Marathon Digital Holdings Announces Completion of Privately Negotiated Convertible Note Exchanges
20 Setembro 2023 - 7:24PM
Marathon Digital Holdings, Inc.
(NASDAQ:MARA) ("Marathon"
or "Company"), a leader in supporting and securing the
Bitcoin ecosystem, has completed the pricing period of the
previously announced, privately negotiated exchange agreements with
certain holders of its 1.00% Convertible Senior Notes due 2026 (the
“Notes”). On average, the transactions represent an approximately
21% discount to the par value and result in approximately $101
million in cash savings before transaction costs for the Company.
In total, Marathon exchanged $417 million
aggregate principal amount of the Notes held by such holders (the
“Exchanges”) for an aggregate 31.7 million newly issued shares of
Marathon common stock. As a result, the Company has reduced its
long-term convertible debt by approximately 56% and realized
approximately $101 million in cash savings before transaction
costs. Following the Exchanges, $331 million aggregate principal
amount of the Notes will remain outstanding.
“By exchanging $417 million of our Notes at a
21% discount, we have reduced our long-term convertible debt by 56%
and captured a total of approximately $101 million, or $0.55 per
share, in cash savings for our shareholders,” said Salman Khan,
Marathon’s chief financial officer. “For the first time in two
years, Marathon’s combined cash and bitcoin holdings now exceed its
convertible debt. By generating savings that exceed the value
issued in equity, improving our liquidity, and deleveraging the
balance sheet, we believe we have significantly strengthened
Marathon’s financial profile.”
Figure 1: Marathon Convertible Note Exchange --
Accretion Analysis
Marathon Convertible Note Exchange -- Accretion
Analysis |
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$ in millions except share and per share amounts |
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Current |
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Exchange |
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Pro
Forma |
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Enterprise Value |
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$ |
2,277 |
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- |
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$ |
2,277 |
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Less: Notes Payable1 |
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747.5 |
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(416.8 |
) |
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330.7 |
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Less: Preferred |
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15.8 |
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- |
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15.8 |
|
Plus: Cash2 |
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105.5 |
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(8.3 |
) |
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97.2 |
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Market Cap |
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|
1,619 |
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2,028 |
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Shares Outstanding |
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174.3 |
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31.7 |
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206.0 |
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Equity Value Per Share |
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$ |
9.29 |
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$ |
9.84 |
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Implied Change |
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$ |
0.55 |
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Accretion % |
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5.9 |
% |
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1 Gross notes payable based on the latest publicly
available information and as of June 30, 2023 |
2 Based on the latest publicly available
information and as of August 31, 2023 |
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Fred Thiel, Marathon’s chairman and chief
executive officer, added, “We are always looking for the
opportunities to increase our resilience and create shareholder
value. By opportunistically retiring the majority of our
convertible debt, we have strengthened Marathon’s balance sheet in
an accretive transaction. We have always maintained a positive
outlook on both Marathon’s and Bitcoin’s future, as we now hold
over 13,000 bitcoin on our balance sheet and our operations
produced approximately 34.3 bitcoin per day in August 2023. With a
reduced debt load, we believe Marathon is even better positioned to
capitalize on any near-term turbulence in the Bitcoin mining sector
including next year’s halving.”
FREQUENTLY ASKED QUESTIONS
Why pay off some of the debt
early? Bitcoin’s price can change quickly. Market
downturns like the one experienced in 2022 can negatively impact
companies with material debt obligations and limit future financing
options. While the Company’s debt is not due until 2026, Marathon
had an opportunity to strengthen its balance sheet and retire a
portion of its debt early in a manner deemed accretive for
shareholders.
Marathon considered multiple alternatives,
including refinancing the Notes. Although refinancing would have
extended the repayment terms, the Company would not have been able
to reduce its debt load and would have burdened its cash flows with
additional interest payments due to higher rates. The Company opted
to act opportunistically and retired a portion of its debt prior to
maturity.
Why does reducing leverage
matter?Reducing debt improves Marathon’s balance sheet. It
makes the Company more resilient to market downturns, changes in
Bitcoin’s price, and halving events. It also increases the
Company’s financial optionality and improves Marathon’s position as
a reliable and attractive partner. While Marathon maintains a
positive outlook on the long-term performance of Bitcoin, the
Company believes it is crucial to increase resilience and reduce
its risk profile prior to the next Bitcoin halving event.
How does this
transaction impact Marathon’s financial
condition?With this transaction, Marathon has reduced its
debt by approximately 56% from $748 million to $331 million. By
exchanging $417 million in Notes for $329 million of equity (c.
31.7 million newly issued shares), the Company captured an $88
million discount and removed approximately $13 million in future
interest payments on the retired notes. In total, this transaction
resulted in approximately $101 million, or $0.55 per share, in
savings. For the first time in two years, Marathon’s combined cash
and bitcoin holdings now exceed its debt outstanding.
Investor Notice Investing in
our securities involves a high degree of risk. Before making an
investment decision, you should carefully consider the risks,
uncertainties and forward-looking statements described under "Risk
Factors" in Item 1A of our most recent Annual Report on Form 10-K
for the fiscal year ended December 31, 2022, filed with the SEC on
March 16, 2023. If any of these risks were to occur, our business,
financial condition or results of operations would likely suffer.
In that event, the value of our securities could decline, and you
could lose part or all of your investment. The risks and
uncertainties we describe are not the only ones facing us.
Additional risks not presently known to us or that we currently
deem immaterial may also impair our business operations. In
addition, our past financial performance may not be a reliable
indicator of future performance, and historical trends should not
be used to anticipate results in the future. Future changes in the
network-wide mining difficulty rate or Bitcoin hash rate may also
materially affect the future performance of Marathon's production
of bitcoin. Additionally, all discussions of financial metrics
assume mining difficulty rates as of September 2023. See
"Forward-Looking Statements" below.
Forward-Looking Statements
Statements made in this press release include forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934. Forward-looking statements can be identified by the use of
words such as “may,” “will,” “plan,” “should,” “expect,”
“anticipate,” “estimate,” “continue,” or comparable terminology.
Such forward-looking statements are inherently subject to certain
risks, trends and uncertainties, many of which the Company cannot
predict with accuracy and some of which the Company might not even
anticipate and involve factors that may cause actual results to
differ materially from those projected or suggested. Readers are
cautioned not to place undue reliance on these forward-looking
statements and are advised to consider the factors listed above
together with the additional factors under the heading “Risk
Factors” in the Company's Annual Reports on Form 10-K, as may be
supplemented or amended by the Company's Quarterly Reports on Form
10-Q. The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events, new information or otherwise.
About Marathon Digital Holdings
Marathon is a digital asset technology company that focuses on
supporting and securing the Bitcoin ecosystem. The Company is
currently in the process of becoming one of the largest and most
sustainably powered Bitcoin mining operations in North America.
For more information, visit www.mara.com, or
follow us on:
Twitter: @MarathonDHLinkedIn:
www.linkedin.com/company/marathon-digital-holdings Facebook:
www.facebook.com/MarathonDigitalHoldings Instagram:
@marathondigitalholdings
Marathon Digital
Holdings Company Contact:
Telephone: 800-804-1690Email: ir@mara.com
Marathon Digital Holdings Media
Contact:Email: marathon@wachsman.com
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