Shares of WhiteFiber, Inc. (NASDAQ: WYFI), a company focused on artificial intelligence infrastructure, experienced a 7% decline in after-hours trading on Wednesday following its announcement of a $200 million convertible senior notes offering due in 2031. This private placement targets qualified institutional buyers and includes an option allowing initial purchasers to acquire an additional $30 million in notes within 13 days of issuance.
The notes will be senior unsecured obligations, featuring semiannual interest payments. Specific details such as the interest rate and conversion rate will be established during pricing. A segment of the capital raised will fund a zero-strike call option transaction with one initial purchaser. The remainder is earmarked mainly for expanding WhiteFiber's data center operations, encompassing property purchases, construction of new facilities, procurement of equipment, and potential strategic partnerships.
WhiteFiber acknowledged that accomplishing these expansion projects will require additional project financing beyond the anticipated offering. As part of the transaction, the company intends to enter a privately negotiated zero-strike call option set to expire soon after the note maturity. This structure is designed to enable derivative transactions between the option counterparty and certain note investors, which may impact the market price of both WhiteFiber's ordinary shares and the notes.
Operating within high-performance computing, WhiteFiber delivers cloud services optimized for generative AI workloads through its data centers. The convertible notes and any ordinary shares issuable upon conversion have yet to be registered under the Securities Act, limiting their sale or offering in the U.S. to registered transactions or applicable exemptions.
This financing move reflects WhiteFiber’s strategic focus on bolstering infrastructure to meet increasing demand in AI-driven computing services. However, the need for further financing and the complex financial instruments involved introduce several considerations for investors.