Bitcoin mining firm Riot Platforms is following in MicroStrategy’s footsteps. The company has announced a plan to issue $500 million worth of convertible bonds to purchase Bitcoin directly from the market. As of Nov. 30, Riot holds 11,425 BTC in its reserves.
The senior secured bonds, due 2030, would be issued in a private offering to qualified institutional buyers. Additionally, Riot intends to make available an additional $75 million of the bonds within three days after the initial closing. The offering is subject to market conditions, and there is no guarantee it will be completed as planned.
These convertible notes will represent Riot’s unsecured senior obligations. They will become mature on Jan. 15, 2030, although they are callable, redeemable, or convertible prior to this date. After Jan. 20, 2028, Riot can redeem the bonds for cash, but at least $50 million of the notes must remain outstanding.
These bonds are convertible into cash, common stock of Riot, or a combination of both, at the option of Riot, and initially convertible only upon the occurrence of certain conditions, but after June 15, 2029, such notes will be convertible at any time prior to the maturity date.
Riot to use proceeds for Bitcoin acquisition and corporate purposes
However, Riot expects the conversion rate to be based on the volume-weighted average price of its common stock at the time of offering. The net proceeds from this offering are intended to be used to acquire additional Bitcoin, as well as for general corporate purposes.
The bonds will be sold to institutional buyers under Rule 144A under the Securities Act. Riot has clarified that the bonds and any shares issued upon conversion will not be registered under the Securities Act or other securities laws and cannot be sold in the U.S. without proper registration or an exemption.
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