Unity Software Inc. (U) shares plunged 7.13% in pre-market trading on Monday, February 24, 2025, as the company announced plans to issue new convertible debt and repurchase a portion of its existing debt.

Unity Software revealed its intent to offer $500 million in convertible senior notes due 2030 in a private placement. The issuance of new convertible debt could potentially dilute existing shareholders and put pressure on the stock price. The company plans to enter into capped call transactions to mitigate the potential dilution from the note conversions.

Additionally, Unity Software intends to use a portion of the proceeds from the new debt offering, along with cash on hand if necessary, to repurchase approximately $500 million in principal amount of its 0% convertible senior notes due 2026. While the repurchase of existing debt could reduce the company's overall debt burden, it may also impact the stock price due to technical factors related to convertible debt instruments.