Shares in Bitcoin mining company IREN and finance company Kindly MD each closed in losses on Tuesday after announcing multi-million dollar convertible debt deals, as venture capital activity in the crypto sector slows.
IREN (IREN) stock closed Tuesday’s trading up 6.81%, but was down 4.9% after the bell, trading at $58.66 after the company announced the issuance of $875 million in convertible notes.
Kindly MD, the healthcare company that merged with David Bailey’s Bitcoin company Nakamoto, also appeared to surprise shareholders on Tuesday when it announced it had signed a $250 million five-year convertible note deal with fintech company Antalfa.
Kindly MD (NAKA) fell 0.97% on the day and dropped an additional 2.83% to $0.99 in after-hours trading.
Digital assets continue to attract interest from institutional investors, but Galaxy Research’s latest venture capital report found a 59% decline in available funds and a 15% decline in the number of deals compared to the previous quarter.
IREN raises funds for corporate purposes
IREN intends to use a portion of the proceeds from the bond issuance for general corporate purposes and working capital.
The company also hopes to cover the cost of capped call transactions, which are used to prevent companies from issuing too many new shares when converting debt into equity by setting a price ceiling.
Additionally, an additional $125 million in bonds are available to early purchasers, all of which are convertible into equity in the company.
The company said the call transaction is expected to reduce potential dilution of IREN’s common stock upon conversion of the notes.
Shareholders are often concerned that convertible debt transactions will reduce the value and power of the stock they already own.
Mr. Nakamoto wants to purchase more Bitcoin
Antalf and Kindly MD have entered into a non-binding letter of intent for long-term financing, the company said, expecting “less shareholder dilution risk compared to standard convertible debt.”
Proceeds are marked to be used to grow the KindlyMD Bitcoin Treasury’s Bitcoin (BTC) holdings, in addition to general corporate purposes.
The funds raised through this loan also replace an existing $203 million Bitcoin-backed loan from Two Prime Lending Limited.
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Antalfa also offers Bitcoin-backed loans
Until the convertible note facility is completed, Antalpha will provide interim Bitcoin-backed financing to KindlyMD.
Bailey said the partnership “represents the power of Bitcoin companies to support Bitcoin companies” and is “aimed at addressing today’s financing needs, while also laying the foundation for a future structure tailored to the unique requirements of Bitcoin treasury companies.”
“This is the first step in a long series of initiatives to benefit our portfolio, our shareholders, and the entire Bitcoin ecosystem.”
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