Supermicro Raises $2 Billion Via Private Convertible Debt With 35% Conversion Premium

Super Micro Computer SMCI announced Tuesday that it has priced the $2 billion convertible senior notes due 2030.

The stock recovered some losses Tuesday after a 9.7% fall on Monday, when the company announced its plans to raise $2 billion via debt by offering convertible senior notes due 2030.

The convertible senior notes offering triggered concerns over stock dilution when the debt is converted to stock. 

An additional $300 million will be available at the option of the initial purchasers within 13 days of issuance.

Also Read: Supermicro Teams Up With Nvidia To Supercharge Europe’s AI Factories With Powerful Server Solutions

The company had shared plans to privately negotiate capped call transactions alongside the pricing of its convertible notes to limit potential dilution for existing shareholders. It also said it looked to allocate part of the net proceeds to cover the cost of these transactions.

The “conversion premium” refers to the price the company pays for the capped call, which is effectively an upfront fee the company pays for limiting its potential dilution. 

Supermicro set an initial conversion rate of 18.1154 shares per $1,000 of its convertible senior notes, equating to a conversion price of roughly $55.20 per share. This represents a 35% premium over the company’s June 23, 2025, closing stock price of $40.89.

Starting June 15, 2028, Supermicro may redeem the notes for cash, partially or in full, if the stock price exceeds 130% of the conversion price for a set period.

The company expects net proceeds of $1.96 billion (or $2.26 billion if underwriters exercise their full option). It plans to spend $158.4 million on capped call transactions designed to reduce potential dilution and $200 million to repurchase about 4.9 million shares of its stock in private deals with note buyers.

The cap price of the capped call transactions is initially $81.78 per share of the company’s common stock, which represents a premium of 100% above the last reported sale price per share of the company’s common stock on Nasdaq on June 23, 2025

The company expects to establish more capped call agreements if the additional $300 million in notes is sold.

Supermicro stock lost 51% in the last 12 months as an August 2024 Hindenburg short report accused the company 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.

Still, the stock has surged over 36% year-to-date.

In May, it partnered with DataVolt to help build hyperscale AI campuses throughout Saudi Arabia. Supermicro will provide a thoroughly tested and optimized IT solution, including high-performance AI servers. The estimated minimum market value of the products involved is approximately $20 billion.

Supermicro plans to expand its server production capacity in U.S. states such as Mississippi and Texas.

Price Action: SMCI shares were trading higher by 1.17% to $41.37 at the last check Tuesday.

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