EASTON, Md. - TeraWulf Inc. (NASDAQ:WULF), an operator of zero-carbon energy-powered digital infrastructure, announced its intention to offer $350 million in convertible senior notes due 2030 in a private placement to qualified institutional buyers. The offering, which depends on market conditions, may see an additional $75 million in notes available through an initial purchaser option within a 13-day period starting from the issue date.
The company aims to allocate the net proceeds from this offering to finance capped call transactions, repurchase shares of its common stock, and for general corporate purposes. The notes, set to mature on February 1, 2030, will be senior unsecured obligations and interest will be paid semi-annually starting May 1, 2025.
Convertible only under certain conditions until November 1, 2029, the notes will then be convertible at any time until the second trading day before the maturity date. The conversion rate and interest will be decided during pricing negotiations with the initial purchasers.
TeraWulf also plans to enter into capped call transactions with some initial purchasers or financial institutions, which are expected to reduce dilution from conversions of the notes or offset any cash payments above the principal amount, subject to a cap. The initial hedging activities related to these transactions may affect the market prices of TeraWulf's common stock and the notes.
The company anticipates repurchasing its common stock concurrently with the pricing of the notes, with the purchase price per share equaling the stock's closing price on the pricing date. The notes and any shares of common stock issued upon conversion have not been registered under the Securities Act and will be offered only to qualified institutional buyers.
TeraWulf, focusing on environmentally sustainable data centers for Bitcoin mining and high-performance computing, leverages predominantly zero-carbon energy sources like nuclear and hydroelectric power. Its Lake Mariner facility is located on a retired coal plant site in Western New York.
The press release contains forward-looking statements and acknowledges that there can be no assurance of the completion, timing, or terms of the offering, as well as the anticipated use of proceeds. It is based on a press release statement and presents the facts without endorsing the claims.
In other recent news, TeraWulf Inc. has set a $200 million stock buyback program through 2025, reflecting the company's confidence in its business strategy and financial stability. The company has also appointed industry expert John Larkin as Senior Vice President, Director of Investor Relations, a move that is expected to enhance the company's communication with institutional investors.
In other developments, TeraWulf has secured a new 35-year lease for its Lake Mariner facility, expanding its land area from 107 acres to 157 acres. This is expected to enhance the company's capabilities in high-performance computing and AI data centers.
Furthermore, the company has reported a doubling of its self-mining capacity, contributing to a significant revenue increase. Despite falling short of initial estimates in its third-quarter Bitcoin mining, the sale of its Nautilus JV stake is expected to provide substantial financial support.
Rosenblatt Securities and Cantor Fitzgerald have maintained their Buy and Overweight ratings respectively, expressing confidence in the company's strategic direction. Finally, TeraWulf has engaged Deloitte & Touche LLP as its new independent registered public accounting firm, highlighting the company's commitment to its operations and strategic initiatives.
InvestingPro Insights
TeraWulf's recent announcement of a $350 million convertible senior notes offering comes amid a period of significant growth and volatility for the company. According to InvestingPro data, TeraWulf has experienced a remarkable 444.17% price total return over the past year, with a 140.96% increase in the last six months alone. This strong performance is reflected in the company's current market capitalization of $2.43 billion.
Despite the impressive stock performance, InvestingPro Tips highlight that TeraWulf operates with a moderate level of debt and is not currently profitable. The company's revenue for the last twelve months as of Q2 2024 stands at $120.25 million, with a substantial revenue growth of 197.49% over the same period. This growth aligns with an InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
However, investors should note that TeraWulf's stock is trading at high valuation multiples. The company's Price to Book ratio is 6.45, which an InvestingPro Tip flags as high. Additionally, the stock's recent performance has pushed it into potentially overbought territory, according to the Relative Strength Index (RSI).
The planned convertible notes offering and share repurchase program come at a time when TeraWulf's stock price is near its 52-week high, currently at 96.28% of that peak. This timing could be strategic, capitalizing on the company's strong market position to secure funding for future growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for TeraWulf, providing a deeper understanding of the company's financial health and market position.
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