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Crypto exchange Coinbase is planning to raise up to $1.25 billion in funding via the issuance of debt securities. The debt instruments will only be offered to institutional investors through a private offering.
“Coinbase Global, Inc. today announced its intention to offer, subject to market conditions and other factors, $1.25 billion aggregate principal amount of Convertible Senior Notes due 2026 (the ‘notes’) in a private offering (the ‘offering’) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended (the ‘Securities Act’),” the company said in an announcement on May 17.
The notes will only be available to institutional investors who manage a minimum of $100 million in securities by other companies, according to Cointelegraph. As holders of a senior convertible note, which is a type of debt security, investors will receive a stream of interest payments given out at intervals.
“Coinbase also expects to grant the initial purchasers of the notes a 30-day option to purchase up to an additional $187.5 million principal amount of notes solely to cover over-allotments,” the company added. “The notes will be senior, unsecured obligations of Coinbase will accrue interest payable semi-annually in arrears and will mature on June 1, 2026, unless earlier repurchased, redeemed or converted.”
Coinbase has not yet revealed the interest rate, initial conversion rate, and other terms but explained that such details will be determined upon pricing. Investors have the option to convert the notes into cash, Coinbase Class A common stock, or “a combination thereof, at Coinbase’s election.”
Coinbase plans to use the funds to “bolster Coinbase’s already strong balance sheet with low-cost capital that maintains operating freedom and minimizes dilution for Coinbase’s stockholders.” For instance, net proceeds could be used to pay for capped call transactions cost, capital expenditures, and beefing up its working capital.
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