Coinbase is set to raise $1 billion through the issuance of senior convertible notes, as revealed in an 8-K filing submitted to the United States Securities and Exchange Commission (SEC). These notes, targeting eligible institutional buyers, offer a debt instrument that may convert into equity later on, providing flexibility for both the company and investors.
The move underscores Coinbase’s strategic financial planning, aiming to address debt repayment and unspecified corporate needs. The seniority of these notes over common stock ensures priority in the event of bankruptcy or liquidation, offering holders added security. They will accrue interest biannually and can be converted into cash, Coinbase shares, or a combination of both.
The raised funds are intended primarily for retiring existing convertible senior notes maturing in 2026, 2028, and 2031, which carry interest rates of up to 3.625%. Additionally, the capital will support general corporate purposes, such as working capital, capital expenditures, and expenses related to capped call transactions.
Coinbase’s decision to pursue this financing option aligns with recent market trends, demonstrating confidence in its elevated share price. However, it faces competition in this arena, as evidenced by MicroStrategy’s recent $800 million convertible note offering, aimed at bolstering its Bitcoin treasury reserve.
Despite the announcement, Coinbase’s stock saw minimal fluctuations, with a slight gain of around 0.8% on March 12th, closing at $256. However, after-hours trading following the note offering news saw a decline of 2.3% to approximately $250.
