Coinbase, the leading US-based cryptocurrency exchange, is raising $1 billion through senior convertible notes.
Coinbase, the leading US-based cryptocurrency exchange, is raising $1 billion through senior convertible notes. These notes act like loans that can be converted into company stock later. The funds will be used to repay existing debt and for general business purposes, according to a company blog post. According to the March 12 announcement, the offering targets institutional investors and comes as Coinbase stock enjoys a two-year high.
Convertible notes offer companies a way to raise capital while delaying the dilution of ownership that comes with issuing new stock. Investors benefit from the potential for higher returns if the company's stock price increases. The notes carry an interest rate and mature on April 1, 2030, although Coinbase can repurchase them earlier. The company intends to use the proceeds to repay existing convertible notes with lower interest rates, freeing up resources for future growth.
This move follows a similar strategy by MicroStrategy, a major Bitcoin investor, who recently raised $800 million via convertible notes to acquire more BTC. This came after MicroStrategy announced an additional purchase of 12,000 BTC, making it the company with the most BTC in its corporate treasury.
Coinbase's stock price remained flat during the day on March 12 but dipped slightly in after-hours trading following the announcement. Despite the dip, the stock is still up over 63% year-to-date, reflecting the broader cryptocurrency market rally.
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