TLDR
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Cipher stock drops 4% after $1.1B convertible note offering announcement
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Cipher Mining’s $1.1B notes deal rattles investors, stock dips to $11.16
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Stock slides as Cipher boosts note offering, sparking dilution concerns
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Cipher reveals $1.1B 0% convertible notes, stock sinks despite growth plans
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Investors flee as Cipher’s debt deal raises dilution and pressure on stock
Cipher Mining Inc. stock dropped 4.05% to $11.16 after announcing a large convertible notes offering.
The sharp decline followed early gains but continued through the morning session. The company priced $1.1 billion in notes, increasing the offering from an earlier $800 million plan.
Convertible Notes Offering Details
Cipher priced $1.1 billion aggregate principal amount of 0.00% convertible senior notes due 2031. The notes will not bear interest or accrete in value. The company scheduled settlement of the notes for September 30, 2025.
The notes mature on October 1, 2031 unless redeemed, repurchased, or converted earlier. Before July 1, 2031, holders may only convert under specific conditions. After that date, conversion is open until two days before maturity.
Cipher may settle conversions in cash, stock, or a mix of both. The initial conversion rate equals 62.3733 shares per $1,000 principal. That sets an initial conversion price of $16.03 per share, about 37.5% above the September 25 closing price.
Redemption and Repurchase Provisions
The company may redeem the notes beginning October 5, 2028, if the stock trades 130% above the conversion price. The redemption will equal the principal plus any accrued special or additional interest. Redemption remains subject to certain limitations.
If a fundamental change occurs, holders can demand repurchase for cash at the principal amount plus interest. Additionally, holders may request repurchase on October 1, 2029, under the same terms. These measures give flexibility to both the company and noteholders.
Such structures aim to balance financing needs with investor protections. Yet they often create pressure on share prices. Market participants responded with heavy selling today after the announcement.
Use of Proceeds and Hedge Transactions
Cipher expects net proceeds of $1.08 billion, or $1.27 billion if purchasers exercise their option fully. The company will allocate $70 million to fund capped call transactions. The remaining funds will support data center construction and its high-performance computing expansion.
The Barber Lake facility remains central to the company’s expansion strategy. Proceeds will also strengthen its 2.4 gigawatt development pipeline. General corporate purposes will receive additional allocations.
Option counterparties entered into capped call transactions to reduce potential dilution. The cap price was set at $23.32 per share, double the last reported closing price. These transactions may influence Cipher’s share price through related hedge activities.
