Key Takeaways:
- TeraWulf has expanded its convertible note offering to $850 million to support its data center growth, with notes maturing in 2031 at a 1% interest rate.
- After the news, shares fell by 5%, following a significant three-day rally linked to a partnership with FluidStack, which is backed by Google.
Overview
TeraWulf’s (WULF) remarkable surge in stock price has taken a pause as the company reported an increase in its convertible note offering to $850 million, initially aimed to fund data center expansion. These notes will mature in 2031 and boast an annual interest rate of 1%.
According to the firm’s announcement on Monday, these notes are convertible into cash, stock, or a combination, with an initial conversion price set at $12.43 per share, reflecting a 32.5% premium over last week’s closing price.
Net funds from this transaction are estimated to be $828.7 million, primarily allocated for the data center expansion, with $85.5 million reserved for capped call transactions aimed at limiting share dilution.
Additionally, buyers have a 13-day option to include an extra $150 million in the offering, with the transaction expected to finalize this week.
In the wake of this announcement, TeraWulf shares dropped by 5% to below $9, retracting from the recent high of $10.7 reached after an almost 100% rally following a significant partnership with FluidStack, an AI cloud platform supported by Google.
Under a 10-year agreement, FluidStack will enhance operations at TeraWulf’s Lake Mariner campus in New York, augmented by Google’s investment of $1.4 billion into the project. Presently, Google holds warrants for a 14% equity stake in TeraWulf.
