Cipher Mining Inc. said Thursday it has priced a $1.1 billion private offering of convertible senior notes due 2031, increasing the size from a previously announced $800 million.
The notes, which carry no regular interest, are being offered to qualified institutional buyers under Rule 144A of the Securities Act. The company expects the sale to close Sept. 30, subject to customary conditions. Purchasers have a 13-day option to buy up to an additional $200 million of notes.
Cipher Mining Terms of the Notes
The notes will be unsecured obligations of Cipher and will mature Oct. 1, 2031, unless converted, redeemed or repurchased earlier. Before July 2031, conversion is limited to specific conditions; afterwards, the notes may be converted at any time up to two days before maturity.
Cipher may choose to settle conversions in cash, stock, or a combination of both, subject to shareholder approval to increase authorised shares. The initial conversion rate is set at 62.3733 shares per $1,000 principal, equal to a price of about $16.03 per share — a 37.5% premium over Wednesday’s closing price of $11.66.
The company can redeem the notes for cash starting in October 2028 if its stock trades at more than 130% of the conversion price for a set period. If a “fundamental change” such as a merger occurs, investors can require Cipher to repurchase the notes for cash. A separate investor option in October 2029 allows holders to demand repurchase at face value.
Proceeds and Planned Use
Cipher expects net proceeds of about $1.08 billion, or $1.27 billion if the overallotment option is exercised, after deducting fees and expenses. Roughly $70 million will fund capped call transactions intended to limit the potential dilution of its stock.
The remainder will support construction of the Barber Lake data centre, expansion of high-performance computing projects across its 2.4-gigawatt pipeline, and other corporate purposes, the company said.
Market Impact
In connection with the capped call agreements, counterparties are expected to engage in hedging activities, including trading Cipher’s stock or related derivatives. Such transactions could influence the share price during the life of the notes and particularly around conversion or redemption periods.
The capped call transactions carry an initial cap price of $23.32 per share, double the most recent closing price. These arrangements are designed to reduce dilution if noteholders convert their securities.
The offering and any shares issuable upon conversion are not registered under the Securities Act and may only be sold under applicable exemptions. Cipher emphasized that the announcement does not constitute an offer to sell or solicitation to buy the securities in jurisdictions where such actions would be unlawful.
