MARA Holdings (MARA), formerly Marathon Digital Holdings, shook up shareholders on Monday after the crypto company announced a proposed $700 million note offering. These convertible senior notes mature on March 1, 2030, and will be sold to qualified institutional buyers in a private offering.
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News of the proposed notes offering saw shares of MARA stock fall 7.36% in early morning trading. That builds on a 19.28% drop year-to-date but doesn’t undo the stock’s 78.20% rally over the last 12 months.
Details of the Notes Offering
The notes sold by MARA Holdings will be unsecured, with senior obligations collecting interest payments semiannually on March 1 and September 1 of each year. This starts on March 1, 2025.
The company may redeem the notes for cash starting on March 5, 2028. If it doesn’t redeem all of the notes, it has to leave $75 million aggregate. Holders can also require the redemption of the notes for cash starting on December 1, 2027.
Additionally, these notes can be converted into cash or shares of MARA stock. If MARA goes the stock conversion route, it will increase the total number of outstanding shares, diluting the stakes of current investors in the company. This possibility helps explain why shares of MARA are falling today.
What Will Mara Do With the $700 Million?
MARA Holdings plans to use $200 million of the notes in this offering to repurchase senior convertible notes due in 2026. But that still leaves MARA with $500 million to work with.
With some of these leftover funds, the company plans to continue to shore up its Bitcoin (BTC) holdings. MARA has been betting big on the cryptocurrency, with 26,747 tokens currently held. Any funds remaining after that will go toward general corporate purposes.
Should Traders Buy MARA Stock?
Turning to Wall Street, MARA Holdings has an analyst consensus rating of Moderate Buy based on three Buy, three Hold, and one Sell ratings over the last three months. It also has an average price prediction of $25 per share, with a high of $33 and a low of $19. That represents a potential upside of 31.37%.
