Convertible bond offering ≠ simple dilution

It's important to understand the bond offering to put things into perspective because it's not just simply dilution.

Funding:

• $107 million in debt from Highbridge Capital Management at 7.5% p.a., payable in shares or cash
• Specifically outlined to fund the Yotta project
• Deadline June 5, 2031, unless Highbridge decides to convert the bonds into shares before that date

No shares issued right now, debt can convert into shares at these rates:

• Baseline price for the deal is $25.48, about 17% premium to the price before the announcement. Meaning for every $1000 of debt Highbridge have the right to convert at that price so the math is $1,000 / $25.4826 = 39.2425 shares

• Right now I can't see any mention of automatic conversions but I expect to see that on Friday when the deal officially closes. So as of now conversions are executed fully on Highbridge's decision.

• This is important because the eventual price at which Highbridge convert debt to shares adjusts both upwards and downwards based on current stock price, with a floor of $6.00/share and a ceiling of $31.85. Ultimately these two are just guardrails for the deal so take both with a grain of salt and don't read into that too much.

Now for the actual dilution scenarios, you can use this math at any time to understand the dilution %:

$107m ÷ share price = number of converted shares
Converted shares ÷ (27.65m shares + converted shares) = dilution %

Outstanding shares as of today: 27.65m
Debt amount: $107m

• Current Scenario: As of me writing this, the price is at $17.55 which would create 6.1 million shares ($107m/$17.55) diluting by 18.07%
• Base case**:** Converts at $25.48, creating 4.2 million shares = 13.19% dilution
• Worst-Case Scenario**:** Highbridge convert at the $6.00 floor creating 17.8 million shares = 47.8% dilution.
• Best-case Scenario: Stock goes near $31.85 but *importantly* does not exceed it by much before Highbridge decide to convert. This creates only 3.3m shares representing 10.83% dilution.

What's important about the cap is that if the stock rises past $31.85, Highbridge still are able to get shares at that price in which case the dilution % would be lower but shares are issued at a discount to them

Understand people are pissed about any dilution but ultimately this is how business scales and based on what we know now this is more of a bet on expansion than just simple dilution.

Not ideal for traders and emotional investors but if anything this benefits long-term holders.
If you have conviction this can be a good buying opportunity