KindlyMD (NAKA), the Nasdaq-listed company that recently merged with bitcoin treasury firm Nakamoto, announced the closure of a $200 million convertible note offering on Friday. The convertible notes have a unique structure, with no interest in the first two years and a 6% annual rate kicking in from year three until maturity in 2028. The funds raised through this offering will be used to acquire additional bitcoin.
The financing deal, facilitated by Yorkville Advisors’ YA II PN fund, includes some unconventional terms. Yorkville has the option to convert the debt into equity at an initial price of $2.80 per share, which could potentially lead to dilution if the lender chooses to convert. Additionally, Nakamoto/KindlyMD is required to provide twice the principal amount in BTC as collateral, providing the lender with strong downside protection.
Following the announcement of the convertible note offering, NAKA’s shares fell by 11.2% on Monday, alongside a decline in the price of bitcoin over the weekend. Other companies with bitcoin treasury strategies, such as MicroStrategy (MSTR) and Semler Scientific (SMLR), also experienced slight declines, although not as significant as NAKA’s.
Overall, the closure of the $200 million convertible note offering marks a significant milestone for KindlyMD and Nakamoto as they continue to expand their presence in the cryptocurrency market. The unique terms of the financing deal demonstrate the company’s commitment to strategic growth and innovation in the evolving landscape of digital assets.