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Investing.com -- Shares of Xometry Inc (NASDAQ:XMTR) declined by 4.7% following the company’s announcement of a private offering of $225 million aggregate principal amount of Convertible Senior Notes due 2030. The marketplace for manufacturing services, known for its AI-powered platform, also plans to grant initial purchasers an option to buy an additional $25 million of the notes within a 13-day period starting from the date of issue.
The notes, which will be unsecured obligations of the company, are set to accrue interest payable semiannually. Xometry has indicated that upon conversion, the company will have the discretion to settle in cash, shares of its Class A common stock, or a combination of both. The interest rate and initial conversion rate will be determined at the time of pricing.
Xometry aims to allocate the net proceeds from the offering to various strategic initiatives. These include financing the cost of capped call transactions, repurchasing up to $25 million of its Class A common stock concurrently with the offering, and buying back a portion of its outstanding 1.00% Convertible Senior Notes due 2027. If the option to purchase additional notes is exercised, Xometry expects to use the extra proceeds for further capped call transactions, working capital, and potential acquisitions or strategic investments, although no specific agreements are currently in place.
In conjunction with the notes’ pricing, Xometry anticipates entering into capped call transactions to reduce the potential dilution from the conversion of the notes or to offset any excess cash payments required upon conversion, with a cap on these adjustments.
Market activity from the capped call transactions’ initial hedges, as well as subsequent adjustments by the option counterparties or their affiliates, may influence the market price of Xometry’s Class A common stock and the notes. These activities could potentially affect noteholders’ ability to convert their notes and the value they may receive upon conversion.
The company’s stock movement reflects market reaction to the potential increase in debt and the implications of the convertible notes on shareholder value. The financial maneuvers, including the capped call transactions and share repurchases, are strategic efforts by Xometry to manage the impact on its capital structure and stock price.
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