Key Takeaways
- The senior convertible notes, available exclusively to eligible institutional buyers, are expected to mature by April 1, 2030.
- Coinbase noted that the proceeds from the offering will primarily go towards repaying or repurchasing existing debt obligations
Coinbase Global Inc. unveiled its plan to issue $1 billion in convertible senior notes aimed at repaying existing debt and funding general corporate activities, according to a statement released on Tuesday.
The notes, set to mature in 2030, will be offered privately to institutional investors. Additionally, Coinbase intends to grant a 30-day option to purchase up to an additional $150 million of the securities to cover over-allotments.
The senior convertible notes, available exclusively to eligible institutional buyers, are expected to mature by April 1, 2030. They hold precedence over common stock in the event of bankruptcy or liquidation and accrue interest semi-annually.
The company specified that the proceeds from the offering will primarily go towards repaying or repurchasing existing debt obligations, including Coinbase’s outstanding 0.50% convertible senior notes due 2026, 3.375% senior notes due 2028, and 3.625% senior notes due 2031. The remainder of the funds will be allocated for general corporate purposes, such as working capital, capital expenditures, and expenses related to capped call transactions.
Despite the strategic move, Coinbase experienced a decline in shares of up to 3.6% during after-hours trading following the announcement. However, the stock has seen a significant uptick of 47% since the start of the year, showcasing investor confidence in the company’s growth trajectory.
The decision to issue convertible senior notes reflects Coinbase’s prudent approach to managing its financial obligations while actively pursuing growth opportunities in the dynamic cryptocurrency market.
The issuance of the convertible senior notes is subject to market and other customary conditions, and there can be no assurance as to whether or when the offering may be completed, Coinbase noted.
Coinbase’s move to venture into the debt market for funding its crypto endeavors mirrors a strategy reminiscent of MicroStrategy’s Michael Saylor. Over recent years, Saylor’s firm has acquired 205,000 bitcoins, currently valued at almost $15 billion. This substantial investment has been largely financed by MicroStrategy’s issuance of over $2 billion in convertible notes.
