Coinbase proposes $2 billion convertible note offering to fund growth and acquisitions

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Key Takeaways

Coinbase is issuing $2 billion in convertible senior notes to fund growth, acquisitions, and general corporate purposes.
The notes will be convertible into cash or Class A common stock and are only offered to qualified institutional buyers.

Coinbase is looking to raise $2 billion through convertible senior notes to refinance debt, enhance liquidity, and support its general corporate purposes, the company announced Tuesday.

The company is offering $1 billion in 2029 notes and $1 billion in 2032 notes. Buyers can exercise the option to purchase up to an additional $150 million worth of each tranche within 13 days. The notes will be senior, unsecured obligations with semi-annual interest payments.

Both series of notes will be convertible into cash, shares of Coinbase’s Class A common stock, or a combination at Coinbase’s discretion. The interest rate, initial conversion rate, and other terms will be determined when the offering is priced.

Coinbase plans to enter into capped call transactions with initial purchasers or their affiliates to reduce the potential dilution of its Class A common stock upon conversion of the notes. The company will use part of the net proceeds to fund these capped-call transactions.

Remaining proceeds will be used for general corporate purposes, such as working capital, capital expenditures, potential investments, acquisitions, and repurchases of its Class A common stock and outstanding convertible and senior notes.

Last week, Coinbase reported lower-than-expected Q2 revenue of $1.5 billion, missing analyst projections amid a drop in spot crypto trading volumes.

Despite the earnings miss, Coinbase continued to increase its Bitcoin holdings, purchasing $222 million worth of BTC during the quarter, bringing its total crypto investment portfolio to a fair market value of $1.8 billion.