Coinbase to offer $1 billion in convertible notes.
Cryptocurrency exchange Coinbase plans to raise $1 billion in major convertible notes to pay down debt and for “general corporate purposes.”
The highly variable notes — debt securities that can later be converted into equity like shares — will be offered privately only to qualified institutional buyers and will be due on April 1, 2030 unless purchased, repurchased or converted earlier, the firm said in a March 12 blog post.
The notes are a valuable tool for companies looking to raise capital, and Coinbase appears to be jumping at the chance to take on debt as investors remain confident in the company's share price, which has been more than two years after Google's financing.
The notes are senior to common stock because holders have priority in the event of insolvency or bankruptcy. They collect interest semi-annually and can be converted into cash, Coinbase shares, or a combination of both.
Coinbase said it intends to use it to pay off its outstanding convertible senior notes maturing in 2026, 2028 and 2031. The three notes have respective interests of 0.50%, 3.375% and 3.625%.
The funds “will be used for other general corporate purposes, which may include working capital and capital expenditures, and to pay the cost of accumulated call transactions,” he said.
RELATED: Coinbase Shares Up 60% in 2024, Restores List Price
Earlier this week, Bitcoin (BTC)'s largest corporate owner, MicroStrategy, completed a new $800 million convertible note offering.
The purchase came a week after it announced it would raise $600 million in a move to buy more bitcoin, which later fell to $800 million.
Coinbase (COIN) traded flat on March 12, gaining about 0.8% to close at $256, and after-hours trading fell 2.3% to around $250.
Coinbase, however, is up more than 63% year-to-date.
Magazine: Wolf of All Streets Worries About Bitcoin Hitting $1M World: Flame Hall
