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Coinbase $1 Billion Private Offering: Convertible Senior Notes Unveiled for 2030

Last Updated March 13, 2024 11:44 AM
Teuta Franjkovic
Last Updated March 13, 2024 11:44 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Coinbase eyes $1 billion in convertible notes to repay debt and fund future endeavors.
  • The offering caters to institutional investors, with options for additional purchases.
  • Funds will be used to pay off existing debt and potentially repurchase shares to manage dilution.

Coinbase Global Inc., an American cryptocurrency exchange, announced  the issuance of convertible senior notes as a novel approach to fundraise.

The company plans to offer up to $1 billion in convertible senior notes  set to mature in 2030.

Coinbase Targets Institutional Investors with Convertible Note Offering

Coinbase plans to issue convertible senior notes, exclusively available to institutional investors through a private offering. The initiative includes an additional 30-day option for purchasers to buy up to $150 million more in securities to accommodate over-allotments.

These notes, which are convertible into cash, Coinbase’s Class A common stock, or a mix of both at Coinbase’s discretion, are part of a strategic financial maneuver. Ultimately, Coinbase aims to use the proceeds from this offering to manage its existing debt, specifically by repaying, repurchasing, or redeeming its outstanding 0.5% convertible senior notes, along with its 3.375% and 3.625% senior notes, either at their maturity or beforehand.

Outlining Future Financial Strategy

Coinbase has detailed  its financial planning surrounding the issuance of convertible senior notes. It said the existing 0.5% notes were not due until 2026, the 3.375% notes until 2028, and the 3.625% notes until 2031.

The company plans to allocate a portion of the proceeds from this offering for general corporate purposes , such as bolstering working capital and covering expenses related to capped-call transactions.

Coinbase is aiming to initiate at least one capped-call transaction with its customers. This, therefore, should initially cover the common stock of Coinbase linked to these notes.

MicroStrategy Doubles Down on Bitcoin with Debt and Cash

MicroStrategy, a business intelligence software company, has further increased its Bitcoin portfolio to approximately 203,000 BTC, with its latest acquisition amounting to around $821.7 million. This purchase pegs the average cost per Bitcoin at $68,477.

The company used the proceeds from the sale of convertible notes and excess cash reserves for the acquisition. Furthermore, this aligns with MicroStrategy’s ongoing strategy of investing in Bitcoin. Just days before this new addition, the company raised its convertible note offering to $700 million, due in 2030, and provided initial purchasers a 13-day option to buy up to an additional $100 million worth of notes post-issuance.

This move by MicroStrategy, similar to Coinbase’s strategy, signifies a growing trend in leveraging debt offerings for significant cryptocurrency investments.

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