IREN announces proposed convertible notes offering

Rhea-AI Summary

IREN announced plans to offer $450 million in convertible senior notes due 2029, with an additional $50 million option for initial purchasers. The notes will be senior, unsecured obligations with semi-annual interest payments, convertible to cash, ordinary shares, or a combination. The company plans to use proceeds for capped call transactions, a prepaid forward transaction, and general corporate purposes. The capped call transactions, covering approximately $100 million worth of shares, aim to reduce potential dilution and offset cash payments beyond principal amounts. IREN will also enter into a prepaid forward share repurchase transaction to facilitate derivative transactions for note investors. The notes will be offered privately to qualified institutional buyers under Rule 144A of the Securities Act.

Positive

• Potential to raise up to $500 million in capital through convertible notes offering
• Implementation of capped call transactions to reduce potential share dilution
• Flexible conversion terms allowing settlement in cash, shares, or combination
• Strategic prepaid forward transaction to facilitate investor hedging

Negative

• Potential dilution of existing shareholders if notes are converted to shares
• Additional debt obligation with interest payments until 2029
• Complex transaction structure may impact stock price through various hedging activities
• Increased financial leverage and debt service obligations

Insights

Financial Derivatives Specialist

IREN's $450M convertible note offering includes anti-dilution measures, but still carries potential dilution risks for shareholders.

IREN has announced a $450 million convertible senior notes offering due 2029, with an option for purchasers to buy an additional $50 million. This significant financing move incorporates sophisticated capital market strategies through complementary derivative transactions.

The company is implementing two key hedging mechanisms alongside this offering. First, they're entering into capped call transactions that should reduce potential dilution from note conversions by effectively raising the conversion premium. These transactions only kick in when the stock price exceeds the cap price, providing partial protection against share dilution.

Second, IREN is executing a $100 million prepaid forward repurchase transaction that will settle near the notes' maturity date. This transaction facilitates derivative positions for note investors while potentially offsetting some dilution effects.

What makes this offering particularly complex is the cash settlement requirement until shareholder approval for share repurchases is obtained. The company has structured these instruments to comply with jurisdictional incorporation laws while maintaining flexibility through potential future shareholder approvals.

These derivative transactions will likely create temporary price effects on IREN's shares - particularly around the pricing date and during hedge establishment periods. The hedging activities could temporarily increase share prices during initial setup and potentially create volatility during adjustment periods.

For existing shareholders, this convertible offering represents a double-edged sword: it provides substantial capital for "general corporate purposes and working capital" without immediate dilution, but creates potential future dilution partially mitigated by the capped calls and prepaid forward. The true impact depends heavily on IREN's share price performance relative to the conversion and cap prices that will be determined at pricing.

SYDNEY, June 10, 2025 (GLOBE NEWSWIRE) -- IREN Limited (NASDAQ: IREN) (ACN 629 842 799) (“IREN”) today announced its intention to offer, subject to market and other conditions, $450 million aggregate principal amount of convertible senior notes due 2029 (the “notes”) in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). IREN also expects to grant the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date the notes are first issued, up to an additional $50 million principal amount of notes.

Description of notes

The notes will be senior, unsecured obligations of IREN, will accrue interest payable semi-annually in arrears and will mature on December 15, 2029 unless earlier repurchased, redeemed or converted. Noteholders will have the right to convert their notes in certain circumstances and during specified periods. IREN will settle conversions by paying or delivering, as the case may be, cash, its ordinary shares or a combination of cash and its ordinary shares, at its election.

The notes will be redeemable, in whole or in part (subject to certain limitations), for cash at IREN’s option, on or after June 20, 2028 and on or before the 30th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of IREN’s ordinary shares exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If certain corporate events that constitute a “fundamental change” occur, then, subject to a limited exception, noteholders may require IREN to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.

Use of proceeds

IREN intends to use a portion of the net proceeds from the offering to fund the cost of entering into the capped call transactions and to fund the cost of entering into the prepaid forward transaction, each as described below. IREN intends to use the remainder of the net proceeds for general corporate purposes and working capital. If the initial purchasers exercise their option to purchase additional notes, IREN intends to use a portion of the additional net proceeds to fund the cost of entering into additional capped call transactions, as described below.

Capped call transactions

In connection with the offering of the notes, IREN expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers or their affiliates and/or one or more other financial institutions (the “option counterparties”). The capped call transactions are expected to cover, subject to anti-dilution adjustments, the number of ordinary shares of IREN that will initially underlie the notes. If the initial purchasers exercise their option to purchase additional notes, then IREN expects to enter into additional capped call transactions with the option counterparties. 

