Opendoor is selling $650m of convertible notes that pay no interest, and buying back about a third as many shares as those notes could one day create

Six hundred and fifty million dollars, at no interest at all.

That is the size and the coupon of the convertible notes Opendoor Technologies agreed to sell on Wednesday, disclosed in a Form 8-K filed at 06:05 Eastern on Thursday. The notes pay no regular interest, the principal does not accrete, and they mature on 15 August 2030.

They convert at about $4.71 a share, which the filing puts at a premium of roughly 35 percent over the $3.49 close on 12 August. At that rate the notes carry a claim on 137,960,290 shares.

The offsets

Two of them, bought with the proceeds.

The first is a repurchase of about 45.3 million shares for $158 million, at the same $3.49. Opendoor says it is the first buyback in the company's history as a public company, that it equals about 5 percent of the shares outstanding on 28 July, and that the board authorised it on 12 August. The second is a set of capped call transactions costing about $52.5 million.

Stack them and the company arrives at a threshold rather than a promise. The capped calls are expected to absorb dilution up to $6.98 a share. Above that the repurchased shares are expected to absorb it until the stock passes $10.38. Opendoor states the combined effect as no expected net share issuance below approximately $10.38, and less than 5 percent net dilution at $20.00.

What lands on the balance sheet

About $440m, before transaction expenses, on the company's own arithmetic: $650m raised, $158m spent on the buyback, $52.5m spent on the capped calls.

Kaz Nejatian, the chief executive, said in the release that the transaction "gives us more than $400 million of growth capital at a 0% coupon" and reduces shares outstanding by 5 percent. The stated use is expansion of home inventory and market footprint.

One further party is buying. J. Wood Capital Advisor LLC, the placement agent on the offering, will purchase about $25 million of Opendoor stock at a discount to Wednesday's closing price, at the same time as the company is buying its own. The release says plainly that these purchases could increase the market price of the shares or the notes, or reduce the size of any decrease in it.

The offering is expected to settle on 19 August.