Supermicro Wants To Raise $2 Billion Via Convertible Debt, Stock Falls On Dilution Concerns

Super Micro Computer SMCI on Monday announced that it intends to raise $2 billion via debt by offering convertible senior notes due 2030.

The offering size is equivalent to 7.4% of the company’s market cap of $27.05 billion.

The company also expects to grant the initial purchasers an option to purchase up to an additional $300.0 million aggregate principal amount of the convertible notes within 13 days.

Also Read: Dell, Hewlett Packard, Super Micro Set To Benefit From Nvidia’s AI Chip Ramp

How Will $2 Billion Debt Be Used?

The convertible notes will accrue interest payable semi-annually in arrears and mature on June 15, 2030.

In connection with the pricing of the convertible notes, the company expects to enter into privately negotiated capped call transactions to manage the potential dilution of their existing shareholders.

The company expects to use a portion of the net proceeds to fund the cost of entering into the capped call transactions.

Also, roughly $200.0 million of the net proceeds will be used to repurchase shares of its common stock from purchasers of the convertible notes concurrently with the pricing of the offering in privately negotiated transactions.

The rest will be used for general corporate purposes, including to fund working capital for growth and business expansion. Since the debt is convertible, it will trigger stock dilution for existing shareholders. 

Why It Matters

As of March 31, 2025, Supermicro held $2.54 billion in cash and equivalents, and total bank debt and convertible notes were $2.49 billion.

In August 2024, Hindenburg published a short report accusing Super Micro Computer of “accounting manipulation,” sibling self-dealing, and sanctions evasion. 

In December 2024, the company announced the completion of an independent review conducted by an Independent Special Committee, which gave the company a clean chit.

Super Micro Computer stock has lost over 45% in the past year. In its latest earnings, the company missed revenue and margin estimates, citing delays tied to next-gen AI platform transitions and inventory pressures.

CNBC Mad Money host Jim Cramer slammed Super Micro Computer, citing irregularities in its accounting, following a barrage of issues it has faced since June 2024.

In May, Raymond James analyst initiated coverage on Super Micro Computer, saying AI platforms constitute approximately 70% of Supermicro’s revenue, positioning it as a dominant player among branded server vendors. 

Raymond James noted that Supermicro has effectively positioned itself with traditional branded IT vendors.

Price Action: SMCI shares were trading lower by 6.00% to $42.56 at last check Monday.

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