SANTA FE, N.M. - Coinbase (NASDAQ:COIN) Global, Inc. (NASDAQ:COIN), a major player in the cryptocurrency exchange market, has increased its private offering to $1.1 billion in Convertible Senior Notes due 2030, a bump from the initially announced $1.0 billion. The company also provided the initial purchasers with a 30-day option to acquire an additional $165 million in notes to cover over-allotments.
The transaction is slated to close on March 18, 2024, with expectations to net approximately $1.08 billion, or $1.24 billion if the additional notes are fully purchased after deducting related costs.
The proceeds from this offering are earmarked for various corporate activities, including repaying or redeeming prior debts such as the 0.50% Convertible Senior Notes due 2026, 3.375% Senior Notes due 2028, and 3.625% Senior Notes due 2031. Additional uses for the funds include general corporate purposes like working capital and capital expenditures, as well as potential investments in or acquisitions of other companies, products, or technologies.
Coinbase's new notes will bear a 0.25% annual interest, payable semi-annually, with maturity set for April 1, 2030, unless repurchased, redeemed, or converted earlier. The notes are senior, unsecured obligations and will not be redeemable before April 1, 2027. Post this date, Coinbase has the option to redeem the notes at 100% of their principal amount plus accrued interest under specific conditions.
Notably, the notes are convertible into Coinbase's Class A common stock at an initial rate of approximately 2.9981 shares per $1,000 principal amount, which is about a 32.5% conversion premium over the stock's last reported sale price. The conversion of notes can be settled in cash, shares, or a combination thereof at Coinbase's discretion.
In conjunction with the note pricing, Coinbase has entered into capped call transactions intended to minimize potential dilution from the conversion of the notes or to offset potential cash payments above the principal amount. The initial cap price is set at approximately $503.46 per share, double the last reported sale price of Coinbase's stock.
Coinbase has been informed that the counterparties to the capped call transactions may undertake various derivative transactions and stock purchases, which could affect the market price of Coinbase's Class A common stock and the notes.
The offering was made to qualified institutional buyers under Rule 144A and the notes, as well as the shares potentially issuable upon conversion, have not been registered under the Securities Act and will not be publicly offered or sold in the United States absent registration or an applicable exemption.
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