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Coinbase Global Inc. planned to repay the debt by raising over $1 Billion by offering convertible senior notes to qualified institutional buyers.
The only publicly traded cryptocurrency exchange in the USA, Coinbase, revealed a plan to repay debts by raising $1B. It will sell convertible bonds to raise the fund. This platform is inspired by Michael Saylor’s MicroStrategy to fund its crypto aspirations. It also tried to avoid an equity sale that could impact the stock price.
Coinbase’s Plan for Debt Repayment
On March 12, 2024, Coinbase announced an efficient plan of offering unsecured convertible senior notes through a private offering. Additionally, at a certain point, the convertible bonds can be transformed into shares of the issuing company.
The notes maturing on April 1, 2030, will be offered to institutional investors via a private offering. Moreover, the exchange is also anticipated to deliver a 30-day option to permit the purchase of an additional $150 Million of the securities.
The notes can be transformed into cash, shares, or a combination of both.
Per the company statement, the notes will be senior and unsecured obligations of the exchange and can be accrued interest payable semi-annually in arrears. Additionally, the initial conversion rates, interest rates, and other terms and conditions related to the notes are yet to be decided and will depend on the pricing of the offering.
The aim is to repay the debts by raising around $1 Billion, and the net proceeds will be used for repurchase or redemption before maturity.
Coinbase’s Inspiration
The exchange took inspiration from Michael Saylor’s strategy, which included the purchase of over 205,000 Bitcoin worth $15 Billion. Also, the purchase was funded by Microstrategy’s sale of over $2 Billion of convertible notes.
The crypto exchange is on the same path, taking a step ahead to mitigate the dilution when its debt is transformed into equity by delivering “negotiated capped call transactions”.
Additionally, the action came just after a massive Bitcoin rally, which boosted the price to an all-time high of $73K. Most publicly traded companies are expected to benefit from the bull market by raising money through selling securities like convertible notes or equity.
Moreover, the exchange’s statement of raising $1 billion came after some Wall Street analysts dropped their bearish stance on the stock.
As per the company statement, another general purpose of the exchange may include capital and capital expenditure along with paying the cost of the capped call transaction.
About Coinbase
Coinbase, one of the leading cryptocurrency exchanges, is on a mission to enhance economic freedom for more than 1 Billion individuals. It is one of the most secure online platforms for selling, purchasing, or storing digital assets.
The platform was established in June 2012 and was co-founded by Brian Armstrong. The exchange also delivers critical infrastructure for on-chain activities and supports builders who share the visions of on-chain. It has over 245K ecosystem partners in more than 100 nations and offers easy and secure services to invest, save, earn, and spend crypto.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.