IREN Dilutes Now to Save Shares Later

AfraSimon
12-03

Why is $IREN Ltd(IREN)$ selling shares and diluting shareholders now, instead of letting notes convert in 2029/30?

They are doing it to save 20M shares.

Let me explain.

- $550M $13.64 2029 Note=40.3M shares

- $400M $16.81 2030 Note=23.8M shares

- Total share count = 64.1M shares

To repay them IREN must convert them now at a negotiated price, so let's use yesterday's price of $48

- 2029 Note ($48-13.64)*40.3M=$1.38B

- 2030 Note ($48-16.81)*23.8M=$742M

- Total Conversion costs = $2.1B

To get $2.1B from yesterday's price of $48, $IREN must sell 44M shares.

So, to not have to issue 64M shares in 2029 and 2030, $IREN must issue 44M shares now.

That is a net benefit of 20M shares.

*Minus legal fees, transaction costs.

*Also we don't know the final conversion price, so the net benefit is likely lower.

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