Shares of Bitcoin miner IREN and treasury company Kindly MD ended Tuesday with losses after both companies revealed multimillion-dollar convertible note agreements in light of a slowdown in venture capital activity within the crypto sector.
IREN (IREN) wrapped up Tuesday’s trading session up 6.81% but fell 4.9% in after-hours trading to $58.66 following its announcement regarding an $875 million convertible senior note offering.
Kindly MD, which merged with David Bailey’s Bitcoin firm Nakamoto, also shared on Tuesday that it opted into a $250 million five-year convertible note arrangement with fintech company Antalpha, which likely unsettled shareholders.
Kindly MD (NAKA) experienced a 0.97% dip on the day and further decreased by 2.83% to $0.99 in after-hours trading.
While digital assets continue to garner interest from institutional investors, Galaxy Research’s recent venture capital report indicated a 59% decline in funding and a 15% drop in deal count compared to the previous quarter.
IREN raising capital for corporate purposes
IREN plans to allocate a portion of the proceeds from the note offering to general corporate needs and working capital.
The company also seeks to use the funds to cover costs associated with capped call transactions, which are designed to mitigate excessive new share issuance during the conversion of company debt into stock by imposing a price cap limit.
Additionally, there are another $125 million of notes available for initial purchasers, all of which can be converted into company shares.
The company stated that the call transactions are anticipated to lessen potential dilution of IREN’s ordinary shares upon any conversion of the notes.
Shareholders often express concern that convertible note agreements may dilute the value and ownership of their existing stock.
Nakamoto hoping to buy more Bitcoin
Antalpha and Kindly MD have entered a non-binding letter of intent for long-term financing, aiming to reduce the “dilution risk to its stockholders compared to standard convertible debt,” as stated by the company.
The proceeds are earmarked for expanding Bitcoin (BTC) holdings in the Kindly MD Bitcoin Treasury, in addition to general corporate purposes.
Funds raised through this financing are also intended to refinance an existing $203 million Bitcoin-secured loan from Two Prime Lending Limited.
Related: Crypto treasury share buybacks could signal a ‘credibility race’ is on
Antalpha also providing Bitcoin-backed loan
Pending the finalization of the convertible debt facility, Antalpha will extend an interim Bitcoin-backed loan to Kindly MD.
Bailey remarked that the partnership represents “the power of Bitcoin companies backing Bitcoin companies,” aiming to meet “today’s financing needs while also laying the groundwork for future structures tailored to the unique requirements of Bitcoin treasury companies.”
“This is the first step in what we anticipate will be a long series of initiatives to benefit our portfolio, our shareholders, and the Bitcoin ecosystem as a whole.”
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