Cryptocurrency exchange Coinbase plans on raising $1 billion from senior convertible notes to raise cash to repay debts and for “general corporate purposes.”
The senior convertible notes — a debt security that can later be converted into equity, like stock — will only be privately offered to eligible institutional buyers and must be repaid by April 1, 2030, unless earlier repurchased, redeemed or converted, the firm said in a March 12 blog post.
The notes are a valuable tool for companies looking to raise capital and Coinbase is seemingly jumping at the chance to take on debt while investors are confident in the firm, with its share price at an over two-year high, per Google Finance.
The notes are senior to common stock as holders have priority should bankruptcy or liquidation occur. They will accrue interest semi-annually and can be converted into cash, Coinbase shares or a combination of both.
Coinbase said it intends to use the n proceeds to repay at maturity its own outstanding convertible senior notes due in 2026, 2028 and 2031. The three notes have respective interests of 0.50%, 3.375% and 3.625%.
The funds will also be used “for other general corporate purposes, which may include working capital and capital expenditures, and to pay the cost of the capped call transactions,” it said.
Related: Coinbase stock jumps 60% in 2024, recovers listing price
Earlier this week, MicroStrategy, the largest corporate holder of Bitcoin (BTC), completed a fresh $800 million convertible note offering, with the proceeds used to add another 12,000 BTC to its Bitcoin treasury reserve.
The purchase came a week after it announced it would raise $600 million as part of a move to buy more Bitcoin, which was later bumped up to $800 million.
Coinbase (COIN) traded flat on March 12, gaining about 0.8% and closing at $256, it’s down 2.3% in after-hours trading after it announced the note offering to around $250.
Coinbase is, however, up over 63% year-to-date as the crypto market has rallied and is at a 26-month high being last above $250 on Dec. 31, 2021.
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