing stock from being heavily diluted.

At the same time, Cipher Digital is negotiating with investors who hold its older 2030 debt, offering to trade those bonds directly for company shares. The company noted that these investors might buy or sell stock in the open market to adjust their portfolios, which could temporarily impact the stock’s trading volume and price.

Investors holding the new 2032 bonds can convert them into stock under specific conditions until August 2032, after which they can convert them freely until just before the debt matures. When investors choose to convert, Cipher Digital can pay them in cash, stock, or a mix of both.

The company also reserves the right to buy back the bonds early for cash starting in November 2029, but only if its stock price performs exceptionally well and hits specific high targets.

Original Article

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