Evernorth plans up to $80 million equity raise to buy more XRP

First reported 25 Oct, 14:30 UTCSource: CryptoSlateLast editorial activity 25 Oct, 14:30 UTCWrite a comment ↓

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Evernorth Holdings, the Ripple-backed company, is preparing to raise roughly $80 million through a new equity financing agreement with a Cantor Fitzgerald affiliate, and plans to use much of the money to buy more XRP. The approach mirrors the share-funded treasury model that Strategy has used to accumulate Bitcoin.

Terms of the Cantor equity arrangement

Evernorth signed a stock purchase agreement with CF Principal Investments, an affiliate of Cantor Fitzgerald, on October 23. Under the deal, the Nasdaq-listed company can sell up to 5.22 million newly issued Class A common shares over about 14 months.

According to an accompanying SEC prospectus, the arrangement could generate $80.7 million in gross proceeds, or roughly $78.3 million after fees and expenses, based on Evernorth's share price at the time of the filing.

Evernorth can instruct Cantor to buy shares periodically at 97% of their volume-weighted average trading price. The company decides when to issue shares based on market conditions and its financing needs, so the money arrives in installments rather than as a single lump sum.

Limits and conditions on the purchases

The purchases are constrained. A general cap limits Cantor's buying to 20% of trading volume during the applicable purchase period, and a 4.99% ownership threshold applies to Cantor.

The financing has not yet begun. Evernorth must first obtain SEC effectiveness for its resale registration statement and meet other contractual requirements. The final amount raised will therefore depend on its share price, trading liquidity and the volume of equity it ultimately issues.

Use of proceeds and the XRP strategy

Evernorth intends to direct a substantial portion of the proceeds toward acquiring additional XRP, the token associated with Ripple. The remaining capital is earmarked for working capital, corporate expenses and activities within the XRP ecosystem.

The plan follows the approach popularised by Strategy, the company led by Michael Saylor that has funded Bitcoin purchases largely through share sales.

Additional potential capital from warrants

A separate earlier SEC filing identifies another potential $132 million from outstanding warrants. These warrants were issued by the special purpose acquisition company behind Evernorth's public listing and allow holders to buy shares at $11.50 each. Whether that money materialises depends on holders exercising the warrants.

Open questions

Will Evernorth obtain SEC effectiveness for its resale registration statement, allowing the financing to start?
How much of the roughly $80 million will ultimately be raised, given the dependence on share price and trading liquidity?
Will the warrants be exercised to bring in the additional $132 million?

Key facts

Evernorth Holdings could raise about $80 million through a stock purchase agreement with CF Principal Investments, a Cantor Fitzgerald affiliate.

The agreement, dated October 23, allows Evernorth to sell up to 5.22 million newly issued Class A common shares over roughly 14 months.

An SEC prospectus estimates gross proceeds of $80.7 million, or about $78.3 million after fees and expenses.

Evernorth intends to put a substantial share of the proceeds into additional XRP, with the rest going to working capital and corporate costs.

A separate earlier SEC filing points to another potential $132 million from outstanding warrants at $11.50 per share.