Metaplanet plans to raise up to 21 billion yen (about $137 million) through the sale of stock warrants and new shares.
Tokyo-based company will raise money through new stock and warrants with select investors.
This move is intended to encourage further Bitcoin accumulation, while relieving pressure caused by a large debt burden.
Structure of funding
A third party will allocate the funds, rather than an initial public offering.
Metaplanet plans to issue 24,53,000,000 new shares of common stock at 499 yen per share.
The price is a 5% increase over the last close. This allows the company to receive an upfront amount of 12,24 billion yen.
The announcement of the price premium had a negative impact on stock despite the high prices.
The shares closed the day at 456 yen down by 4%.
Every newly-issued share includes 0.65 rights to purchase stock.
This equates to 15.94 millions additional potential shares or 65% of the warrant coverage.
These warrants have a fixed price for exercise of 547 yen, and they can be used over an annual period.
Metaplanet could raise an additional 8.9 billion yen if all warrants were exercised.
The company stressed that the warrants are not moving strike instruments but fixed strike ones, which limit variable dilution while providing a clearer view of potential shares issuance.
Debt repayment plan
Balance-sheet repairs are a key component of capital raising.
Out of the first proceeds, 5.2 million yen have been set aside for partial payment of debt.
Metaplanet’s Dashboard shows that the company currently owes around $280 Million.
The plan appears to be centered around reducing leverage. Metaplanet aims to reduce financing costs by allocating some of its new capital towards debt repayment. This will also improve the flexibility in its pursuit of bitcoin.
It is expected that the remaining funds will be used to purchase bitcoins and for general corporate needs.
The company can maintain operational liquidity while focusing on growing its crypto assets.
Bitcoin strategy
Metaplanet is a company that has built up a strong reputation by aggressively collecting bitcoin. It now ranks as one of the world’s largest corporations.
The fourth largest bitcoin holding among public companies is currently held by the company, which holds 35,102 BTC.
The treasury has been a key feature in the company’s operations.
Metaplanet aligns its capital structure to the long-term and volatile nature of bitcoin ownership by using equity-linked funding rather than debt-based financing.
Even though markets are still sensitive to balance sheet risk and dilution, the size of the raise proposed shows the commitment the company has to this strategy.
Market Reaction
Investors are now weighing up the advantages of a premium priced funding against issuing millions of shares, and the potential for additional dilution due to warrants.
The fixed-strike structure, as well as the ability to use the proceeds both for debt reduction and Bitcoin accumulation, may also appeal to long-term investors. They view this strategy more like a discipline than speculation.
The post Metaplanet to raise $137M in capital for bitcoin purchases and debt reduction may change as new information becomes available.
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