COINBASE ANNOUNCED PROPOSED PRIVATE OFFERING OF $1.25 BILLION OF CONVERTIBLE SENIOR NOTES DUE 2026
On Monday Coinbase announced that the sale of so-called convertible banknotes would generate an additional $ 1.25 billion. This type of bond allows the buyer to earn interest or convert ownership into shares.
This move is surprising considering the company has positive cash flow and went public through direct listing a month ago. However, it does not include selling new shares, so a bond announcement looks like a strategic decision to raise capital at a time when interest rates remain at historically low levels.
“This fundraiser provides an opportunity to improve Coinbase’s already strong balance with cheap capital, preserving operational freedom and minimizing dilution for Coinbase shareholders,” said a statement announcing the decision.
One analyst suggested that the Coinbase solution is a smart way to ensure there is a healthy cash balance in case the market goes up or down.
It’s unclear whether Coinbase intends to use the money raised to add crypto to its balance sheet. The statement said the company would use the proceeds for “general corporate purposes, including working capital and investment” but would not provide more specific data. Coinbase did not immediately respond to a request for comment.
Public companies rarely issue convertible banknotes of this type, but this has never happened before. For example, Tesla repeatedly made similar statements to raise funds, including in 2014 to fund its battery plant and in 2019 for public use.