Nisha Gopalan
2 min read
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Super Micro Computer shares fell Monday after the AI server maker said it plans to issue $2 billion in convertible bonds.
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Supermicro shares, which entered Monday up almost 50% this year, lost close to 10% Monday.
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The San Jose, Calif.-based server maker said the bonds will mature on June 15, 2030.
Super Micro Computer (SMCI) shares fell Monday after the AI server maker said it plans to issue $2 billion in convertible bonds.
The stock dropped nearly 10% to close just under $41. Still, it has added roughly a third of its value since the start of the year.
The San Jose, Calif.-based server maker said the bonds will mature on June 15, 2030. Supermicro said it would use the proceeds partly for general corporate purposes. Up to $200 million of the proceeds will go towards financing capped call transactions, which firms use to reduce the potential dilution from the issue of convertible bonds. The transaction usually involves the company buying call options on its own stock, which are subject to a cap.
Supermicro also said it expects to give the initial buyers of the convertible bonds the option to acquire an additional $300 million of the notes within 13 days from when it issues the bonds.
Supermicro shares, which entered Monday up almost 50% this year, have had a volatile 12 months amid concerns about its accounting practices and investor fears it would be delisted from the Nasdaq. The company met the exchange’s deadline to file its delayed reports in February, sending shares soaring at the time, but cut its sales outlook for fiscal 2025 in May, weighing on the stock.
This article has been updated since it was first published to reflect more recent share prices.
Read the original article on Investopedia
