Bitdeer Technologies takes bite out of 2024 CB
Bitdeer Technologies returned to the convertible bond market Thursday with a new US$325m six-year bond to refinance a CB it issued in late 2024.
After a two-day wall-cross and one day of public marketing, Barclays and Morgan Stanley priced the new six-year paper at a 5% coupon and 25% conversion premium, the investor-friendly end of the 4%–5% coupon and fixed 25% conversion premium. The banks modestly upsized the base deal from US$300m.
The company, which is in the early stages of transitioning from bitcoin miner to high-performance computing lessor for AI, simultaneously bought back US$135m of a US$200m principal 5.25% CB it issued in late 2024, paying US$138.2m in cash and trimming the 5.25% maturity in 2029 to US$65m.
Because the 5.25% CB is so new, Bitdeer could not fund the repurchase by delivering treasury shares, as is typical. As an intermediary step, Barclays acted as placement agent on a registered direct offering (RDO) of 5.5m shares priced at US$7.94, the reference price on the new CB, sold to the 5.25% holders whose bonds were repurchased.
ICR Capital advised the company.
“Bitdeer wants to settle the repurchase in stock, but they are not able to do that by delivering treasury stock because the convert is so new,” explained one banker involved in the offering. “The registered direct provides them ‘clean stock’”.
Bitdeer issues clean stock via the RDO to the 5.25% holders whose bonds are repurchased. The 5.25% holders use those shares to close out short positions, with any residual position allowed to be cashed out by selling in the open market – clean shares are integral to unwinding hedges from the repurchased bonds and hedging the new CB sold.
Bitdeer did this same trade in November, issuing a US$400m 4% CB alongside a RDO of 10.66m shares priced at US$13.94, while simultaneously repurchasing US$200m of the 2029s for US$267.9m.
Ideally, the refinancings occur at higher stock prices, which is not the case for Bitdeer.
Bitdeer shares plunged 17.4% Thursday as all these negotiations were taking place, to US$7.94. In addition to technicals of the CB refinancing, the stock has tracked a near-30% plunge in bitcoin prices since November to US$66,000.
High-performance vision
Bitdeer is still in the early stages of transitioning from bitcoin miner to HPC provider for AI generation.
One of the largest bitcoin miners, the company is in the process of converting a 3 gigawatt portfolio of chips for HPC, beginning with 275 megawatts to be converted this year and 870 megawatts in development.
In the fourth quarter, Bitdeer generated adjusted Ebitda of US$31.2m on revenue of US$224.8m, reversing the US$4.2m loss in the year-earlier period on US$69m of revenue. While the company does not break out HPC, it did put annual recurring revenue from HPC at the end of November at US$10m, up from US$8m in October.
“We have our own data centers. I think that’s a very important advantage right now in the US market,” said CEO Jihan Wu on the company’s fourth-quarter earnings call. “(By) the end of (2026), we will be able to deploy the extra 300 (megawatts) with our own data centers. The US is the center of AI innovation globally.”
This expansion costs money, as evidenced by US$599.5m of cash spent on operating activities in Q4, leading to cash and equivalents falling to US$149.4m at December 31, down from US$476.3m at the end of 2024.
Serial funding via CB-plus-RDO takeouts does make sense, but only if the underlying shares rise. Space-based telecom provider AST SpaceMobile has navigated a similar refinancing cycle as its shares have more than quadrupled, making the proposition of selling stock an easier one.