MARA holdings (MARA, Financial) is so enticing to the eyes of its investors as reflected by the super high interest to its million zero-coupon convertible senior notes that are already oversubscribed and upsized.
MARA is releasing zero-coupon convertible notes which was initially only $700 million but then upsized to $850 million with an option to acquire extra notes for $150 million from $105 million only.
The notes will be provided privately to qualified institutional buyers. That means the amount that potentially raised could reach up to $1 billion when fully exercised and the bonds will mature in June 2031.
The fund is said to be used to acquire more bitcoins and repurchase the existing convertible notes that due in 2026. As it is convertible, the notes can be converted into cash, MARA shares or combination of both.
The High Confidence of MARA's Investors
MARA is offering zero-coupon bonds meaning that the bond holders only hope MARA to repay without gaining interest at all until 2031. But even without interest, these notes are oversubscribed already.
Oversubscribed means that investor demand exceeded the number of notes planned to sale. The offering will be closed on December 4, 2024 and after the conditions are met, MARA will receive the funds.
The primary appeal is the convertibility of the notes into MARA's common shares or cash or both. That means these investors are in high confidence believe wholeheartedly that the shares of MARA will increase in value and bring them profits regardless the company's performance and highly reliance on Bitcoin that is super volatile in the nature.
The Potential of Stock Dilution
As the notes are convertibles, then there will be potential for stock dilution when MARA's bond holders choose to convert their notes into MARA shares. That would increase the total number of outstanding shares of MARA.
When new shares issued then the ownership percentage will be diluted, and the company's earnings per share will be lowered as the profits will be divided to the new shares outstanding. Stock dilution will create volatility in the stock price.
You can find out immediately find out about MARA's performance with charts and more insights by visiting GuruFocus now!
