KindlyMD (NAKA) Closes $200M Convertible Note Offering
KindlyMD, the Nasdaq-listed company that recently merged with bitcoin treasury firm Nakamoto, just wrapped up a $200 million convertible note deal late Friday. The terms are… interesting, to say the least. The notes don’t carry any interest for the first two years, but after that, they’ll start accruing a 6% annual rate until they mature in 2028. What’s the plan for the cash? Mostly buying more bitcoin, apparently.
The financing was arranged through Yorkville Advisors’ YA II PN fund, and the structure has raised a few eyebrows. James Van Straten, a senior analyst at CoinDesk, pointed out some unusual conditions. For one, Yorkville can convert the debt into equity at $2.80 per share—a move that could dilute existing shareholders if the lender decides to go that route.
Collateral and Market Reaction
Here’s where it gets even trickier. Nakamoto/KindlyMD has to put up twice the principal amount in bitcoin as collateral. That’s a hefty safety net for Yorkville, ensuring they’re covered if things go south. It’s a strong downside protection, no doubt, but it also ties up a significant chunk of the company’s bitcoin holdings.
The market didn’t exactly cheer the news. On Monday, NAKA shares dropped 11.2%, likely spooked by the convertible note terms and a weekend dip in bitcoin’s price. Other bitcoin-heavy firms didn’t fare much better, though their losses were smaller. MicroStrategy (MSTR) and Semler Scientific (SMLR) both slipped just over 1%, which feels almost mild compared to NAKA’s slide.
Why This Matters
Convertible notes aren’t uncommon, but the specifics here—especially the collateral requirement and conversion terms—stand out. It’s a bold move, maybe even a risky one, depending on how bitcoin performs over the next few years. If prices surge, the collateral won’t be an issue. But if they stagnate or drop, KindlyMD could find itself in a tight spot.
And then there’s the dilution risk. If Yorkville converts its debt to equity, existing shareholders might see their stakes watered down. That’s never popular, and it’s probably part of why the stock took such a hit.
For now, though, KindlyMD seems focused on stacking more bitcoin. Whether that pays off… well, we’ll have to wait and see. The crypto market’s never been predictable, and this deal adds another layer of uncertainty.
