DigitalOcean Holdings NYSE:DOCN, a cloud-infrastructure provider that rents computing and storage to developers and smaller businesses, announced plans to repurchase up to $500 million of its 0.00% convertible senior notes due 2030, funded by a registered direct offering of common stock to the noteholders taking part. The company said the deal is designed to reduce net leverage with minimal change to cash or shares outstanding. DigitalOcean shares were down 10.74% intraday.
Repurchased notes will be retired, and the shares sold in the offering are expected to be largely offset by the shares that already underpinned the converts. DigitalOcean also plans to use its existing buyback authorization to absorb any incremental shares, leaving dilution close to neutral.
The company framed the move as clearing balance-sheet room to expand its AI-Native Cloud. The transaction is expected to close July 23, subject to customary conditions.