Coinbase sells $1.25bn convertible bonds amid crypto rout
09:18, 18 May 2021
Coinbase (COIN) plans to sell $1.25bn worth of convertible bonds to bolster its balance sheet. The biggest US cryptocurrency exchange may also use some of the money to buy other companies, products or technologies, it said in a press release.
Coinbase will sell its notes to qualified institutional investors. The company will offer the buyers a 30-day option to purchase an additional $187.5m notes to cover over-allotments.
The bonds will mature on June 1, 2026, unless earlier repurchased, redeemed or converted. The company will have the option to convert the notes into cash or Coinbase Class A stock if the stock price hits a preset strike price.
Coinbase eyes expansion
"This capital raise represents an opportunity to bolster Coinbase's already strong balance sheet with low cost capital that maintains operating freedom and minimizes dilution for Coinbase's stockholders. Coinbase intends to use the net proceeds from the offering for general corporate purposes, which may include working capital and capital expenditures, and to pay the cost of the capped call transactions," reads the company's press release.
"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 in the future."
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Coibase price down under $250
Coinbase announced the bond offer on the day its stock dropped under $250 for the first time since its NASDAQ listing in mid-April. The COIN shares are down 18% in the last week amid the crypto market rout. Bitcoin (BTC) and Ethereum (ETH), the two dominant cryptocurrencies traded on Coinbase, have also lost around 20% of their value in the last week, after Tesla billionaire Elon Musk's no-confidence vote on Bitcoin.