TeraWulf Inc. Announces Closing of $500 Million 2.75% Convertible Senior Notes Offering

Rhea-AI Summary

TeraWulf has completed a private placement of $500 million in 2.75% Convertible Senior Notes due 2030 to qualified institutional buyers. The company implemented capped call transactions with a cap price of $12.80 and repurchased $115 million of its common stock. The net proceeds of approximately $487.1 million will be allocated as follows: $60 million for capped call transactions, $115 million for stock repurchases, and the remainder for general corporate purposes, including working capital, strategic acquisitions, and data center infrastructure expansion.

Positive

• Secured $500 million in convertible notes financing
• Implemented capped call transactions to minimize dilution
• Initiated $115 million share repurchase program
• Generated $487.1 million in net proceeds for expansion and operations

Negative

• Potential future dilution from convertible notes
• Increased debt obligations with 2.75% interest rate
• Additional financial leverage on balance sheet

Insights

Financial Analyst

This $500 million convertible note offering marks a significant financial milestone for TeraWulf, dramatically strengthening its balance sheet and operational capabilities. The 2.75% interest rate is notably competitive in the current market environment, suggesting strong institutional confidence. The strategic implementation of capped call transactions with a $12.80 cap price effectively manages potential dilution while the $115 million share repurchase demonstrates commitment to shareholder value.

The net proceeds of $487.1 million provide substantial financial flexibility. After allocating $175 million for capped calls and share repurchases, TeraWulf retains over $312 million for strategic growth initiatives. This capital structure optimization positions the company well for expanding its digital infrastructure and computing capabilities while maintaining a balanced approach to shareholder dilution.

Tech Infrastructure Specialist

The strategic allocation of capital towards data center infrastructure expansion is particularly noteworthy in the high-performance computing (HPC) sector. This funding enables TeraWulf to accelerate its zero-carbon energy infrastructure deployment, a critical differentiator in the increasingly ESG-conscious digital infrastructure market. The ability to fund both strategic acquisitions and organic growth provides operational flexibility to capitalize on market opportunities in the rapidly evolving digital asset space.

EASTON, Md., Oct. 25, 2024 (GLOBE NEWSWIRE) -- TeraWulf Inc. (Nasdaq: WULF) (“TeraWulf” or the “Company”), a leading owner and operator of vertically integrated, next-generation digital infrastructure powered by predominantly zero-carbon energy, today completed its previously announced offering of 2.75% Convertible Senior Notes due 2030 (the “Convertible Notes”) in a private placement to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The aggregate principal amount of notes sold in the offering was $500 million, which includes $75 million aggregate principal amount of notes issued pursuant to an option to purchase additional notes granted to the initial purchasers.

In conjunction with the issuance of the Convertible Notes, the Company entered into capped call transactions with a cap price of $12.80 (representing a premium of 100% over the last reported sale price) and repurchased $115 million of the Company’s common stock.

The table below illustrates the potential net dilution expectations from the overall transaction.

The net proceeds from the sale of the Convertible Notes were approximately $487.1 million after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company expects to use $60 million of the net proceeds to pay the cost of the capped call transactions, $115 million to repurchase shares of its common stock and the remainder for general corporate purposes, which may include working capital, strategic acquisitions, expansion of data center infrastructure to support high-performance computing activities and expansion of existing assets.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements include statements concerning anticipated future events and expectations that are not historical facts. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. In addition, forward-looking statements are typically identified by words such as “plan,” “believe,” “goal,” “target,” “aim,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, although the absence of these words or expressions does not mean that a statement is not forward-looking. Forward-looking statements are based on the current expectations and beliefs of TeraWulf’s management and are inherently subject to a number of factors, risks, uncertainties and assumptions and their potential effects. There can be no assurance that future developments will be those that have been anticipated. Actual results may vary materially from those expressed or implied by forward-looking statements based on a number of factors, risks, uncertainties and assumptions, including, among others: (1) conditions in the cryptocurrency mining industry, including fluctuation in the market pricing of bitcoin and other cryptocurrencies, and the economics of cryptocurrency mining, including as to variables or factors affecting the cost, efficiency and profitability of cryptocurrency mining; (2) competition among the various providers of cryptocurrency mining services; (3) changes in applicable laws, regulations and/or permits affecting TeraWulf’s operations or the industries in which it operates, including regulation regarding power generation, cryptocurrency usage and/or cryptocurrency mining, and/or regulation regarding safety, health, environmental and other matters, which could require significant expenditures; (4) the ability to implement certain business objectives and to timely and cost-effectively execute integrated projects; (5) failure to obtain adequate financing on a timely basis and/or on acceptable terms with regard to growth strategies or operations; (6) loss of public confidence in bitcoin or other cryptocurrencies and the potential for cryptocurrency market manipulation; (7) adverse geopolitical or economic conditions, including a high inflationary environment; (8) the potential of cybercrime, money-laundering, malware infections and phishing and/or loss and interference as a result of equipment malfunction or break-down, physical disaster, data security breach, computer malfunction or sabotage (and the costs associated with any of the foregoing); (9) the availability, delivery schedule and cost of equipment necessary to maintain and grow the business and operations of TeraWulf, including mining equipment and infrastructure equipment meeting the technical or other specifications required to achieve its growth strategy; (10) employment workforce factors, including the loss of key employees; (11) litigation relating to TeraWulf and/or its business; and (12) other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). Potential investors, stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. TeraWulf does not assume any obligation to publicly update any forward-looking statement after it was made, whether as a result of new information, future events or otherwise, except as required by law or regulation. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements and the discussion of risk factors contained in the Company’s filings with the SEC, which are available at www.sec.gov.

Investors:
Investors@terawulf.com

Media:
media@terawulf.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/6dc9f0ea-cb8a-4910-9e05-daa4d5422db6

FAQ

What is the interest rate on TeraWulf's (WULF) new convertible notes?

TeraWulf's convertible senior notes carry a 2.75% interest rate and are due in 2030.

How much did TeraWulf (WULF) raise in its convertible notes offering?

TeraWulf raised $500 million in total, with net proceeds of approximately $487.1 million after deducting initial purchasers' discounts and commissions.

What is the cap price for TeraWulf's (WULF) capped call transactions?

The cap price for TeraWulf's capped call transactions is $12.80, representing a 100% premium over the last reported sale price.

How will TeraWulf (WULF) use the proceeds from the convertible notes?

TeraWulf will use $60 million for capped call transactions, $115 million for stock repurchases, and the remainder for general corporate purposes, including working capital and infrastructure expansion.