CleanSpark Completes $650 Million Notes Offering and Share Buyback

Highlights:

• Cleanspark intends to use the funds raised to expand its Bitcoin mining operations.
• The company has also repurchased shares to improve shareholder value.
• Varex Imaging Corporation has announced a private offering of senior secured notes that are due in 2027.

CleanSpark has announced that its $650 million convertible senior notes offering has been completed. The notes carry a 0.00% interest rate and are due in 2030. The initial purchasers sold these notes to qualified institutional buyers under Rule 144A in a private offering. The initial purchasers exercised an option that added $100 million in notes to the total amount.

https://t.co/eGYTK4x5eS

— CleanSpark Inc. (@CleanSpark_Inc) December 17, 2024

The offering generated net proceeds of approximately $633.6 million. Consequently, CleanSpark deducted discounts and estimated expenses from the sale. The company allocated these funds to key financial objectives such as share repurchases and debt repayment.

CleanSpark took part in capped call transactions tied to the convertible notes. CleanSpark priced the capped call at an initial $24.66 per share. It is a 100% premium over its December 12, 2024, closing stock price of $12.33.

These transactions aim to reduce potential stock dilution. CleanSpark structured them to offset cash payments exceeding the notes’ principal amount upon conversion. However, the reduction or offset is capped at a specific price level.

If the company settles the principal conversions in cash, it will not issue new shares until stock prices exceed $33.67. This approach ensures minimal impact on the outstanding share count.

Upholding the Share Value

Moreover, CleanSpark repurchased 11.76 million shares of common stock for $145 million. CleanSpark also removed those shares from the company’s outstanding share count.

The share buyback is consistent with the company’s overall strategy to increase shareholder value. It also complements the capped call transaction hence reducing the potential dilution when convertible notes are converted.

Zach Bradford, the CEO, emphasized the significance of these initiatives. The transactions, he said, offer clarity over the near term share count. He noted that CleanSpark has no immediate plans for additional equity linked offerings.

In a related move, Varex Imaging Corporation has announced a private offering of $125 million aggregate principal amount of 7.875% senior secured notes. The notes are due October 15, 2027, and are Additional Notes to its $300 million senior secured notes issued in 2020. Varex plans to use the proceeds to partially repay its outstanding convertible notes due in June 2025.

$VREX Debt Offering:

Varex Imaging Corp amended its credit agreement and announced a private offering of $125 million in senior secured notes due 2027, adding to its existing $300 million notes. The new notes will be issued under the same indenture as the existing notes, which…

— SEC Filings Digest (@USCorpFilings) December 17, 2024

Proceeds to Fund Bitcoin Mining Expansion and Broader Growth Strategy

The funding gives CleanSpark much-needed capital for growth. Specifically, some of those proceeds will be used to fund its planned expansion to harness Bitcoin mining to 50 exahashes per second (EH/s). It plans to spend the remainder on acquisitions, capital expenditures, and corporate purposes.

CleanSpark also plans to repay its outstanding line of credit with Coinbase fully. Such a move will make CleanSpark more financially stable.

According to the company, the capital received fully covers its near term objectives. To achieve these objectives, the company wants to expand mining capacity, amass Bitcoin, and seek new acquisition opportunities. As the crypto market grows, more companies are embracing Bitcoin as a strategic reserve. Companies such as MicroStrategy are using private note offerings to raise funds to purchase Bitcoin.