Coinbase seeks additional $1.25 billion funding via institutional investors
- Coinbase is raising $1.2B in private debt with an option for investors to buy an additional $187.5M.
- The offer is limited to only institutional investors that manage a minimum of $100 million in securities.
- The note will offer interest, payable semi-annually, until the maturity period on June 1, 2026.
Coinbase said on Monday that it plans to raise about $1.2 billion from private debt offering in a bid to inject funds, following the continuous underperformance of its Nasdaq-listed stock.
The cryptocurrency exchange will also be granted the initial purchasers of the notes a 30-day option to buy up to an extra $187.5 million principal amount to take care of over-allotments.
Participants will accrue interest semi-annually
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According to the announcement, the note will yield interest, which is payable semi-annually, with a maturity period slated for June 1, 2026, unless earlier converted, redeemed, or purchased. Also, the notes can be converted into shares of the exchange’s Class A stock, cash, or both at Coinbase’s election.
This move is coming barely a month after Coinbase went public through a direct listing on Nasdaq. Although the company’s stock is not performing as expected before the listing, Coinbase said it realized $1.8 billion in total revenue for Q1 2021.
The offer is available only to institutional participants
Coinbase says the offer will be available to only participants who manage a minimum of $100 million in securities issued by other companies.
A senior convertible note is a debt security that allows the holder to gain streams of interest payments. Coinbase also stated the terms to the offerings by reiterating that the notes shall be unsecured obligations of the exchange.
The announcement also revealed that the initial conversion, as well as interest, will be set based on the pricing of the offering.
Despite the offering, the COIN share has continued to do badly in the market as it dropped to $245 in line with a 35% fall in the price of Bitcoin.
The Q1 2021 result was released a week before its direct listing on Nasdaq. The trading volume has also appreciated in the quarter under review, as it gained an impressive 276% in revenue.