Coinbase Plans to Generate $1 Billion through Senior Convertible Notes to Settle Debts
Summary:
Coinbase, a cryptocurrency exchange, plans to raise $1 billion via senior convertible notes to repay debts and cater to "general corporate obligations." These notes, which can be changed into equity, will be offered privately to eligible institutional buyers and be repaid by April 1, 2030. The proceeds will be used to resolve existing convertible senior notes maturing in 2026, 2028, and 2031 and be allocated for other corporate expenses. Following the announcement of the offering, after-hour trading saw a decrease but Coinbase's year-to-date climb remains strong with a 63% rise.
Coinbase, a cryptocurrency exchange, has outlined plans to garner $1 billion through senior convertible notes to alleviate debts and address "general corporate obligations." These senior convertible notes, which can later be transformed into equity such as stock, will exclusively be given to qualified institutional buyers in a private offering. The company anticipates full repayment by April 1, 2030, barring any earlier repurchasing, redemption, or conversion. This information was made public through a blog post on March 12. As Coinbase's shares are at an unprecedented, over two-year high, the company is looking forward to using these notes to boost its capital.
Details of the proposed $1 billion offering through senior convertible notes were filed with the U.S. Securities and Exchange Commission in an 8-K filing. The notes will attract bi-annual interest and can be exchanged for cash, Coinbase stock, or a mix of both.
Coinbase will use the proceeds from these notes to offset its existing convertible senior notes that mature in 2026, 2028, and 2031. The interest rates for these three notes are 0.50%, 3.375%, and 3.625% respectively. Plans also include appropriating some portion of these funds for "other general corporate obligations," which could comprise of working capital and capital expenditures.
Earlier this week, MicroStrategy, known as the largest corporate Bitcoin (BTC) holder, successfully completed a $800 million convertible note offering. These funds were used to procure an additional 12,000 BTC for its Bitcoin treasury reserve. This came only a week after its announcement to raise $600 million to buy more Bitcoin, subsequently increased to $800 million.
On March 12, Coinbase's trade (COIN) remained steady, registering an approximately 0.8% increase and closing at $256. After announcing the note offering, its after-hour trading fell by 2.3% to nearly $250. Despite the fall, Coinbase has demonstrated a remarkable over 63% rise year-to-date, as the cryptocurrency market's success escalates. As of December 31, 2021, the company reached a 26-month high with shares peaking over the $250 mark.
Published At
3/13/2024 1:32:48 AM
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