The capped call transactions are expected generally to reduce the potential dilution to IREN’s ordinary shares upon any conversion of the notes and/or offset any potential cash payments IREN is required to make in excess of the principal amount of converted notes, as the case may be, with such offset and/or reduction subject to a cap price. If, however, the market price per ordinary share of IREN, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions. In addition, the capped call transactions will be solely cash settled until IREN receives shareholder approval to repurchase its ordinary shares pursuant to the terms of the capped call transactions or is otherwise permitted to repurchase its ordinary shares pursuant to the terms of the capped call transactions under the laws of its jurisdiction of incorporation. The Company retains flexibility to seek and/or renew such approval from time to time during the terms of the capped call transactions at a general meeting or future annual general meeting.

IREN has been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to IREN’s ordinary shares and/or purchase the ordinary shares of IREN concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of IREN’s ordinary shares or the notes at that time. Any such trades by the option counterparties or their respective affiliates would be on a principal basis and without any agreement, arrangement or understanding between, or with, IREN on how those parties would hedge their own positions.

In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to IREN’s ordinary shares and/or purchasing or selling IREN’s ordinary shares or other securities of IREN in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so (x) on each exercise date for the capped call transactions, which are expected to occur on each trading day during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity date of the notes and (y) following any early conversion of the notes or any repurchase of the notes by IREN on any fundamental change repurchase date, any redemption date or any other date on which the notes are repurchased by IREN, in each case if IREN exercises the relevant election to terminate the corresponding portion of the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of IREN’s ordinary shares or the notes, which could affect the ability of noteholders to convert the notes, and, to the extent the activity occurs following a conversion or during any observation period related to a conversion of the notes, it could affect the number of IREN’s ordinary shares and value of the consideration that noteholders will receive upon conversion of the notes.

Prepaid forward repurchase transaction

In connection with the offering of the notes, IREN also expects to enter into a privately negotiated prepaid forward share repurchase transaction (the “prepaid forward transaction”) with one of the initial purchasers of the notes or its affiliate (the “forward counterparty”), pursuant to which IREN will purchase up to approximately $100 million of its ordinary shares (based on the last reported sale price of IREN’s ordinary shares on the pricing date), for settlement on the date that is shortly after the maturity date of the notes, subject to any early settlement, in whole or in part, of the prepaid forward transaction. The prepaid forward transaction will be solely cash settled until IREN receives shareholder approval to repurchase its ordinary shares pursuant to the terms of the prepaid forward transaction or is otherwise permitted to repurchase its ordinary shares pursuant to the terms of the prepaid forward transaction under the laws of its jurisdiction of incorporation.

The prepaid forward transaction is generally intended to facilitate privately negotiated derivative transactions, including swaps, between the forward counterparty or its affiliates and investors in the notes relating to IREN’s ordinary shares by which investors in the notes will establish short positions relating to IREN’s ordinary shares and otherwise hedge their investments in the notes. As a result, the prepaid forward transaction is expected to allow the investors to establish short positions that generally correspond to (but may be greater than) commercially reasonable initial hedges of their investment in the notes. In the event of such greater initial hedges, investors may offset such greater portion by purchasing IREN’s ordinary shares on or shortly after the day IREN prices the notes. Facilitating investors’ hedge positions by entering into the prepaid forward transaction, particularly if investors purchase IREN’s ordinary shares on or shortly after the pricing date, could increase (or reduce the size of any decrease in) the market price of IREN’s ordinary shares and effectively raise the initial conversion price of the notes. In connection with establishing their initial hedges of the prepaid forward transaction, the forward counterparty or its affiliates may enter into one or more derivative transactions with respect to IREN’s ordinary shares with the investors of the notes concurrently with or after the pricing of the notes. Any such trades by the forward counterparty or its affiliates would be on a principal basis and without any agreement, arrangement or understanding between, or with, IREN on how those parties would hedge their own positions.

IREN’s entry into the prepaid forward transaction with the forward counterparty and the entry by the forward counterparty into derivative transactions in respect of IREN’s ordinary shares with the investors of the notes could have the effect of increasing (or reducing the size of any decrease in) the market price of IREN’s ordinary shares concurrently with, or shortly after, the pricing of the notes and effectively raising the initial conversion price of the notes.

