Coinbase (Nasdaq: COIN), the largest cryptocurrency exchange in the United States, is planning to raise $1 billion through the issuance of convertible senior notes. Announced yesterday (Tuesday), the proceeds will be utilized to repay debt and other general corporate purposes.
The company is avoiding the sale of its equity, which could hurt its stock prices. However, the publicly-listed stock prices of the company dropped by over 1 percent after hours following the announcement of the convertible bond issuance.
The exchange will sell the convertible notes through private offerings only to institutional investors. The convertible notes will have a maturity date in 2030 and will allow the investors to redeem them in cash or Class A shares of the company or in a combination of both.
Furthermore, the San Francisco-headquartered exchange expects to grant a 30-day option to purchase up to an additional $150 million notes to cover over-allotments.
The debt the exchange wants to repay with the planned convertible notes is outstanding: 0.5 percent convertible senior notes due 2026, 3.375 percent senior notes due 2028, and 3.625 percent senior notes due 2031. The general corporate purpose to be fulfilled by the proceeds from the convertible notes might include “working capital and capital expenditures, and to pay the cost of the capped call transactions.”
“Coinbase may also use a portion of the net proceeds to make investments in and acquisitions of other companies, products, or technologies that Coinbase may identify from time to time,” the exchange noted.
The MicroStrategy Playbook
Coinbase’s plan to issue the convertible notes echoes a model mastered by MicroStrategy, a business analytics company known for its massive Bitcoin investment. Under the leadership of Michael Saylor, MicroStrategy purchased 205,000 Bitcoin worth around $15 billion over the years by raising about $2 billion through convertible notes. MicroStrategy sold $700 million worth of convertible notes.
Coinbase’s decision came when the cryptocurrency market witnessed a massive bullish sentiment. Bitcoin is trading at an all-time-high value, nearing $73,000 a piece.
Coinbase (Nasdaq: COIN), the largest cryptocurrency exchange in the United States, is planning to raise $1 billion through the issuance of convertible senior notes. Announced yesterday (Tuesday), the proceeds will be utilized to repay debt and other general corporate purposes.
The company is avoiding the sale of its equity, which could hurt its stock prices. However, the publicly-listed stock prices of the company dropped by over 1 percent after hours following the announcement of the convertible bond issuance.
The exchange will sell the convertible notes through private offerings only to institutional investors. The convertible notes will have a maturity date in 2030 and will allow the investors to redeem them in cash or Class A shares of the company or in a combination of both.
Furthermore, the San Francisco-headquartered exchange expects to grant a 30-day option to purchase up to an additional $150 million notes to cover over-allotments.
The debt the exchange wants to repay with the planned convertible notes is outstanding: 0.5 percent convertible senior notes due 2026, 3.375 percent senior notes due 2028, and 3.625 percent senior notes due 2031. The general corporate purpose to be fulfilled by the proceeds from the convertible notes might include “working capital and capital expenditures, and to pay the cost of the capped call transactions.”
“Coinbase may also use a portion of the net proceeds to make investments in and acquisitions of other companies, products, or technologies that Coinbase may identify from time to time,” the exchange noted.
The MicroStrategy Playbook
Coinbase’s plan to issue the convertible notes echoes a model mastered by MicroStrategy, a business analytics company known for its massive Bitcoin investment. Under the leadership of Michael Saylor, MicroStrategy purchased 205,000 Bitcoin worth around $15 billion over the years by raising about $2 billion through convertible notes. MicroStrategy sold $700 million worth of convertible notes.
Coinbase’s decision came when the cryptocurrency market witnessed a massive bullish sentiment. Bitcoin is trading at an all-time-high value, nearing $73,000 a piece.