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- Coinbase plans to raise $2 billion through convertible senior notes.
- Capped call transactions aim to reduce dilution and offset payments.
- Proceeds from the offering to support acquisitions and corporate growth.
Coinbase Global, Inc. has announced its intention to raise $2 billion through the issuance of Convertible Senior Notes. The offering consists of two series of notes: $1 billion in notes due 2029 and another $1 billion due 2032.
The issuer will also issue the notes under an exemption regime governed by Rule 144A of the Securities Act of 1933, and the initial purchasers may buy up to an additional $150 million of each series. At the time of pricing, the interest rate and conversion terms will be set.
On October 1, 2029, the 2029 notes will mature, and the 2032 notes will mature on October 1, 2032, unless repurchased, converted, or redeemed earlier. Such notes shall be the higher-ranking, unsecured debt of Coinbase, and they will bear interest payable semi-annually in arrears. The notes upon conversion can be redeemed in cash, Coinbase Class A common stock shares, or both, at Coinbase’s option..
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Managing Dilution and Market Impact
In a bid to reduce the risk of dilution caused by the notes’ conversion, Coinbase will also undertake a capped call transaction. Such transactions will give the number of shares that would come up after the notes’ conversion. In this way, the company Coinbase is planning to minimize the dilution of its stock and even match redundant money payments that could appear during this conversion.
Coinbase is also anticipating that the transaction regarding these capped call activities may affect its stock price and the notes. The company has been cautioning that the option counterparties or their affiliates may enter into derivative transactions or acquire shares of the class A common stock in the offering. This may affect the market price of the Coinbase stock and independent notes, especially throughout the period of observation of conversion.
Strategic Use of Proceeds
The company intends to use the proceeds of the offering to fund the capped call transactions. The company will set aside all other money for general corporate uses, including acquisitions, working capital, repurchases, or debt repayments.
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This offering constitutes a strategically crucial initiative by Coinbase, considering its stringent need to remain financially flexible and, at the same time, ensure it remains poised to continue its growth in the competitive landscape of the cryptocurrency market.
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