CoreWeave (NASDAQ:CRWV) shares fell almost 7% on Monday after the cloud computing infrastructure firm announced plans to raise capital through a $2 billion convertible senior notes offering.
Investors often view large convertible note offerings as dilutive, since the debt can eventually convert into shares, increasing the total share count.
CoreWeave said it intends to offer $2 billion aggregate principal amount of convertible senior notes due 2031 in a private placement, with an option for initial purchasers to buy an additional $300 million in notes.
The notes will be fully and unconditionally guaranteed by CoreWeave’s wholly owned subsidiaries and will accrue interest payable semi-annually.
The company said the notes may be converted into shares of CoreWeave’s Class A common stock, cash, or a combination of both, at CoreWeave’s election, under specified conditions and time periods. The interest rate, conversion rate, and other terms will be set at the time of pricing.
CoreWeave said that it plans to use a portion of the proceeds to fund capped call transactions and the remainder for general corporate purposes.
The company also expects to enter into privately negotiated capped call transactions with initial purchasers and other financial institutions in connection with the offering.