The Tokyo-listed company expects approximately ¥51.9 billion in net proceeds from the Euro-yen convertible bonds due in 2031. Around ¥23.6 billion will repay borrowings in November, while as much as ¥28.3 billion will fund share repurchases between October and December.
The transaction changes how Metaplanet finances its Bitcoin-heavy balance sheet. Instead of selling Bitcoin or continuing to rely heavily on loans secured against it, the company is replacing part of that borrowing with unsecured debt carrying no cash interest for five years.
Why Is Metaplanet Repaying Bitcoin-Backed Loans?
Metaplanet had approximately $649.5 million outstanding under an $800 million Bitcoin-collateralized credit facility as of September 30.
Those borrowings represented about 17.7% of the net asset value of its Bitcoin holdings, well above the company’s policy guideline of keeping Bitcoin-backed debt below 10% of BTC NAV.
That ratio becomes more problematic when Bitcoin falls because the value of the collateral declines while the nominal debt remains. Metaplanet said reducing leverage should give it enough financial flexibility to avoid being forced to sell Bitcoin during a further market decline.
The company’s concern is therefore less about reducing headline liabilities immediately than changing their structure. The new bonds will initially increase liabilities, but repayment of Bitcoin-backed loans should release collateral and reduce interest-related cash outflows.
That contrasts with the company’s earlier use of Bitcoin-backed credit to support capital allocation. Metaplanet previously established a $500 million Bitcoin-backed credit line partly to finance share repurchases and potential Bitcoin purchases.
Investor Takeaway
Metaplanet is exchanging collateral and interest risk for future equity-dilution risk, reducing pressure to sell Bitcoin if BTC prices fall sharply.
Why Borrow Money to Buy Back Shares?
Metaplanet is directing up to ¥28.3 billion of the proceeds toward share repurchases and has simultaneously established a new program authorizing as much as ¥60 billion in total buybacks.
The logic is tied to mNAV, Metaplanet’s measure comparing its enterprise value with the net asset value of its Bitcoin holdings. The company generally avoids issuing common equity when mNAV is below 1.0x and has previously said it would consider repurchasing shares when its market valuation falls below the value implied by its Bitcoin treasury.
That policy became increasingly relevant earlier this year when Metaplanet’s mNAV dropped below 1.0x, making buybacks potentially accretive to Bitcoin exposure per remaining share.
The new bonds are therefore being used for two related objectives: reduce financing pressure on the Bitcoin treasury while shrinking the common-share base when management believes the shares are undervalued relative to their underlying assets.
What Is the Cost of Zero-Coupon Financing?
The bonds pay no coupon and will be redeemed at 100% of principal at maturity, giving Metaplanet five-year funding without regular interest payments. They are expected to close on October 29.
But zero interest does not mean the capital is free. Investors receive conversion rights that could ultimately increase Metaplanet’s share count.
The company plans to set the conversion price at a premium to the share price and at a level that would imply mNAV above 1.0x based on Bitcoin NAV when the bonds are issued. Metaplanet cautioned that Bitcoin prices could change before conversion, so mNAV is not guaranteed to remain above that threshold when bondholders exercise their rights.
CEO Simon Gerovich also plans to make up to 55 million existing shares available through stock-lending arrangements so convertible-bond investors can hedge their positions. The shares will come from Gerovich’s holdings rather than new issuance.
Investor Takeaway
The buyback can reduce shares today, while bond conversion could add shares later. The net benefit therefore depends on repurchase prices, Bitcoin and Metaplanet’s future valuation.
Does the Deal Add More Bitcoin?
No. Metaplanet explicitly said none of the proceeds is intended for additional Bitcoin purchases and that the financing is not designed to increase BTC per share immediately.
The company held 44,000 BTC at the end of September after selling 10,000 BTC and subsequently buying 11,000 BTC during the third quarter. That transaction produced a net increase of 1,000 BTC while demonstrating the treasury’s ability to generate liquidity.
Metaplanet shares closed Tuesday at ¥261, down 1.5%. The muted response reflects the trade-off embedded in the new financing: shareholders gain a larger buyback program and lower Bitcoin-collateral leverage, but they also inherit the possibility of future dilution if the convertible bonds ultimately turn into equity.
