SoFi (NASDAQ:SOFI) stock is taking a beating on Wednesday after the Reddit favorite revealed plans to raise $750 million in funding.
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According to the company, it plans to raise these funds by offering convertible senior notes due 2026. These notes will be available through a private offering to select institutional buyers chosen by the company.
SoFi says that the offering will also allow those buyers to pick up an additional $112.5 million worth of notes. This has to be done within 13 days that the notes are first issued.
So what does SoFi intend to do with the funds from notes in this proposed offering? The loan company says it will use a portion of the money raised from this offering to enter into capped call transactions.
SoFi says it will enter into these capped call transactions with one of the institutional buyers taking part in the offering. The company says it may enter into more capped call transactions should the first one go well.
The goal of these capped call transactions is to reduce the dilution of SOFI stock should the senior notes be converted to shares. This will also have the other parties in the agreement acquiring shares of SOFI stock alongside the potential note offering.
SOFI trading is active today with some 18 million shares of the move. That’s approaching the company’s daily average trading volume of 21.5 millino shares.
SOFI stock was down 3.5% as of Wednesday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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