Key Highlights
- Nebius Group revealed plans for a $4.5 billion private placement of convertible senior notes
- Shares of NBIS declined more than 8% during premarket hours after the disclosure
- The debt issuance consists of two tranches: $2.75B maturing in 2030 and $1.75B maturing in 2034
- Funds will support data center infrastructure, AI cloud platform expansion, and GPU acquisition
- Nebius intends to swap portions of outstanding 2029 and 2031 notes for Class A ordinary shares
Shares of Nebius Group (NBIS) plummeted over 8% during Wednesday’s premarket session following the AI cloud company’s announcement of a substantial $4.5 billion convertible senior notes offering.
The capital raise is structured as two separate tranches. The initial tranche comprises $2.75 billion in convertible notes with a maturity date of February 15, 2030. The secondary tranche includes $1.75 billion in convertible notes maturing on February 15, 2034.
The securities will be distributed exclusively through private placement channels to qualified institutional buyers.
Nebius plans to provide initial purchasers with over-allotment options. These options encompass up to $375 million for the 2030 tranche and up to $300 million for the 2034 tranche, available for exercise within a 13-day window following issuance.
If the over-allotment options are fully utilized, the aggregate offering could exceed $5.1 billion.
Allocation of Capital
According to the company, the raised capital will be allocated toward supporting ongoing business expansion initiatives. These include constructing and scaling data center facilities, advancing its comprehensive AI cloud infrastructure, and acquiring essential hardware components such as GPUs.
Any surplus capital will be directed toward general corporate requirements.
Existing Debt Exchange Initiative
In conjunction with the new debt offering, Nebius plans to negotiate exchange agreements with select holders of its existing convertible notes. These include the company’s 2.00% Convertible Senior Notes maturing in 2029 and 3.00% Convertible Senior Notes maturing in 2031.
Through these arrangements, certain amounts of outstanding notes will be converted into Nebius Class A ordinary shares, with each share carrying a par value of ā¬0.01.
This strategy essentially transforms a portion of debt obligations into equity, which may result in dilution for current shareholders.
The potential dilutive impact, coupled with the considerable magnitude of the financing package, appears to be driving the significant premarket decline in NBIS shares.
The stock initially fell more than 6% immediately following the announcement, before losses accelerated beyond 8% as premarket activity progressed.
Both the 2030 and 2034 series will reach maturity on February 15 of their designated years, at which time the principal amount along with any accrued accretion will be due for repayment.
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