Convertible Notes Offer Features Zero Coupon and High Conversion Premium
IREN Limited (NASDAQ: IREN) has priced a substantial $875 million offering of convertible senior notes due 2031, taking a creative approach with a 0.00% coupon and a conversion premium of 42.5%. Notably, these notes do not pay regular interest, mature on July 1, 2031, and are targeted exclusively at qualified institutional buyers under Rule 144A. The deal is slated to settle on October 14, 2025, pending customary closing conditions. IREN also granted initial purchasers an option to buy an additional $125 million in notes within 13 days of the issuance date.
| Key Offering Terms | Details |
|---|---|
| Principal Amount | $875 million (+ up to $125M more) |
| Coupon Rate | 0.00% |
| Conversion Premium | 42.5% |
| Conversion Price | $85.63/share (vs. $60.09 last sale price) |
| Conversion Ratio | 11.68 shares per $1,000 note |
| Maturity | July 1, 2031 |
Capped Call Transactions Aim to Minimize Dilution and Boost Flexibility
To hedge against potential dilution from note conversions, IREN entered into capped call transactions with financial institutions. This means any conversion of the notes into shares should, up to a certain price, be offset—minimizing the dilution impact for current shareholders. The capped call is set at an initial cap price of $120.18, which represents a hefty 100% premium to the recent $60.09 share price. Until shareholder approval is obtained, these will be cash-settled. The company plans to use about $49.6 million of the net proceeds for these capped call transactions, with the remainder for general corporate and working capital needs.
| Capped Call Transaction Details | Value |
|---|---|
| Cap Price | $120.18/share (100% premium) |
| Cost | ~$49.6 million from proceeds |
| Settlement | Cash (until further shareholder approval) |
Redemption and Repurchase Features Offer Shareholder-Friendly Terms
The notes provide redemption and repurchase flexibility. Starting January 8, 2029, IREN may redeem notes for cash—only if the share price stays above 130% of the conversion price. Holders can convert before April 1, 2031 only on certain trigger events, and afterward at any time. A 'fundamental change' (such as an acquisition or major restructuring) could trigger mandatory repurchase of the notes for cash, limiting investor risk in adverse scenarios.
What’s the Strategy Behind IREN’s Move?
IREN’s capital raise leans into the growth opportunity for its AI, data center, and Bitcoin mining platforms. By opting for a zero-coupon convertible with a high conversion premium—and layering on the capped call protection—IREN maximizes immediate capital inflow with minimal dilution risk for shareholders. This complex but creative capital structure allows the company to scale up while keeping options open on future stock issuance and cash management.
Looking Ahead: A Focus on Innovation and Growth
IREN, one of the world’s largest and lowest-cost Bitcoin producers, is increasingly branching out into AI cloud services and next-generation data centers. The newly raised capital could be used to expand its operating capacity—already at 810MW of data centers and 2,910MW of grid-connected power secured—and help support both new project pipelines and working capital needs.
| Business Highlights | Current Metrics |
|---|---|
| Grid-Connected Power | 2,910 MW |
| Operating Data Centers | 810 MW |
| Bitcoin Mining Capacity | 50 EH/s (self-mined) |
Key Takeaway: Shareholders Face Lower Dilution, More Flexibility
The size, zero-coupon rate, and structure of IREN’s convertible note offering are distinctive—and signal both strong capital demand and a disciplined approach to equity management. The capped call mechanism offers investors protection from dilution up to double the current share price. Ultimately, IREN’s financial engineering gives the company fresh fuel for ambitious expansion across digital infrastructure while aiming to keep current shareholders insulated from excess dilution. As IREN continues its growth push, market watchers will be focused on how it puts these proceeds to work—and whether the strategic capital structure helps drive shareholder value in a competitive, evolving industry.
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