Nasdaq-listed cryptocurrency exchange Coinbase has announced plans to offer $1 billion in convertible senior notes in a bid to settle existing debt and allocate funds for general corporate purposes.
The notes, set to mature in 2030, will be privately sold to institutional investors, with the company expecting to grant a 30-day option to allow the purchase of an additional $150 million in securities to cover over-allotments.
Coinbase is set to use the proceeds to repay, repurchase, or redeem its outstanding 0.50% convertible senior notes due in 2026, 3.375% senior notes due in 2028, and 3.625% senior notes due in 2031, either at maturity or before, while also potentially using them for other purposes.
These convertible notes can be exchanged for shares of the issuing company or cash at a specific time, with the conversion year for the proposed notes set for 2030. Opting for this route over issuing new Coinbase shares prevents diluting the ownership stakes of existing shareholders, a scenario often viewed unfavorably by investors.
In an additional measure to minimize dilution when its debt is converted into equity, Coinbase is offering “negotiated capped call transactions,” which serve as a hedge to prevent dilution during the conversion of notes.
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/mar/13/
