Investing.com -- GameStop Corp . (NYSE: NYSE:GME) shares tumbled 8% after the company announced its plan to offer $1.3 billion in convertible senior notes. The private offering, aimed at qualified institutional buyers, raised concerns among investors, leading to a sell-off in today’s after-hours trading session.
The proposed offering involves 0.00% Convertible Senior Notes due in 2030, which will not bear regular interest nor will the principal amount accrete. GameStop has also given the initial purchasers an option to buy an additional $200 million worth of notes within a 13-day period starting from the issue date. The conversion rate and other specific terms will be determined at the time of the offering’s pricing.
Investors reacted to the news with caution, as the issuance of convertible notes can lead to dilution of existing shares. Moreover, the lack of interest payments on these notes until maturity or conversion adds to the uncertainty regarding the company’s debt management strategy.
GameStop intends to use the proceeds from this offering for general corporate purposes, which includes the acquisition of Bitcoin in alignment with the company’s investment policy. This decision to potentially invest in cryptocurrency may also contribute to the stock’s volatility, as it introduces a new layer of risk associated with the fluctuating value of digital assets.
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