TeraWulf (WULF) Falls 7% on Potential Dilution of Mandatory Preferred Share Conversion

WULF -2.53%

We recently published 10 Stocks Deep in the Red. TeraWulf Inc. (NASDAQ:WULF) is one of the worst performers on Tuesday.

TeraWulf extended its losses to a second day on Tuesday, shedding 7.06 percent to close at $14.22 apiece as investors sold off positions ahead of the mandatory conversion of its preferred shares into common stocks.

Next Tuesday, December 9, all convertible preferred shares of the company will automatically convert into 141.9483 common shares, a transaction that could result in a potential dilution. Any fractional interest would be paid in cash.

The conversion was in pursuant with the Certificate of Designations, which TeraWulf Inc. (NASDAQ:WULF) filed with the Secretary of State of the State of Delaware on March 16, 2022.

Photo by ThisisEngineering on Unsplash

Under Section 10c of the Certificate of Designations, the company has the option to convert all its outstanding convertible preferred stocks into common shares, provided that for at least five trading days from November 4 to 24, 2025, whether or not consecutive, the closing price of its common shares exceeded 130 percent of the conversion price, or $10.

According to TeraWulf Inc. (NASDAQ:WULF) Chief Finance Officer Patrick Fleury, the mandatory conversion reinforces the company’s financial discipline and enables focus on growth moving forward.

“[This] announcement represents a key milestone on our journey to simplify TeraWulf’s capital structure going forward, supporting future growth while providing transparency to investors,” he said.

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Disclosure: None. This article is originally published at Insider Monkey.