Neither IREN nor the forward counterparty will control how investors of the notes may use such derivative transactions. In addition, such investors may enter into other transactions relating to IREN’s ordinary shares or the notes in connection with or in addition to such derivative transactions, including the purchase or sale of IREN’s ordinary shares. As a result, the existence of the prepaid forward transaction, such derivative transactions and any related market activity could cause more purchases or sales of IREN’s ordinary shares over the term of the prepaid forward transaction than there otherwise would have been had IREN not entered into the prepaid forward transaction. Such purchases or sales could potentially increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of IREN’s ordinary shares and/or the price of the notes.

In addition, the forward counterparty or its affiliates may modify their hedge positions by entering into or unwinding one or more derivative transactions with respect to IREN’s ordinary shares and/or purchasing or selling IREN’s ordinary shares or other securities of IREN in secondary market transactions at any time following the pricing of the notes and prior to the maturity of the notes. These activities could also cause or avoid an increase or a decrease in the market price of IREN’s ordinary shares or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs following conversion or during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that noteholders will receive upon conversion of the notes.

The offer and sale of the notes and any of IREN’s ordinary shares issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any of IREN’s ordinary shares issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction (including the United States and Australia) in which such offer, sale or solicitation would be unlawful.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the anticipated terms of the notes being offered, the completion, timing and size of the proposed offering and the intended use of the proceeds. Forward-looking statements represent IREN’s current expectations, beliefs, and projections regarding future events and are subject to known and unknown uncertainties, risks, assumptions and contingencies, many of which are outside IREN’s control and that could cause actual results to differ materially from those described in or implied by the forward-looking statements. Among those risks and uncertainties are market conditions, including market interest rates, the trading price and volatility of IREN’s ordinary shares and risks relating to IREN’s business, including those described in periodic reports that IREN files from time to time with the SEC. IREN may not consummate the proposed offering described in this press release and, if the proposed offering is consummated, cannot provide any assurances regarding the final terms of the offering or the notes or its ability to effectively apply the net proceeds after funding the cost of entering into the capped call transactions and financing the prepaid forward as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and IREN does not undertake any obligation to update the forward-looking statements included in this press release for subsequent developments, except as may be required by law. For a further discussion of factors that could cause IREN’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in IREN’s Annual Report on Form 20-F for the year ended June 30, 2024, as amended on Form 20-F/A and other risks described in documents filed by IREN from time to time with the Securities and Exchange Commission.

About IREN

IREN is a vertically integrated data center business powering the future of Bitcoin, AI and beyond utilizing 100% renewable energy. Strategically located in renewable-rich, fiber-connected regions across the U.S. and Canada, IREN’s large-scale, grid-connected facilities are purpose-built for the next generation of power-dense computing applications.

• Power & Land Portfolio: 2,910MW of grid-connected power secured across >2,000 acres in the U.S. and Canada, with an additional multi-gigawatt development pipeline.
  
• Next-Generation Data Centers: 660MW of operating data centers expanding to 885MW in 2025, underpinning three verticals: Bitcoin Mining, AI Cloud Services and AI Data Centers.
  
• Bitcoin Mining: one of the world’s largest and lowest-cost Bitcoin producers with 41 EH/s of capacity, expanding to 50 EH/s in 2025.
  
• AI Cloud Services: delivering high performance cloud compute to AI customers with 1,896 NVIDIA H100 & H200 GPUs.
  
• AI Data Centers: end-to-end design, construction and operation of data center infrastructure tailored for AI workloads, with 50MW (IT load) liquid cooled capacity scheduled for delivery in 2025.
  
  

Contacts
Media Megan Boles Aircover Communications +1 562 537 7131 megan.boles@aircoverpr.com Jon Snowball Sodali & Co +61 477 946 068 +61 423 136 761	Investors Mike Power IREN mike.power@iren.com

FAQ

What is the size of IREN's convertible notes offering?

IREN is offering $450 million in convertible senior notes, with an option for initial purchasers to acquire an additional $50 million, potentially totaling $500 million.

When do IREN's convertible notes mature?

The convertible notes will mature on December 15, 2029, unless earlier repurchased, redeemed, or converted.

How will IREN use the proceeds from the convertible notes offering?

IREN will use the proceeds to fund capped call transactions, a prepaid forward transaction, and for general corporate purposes and working capital.

What measures is IREN taking to protect shareholders from dilution?

IREN is entering into capped call transactions to reduce potential dilution from note conversions and offset potential cash payments exceeding the principal amount.

Can IREN redeem the convertible notes early?

Yes, IREN can redeem the notes after June 20, 2028 if the stock price exceeds 130% of the conversion price for a specified period and other conditions are met.