Iren's US$875m CB marks pivot to AI hyperscaler
Iren took full advantage of its move into hyperscale data centres to raise US$875m from the sale of convertible bonds and purchasing a capped call to express bullishness about its outlook.
The bitcoin miner-turned AI hyperscaler’s shares jumped nearly 7% on Tuesday to US$61.68 after its announcing agreements to lease computing power that would generate more than US$225m in annualised run-rate revenues under a multi-year contract.
Iren then made a quick return to the CB market, with an even larger deal than the upsized US$550m 3.5% CB issue in June.
The move isn’t surprising given Iren’s profile makes it a perfect CB candidate, with its 200-day average volatility at nearly 100.
Citigroup and Goldman Sachs priced the 5.75-year CBs at a fixed zero-percent coupon and at a 42.5% conversion premium, beyond the 30%–35% range marketed across Wednesday's session. Those terms were supported by a credit spread and an implied vol of SOFR+350bp and 50, with the deal wall-crossed with investors prior to launch.
Iren is using net proceeds as working capital and US$49.6m to elevate the effective conversion price to up to US$120.18, double the reference price and versus the US$85.63 where bondholders can convert. The stock traded as low as US$5.13 in April.
Iren said in its offering filing that it had raised US$1bn from selling 66.7m shares under its at-the-market programme.
Iren’s contracts with unnamed AI companies will utilise about half of the 23,000 Nvidia Blackwell GPUs Iren expects to put into operation by the end of the year.
The financing addresses analysts’ concerns over the company’s ability to fund the transition.
In September, Needham analysts said in a note that Iren is uniquely positioned to diversify into providing GPU-as-a-service with its exclusive rights to a 1.4GW site in West Texas and the potential to retrofit 160MW in Canada. But development has been capped by the company’s “reluctance to sell equity to fund this piece”.