U.S.-listed miner MARA Holdings announced on Thursday that the company sold 15,133 bitcoins between March 4 and March 25, raising about $1.1 billion in cash, and will use the proceeds to early repurchase its zero-coupon convertible notes due in 2030 and 2031 in order to reduce debt and strengthen financial flexibility.
According to an official statement, MARA modified its digital asset management strategy on March 3 to allow the company to sell the bitcoins it holds on its balance sheet, whereas the prior policy was limited to selling only newly mined bitcoins. At the time of the policy change, MARA held 53,822 bitcoins, of which 28% had been used in financial activities such as lending and collateralization.
So-called “zero-coupon convertible notes” are bonds issued by a company that do not pay interest during the holding period, but can be converted into company stock under certain conditions. The issue price for this kind of bond is typically lower than its par value (i.e., “issued at a discount”); for investors, profits come from the discount spread and the appreciation of the stock after conversion.
MARA’s move this time is to use the proceeds from selling bitcoin to repurchase these notes early at a price below par. Under a privately negotiated repurchase agreement, MARA will repurchase $367.5 million in par value of the 2030-due notes for $322.9 million; and will repurchase $633.4 million in par value of the 2031-due notes for $589.9 million.
The two transactions are expected to close on March 30 and 31, respectively, for total cash savings of $88.1 million (before transaction costs), which is equivalent to a repurchase at a discount of 9% to par value.
After the repurchase is completed, MARA will still have $632.5 million in par value of 2030-due notes and $291.6 million in par value of 2031-due notes outstanding.
MARA CEO Fred Thiel said: “This transaction enhances financial flexibility and expands our range of strategic options because we are expanding from a pure bitcoin mining business into digital energy and artificial intelligence/high-performance computing infrastructure.”
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