MARA Holdings Inc (NASDAQ:MARA) has announced another private offering of $700 million of zero coupon convertible senior notes due 2031, after completing an offering of $1 billion of 0% convertible senior notes due 2030 in November.
What has happened
The notes will be offered to qualified institutional buyers at 0% interest and with no equity accrual, according to the company’s press release. The interest rate, initial conversion rate and other terms of the notes will be determined at the time of pricing the offering.
The current offering will also primarily go toward acquiring Bitcoin and repurchasing existing convertible notes due 2026.
The conversion price of the $1 billion notes offered to investors in November represented a premium of approximately 42.5% over the share price at midday on November 18 of $18.1848.
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From the previous offering, after deducting discounts and commissions from the initial buyers, MARA raised approximately $980 million. Of that amount, it used $199 million to repurchase $212 million of aggregate principal of its existing convertible notes due 2026. The remainder of the net proceeds were used to acquire Bitcoin (CRYPTO:BTC) additional and general corporate purposes.
You can also read: Bitcoin breaks records: Trump’s plan for a national reserve and regulatory changes
Why is it important
A convertible note is a hybrid instrument that can be exchanged for company shares at a later date. These convertible notes, even though they have 0% interest, still favor investors in the event of bankruptcy, since the holders of the notes have priority of repayment over shareholders.
At the same time, the conversion feature of these notes ultimately helps debt holders participate in the capital increase upon conversion.
MicroStrategy Inc (NASDAQ:MSTR) has also recently been issuing 0% convertible notes to purchase cryptocurrencies. Michael Taylor shared the MARA update and said it is a “company on the Bitcoin standard.”
$MARA is a company on the #Bitcoin Standard. https://t.co/bk8dBbQaqM
— Michael Saylor⚡️ (@saylor) December 2, 2024
MARA’s Current Bitcoin Holdings
According to Benzinga Pro, as of December 2, the company held 26,842 Bitcoins valued at $2.54 billion, representing an average price of $94.96.
Marathon Holdings stock price
MARA shares were down 1.97% at $26.88. Nasdaq 100 futures rose 0.04% to 21,005.25 points.
So far this year, the Nasdaq 100 index is up 26.51% in 2024, while MARA has underperformed the indicator, growing 19.58% in the same period. Furthermore, MARA rose by 40.04% and 76.90% in the last six months and one month, respectively.
According to Benzinga, MARA has a consensus price target of $23.83 per share, based on ratings from 17 analysts. The highest price target of all analysts tracked by Benzinga is $66 per share, issued by Compass Point as of March 8, 2022. The lowest price target is $4 per share issued by Jefferies on January 9, 2023 .
The average price target of $27 per share between Barclays, Compass Point and Macquarie implies a 0.18% downside for MARA.
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