Jack Dorsey’s block to offer $1.5B in senior notes
Fintech company Block – formerly Square – announced on May 6 that it plans to offer $1.5 billion in senior notes to institutional investors in a private placement.
The company said in a statement that the terms of the notes, including interest rates and maturity dates, could be negotiated with the original purchasers. Investors allowed to join the round include pension funds, banks, mutual funds and high net worth individuals.
Block shares (NYSE: SQ ) rose more than 4% following the announcement, trading at $72.40 at the time of writing.
A private placement is a method of raising capital by selling capital, such as stocks or notes, to certain investors rather than through a public offering. According to Block, proceeds from the sale may be used to repay existing debt, potential acquisitions and strategic transactions, capital expenditures, investments and working capital.
According to Fitch Ratings, Bloc is “well-positioned to capitalize on global growth sectors in payments and consumer finance services.”
Regarding FinTech's debt structure, Fitch noted that block has relied on the flexible debt market for most of its external capital needs since its initial public offering (IPO). In the year As of March 2024, the Company had approximately $2.15 billion of outstanding convertible notes, a revolving credit facility of $775 million due June 2028 and $2 billion of senior unsecured notes due 2026 and 2031. Fitch wrote:
“The announced debt increase will bring additional debt on the balance sheet, which is expected to help improve maturities at the end of 2025-2026 and provide additional funding to an already strong balance sheet.”
Block was one of the first public companies to add bitcoin (BTC) to its balance sheet, company co-founder Jack Dorsey announced in a letter to shareholders.
Dorsey revealed that the company plans to allocate 10% of its monthly profits from Bitcoin products to buy BTC. Block bought $220 million worth of Bitcoin between the fourth quarter of 2020 and the first quarter of 2021.
“Going forward, we will invest 10% of our gross profit every month from Bitcoin products into Bitcoin purchases.”
The fintech firm's revenue beat market expectations for the first quarter of 2024. Block's total bitcoin profit was $80 million, representing 3% of its $2.73 billion in bitcoin revenue. The mobile payment and crypto platform cash app generated $1.26 billion in total revenue for Q1 — up 25 percent from last year.
Total gross profit for the first quarter was $2.09 billion, up 22 percent from the previous quarter. The company posted total revenue of $5.96 billion, with earnings per share of $0.85 — above analysts' forecasts.
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