TLDR
- Coinbase announced a $2 billion private offering of convertible senior notes.
- The offering includes $1 billion in notes due in 2029 and $1 billion due in 2032.
- Both series of notes will be offered to qualified institutional buyers under Rule 144A.
- The notes will be convertible into cash shares or a combination at Coinbase’s election.
- Coinbase plans to use part of the proceeds for capped call transactions.
Coinbase announced a private offering of $2 billion in convertible senior notes targeting institutional buyers under Rule 144A. The offering includes $1 billion due in 2029 and another $1 billion due in 2032, both unsecured and senior. Coinbase aims to use proceeds for corporate purposes, including acquisitions, capped call transactions, and debt repurchase.
Coinbase to Issue $1 Billion Convertible Notes Due 2029
Coinbase will offer $1 billion in convertible senior notes maturing on October 1, 2029, subject to early conversion or repurchase. The company granted an option to initial purchasers to acquire an additional $150 million of these notes within 13 days. The notes will accrue semi-annual interest and are payable in arrears.
These notes are senior unsecured obligations and rank equally with Coinbase’s existing unsecured debt instruments. Coinbase has not disclosed the interest rate or conversion terms, which will be determined upon pricing. The notes will be convertible into cash, Class A common stock, or a combination of both, at Coinbase’s election.
Coinbase plans to enter capped call transactions to manage potential dilution and reduce conversion-related cash payments. These transactions will involve financial institutions and cover the underlying shares of the 2029 notes. Coinbase will allocate part of the proceeds to pay for these capped call arrangements.
Coinbase to Issue Additional $1 Billion Notes Due 2032
Coinbase also plans to issue another $1 billion in convertible senior notes, maturing October 1, 2032, with similar terms and structure. The company may issue an additional $150 million of these notes if the initial purchasers exercise their option. The 2032 notes may be redeemed before maturity, unlike the 2029 notes.
Interest on the 2032 notes will also be payable semi-annually, and they will be senior unsecured debt instruments. These notes may be converted into cash, shares, or both, depending on Coinbase’s decision. The interest rate and conversion terms for the 2032 notes remain undisclosed until the pricing is finalized.
Capped call transactions for the 2032 notes will mitigate potential equity dilution and excess conversion payments. Coinbase expects to use part of the proceeds from these notes for the capped call agreements, which will mirror the approach taken with the 2029 notes.
Coinbase intends to deploy remaining proceeds from both offerings toward general corporate uses, including potential acquisitions and working capital needs. The company may also use funds to repurchase or redeem various outstanding debt instruments and Class A common stock. This includes its existing 0.50% Convertible Notes due 2026 and 3.375% Senior Notes due 2028.
Coinbase is actively evaluating opportunities to expand its platform through targeted investments in technology and companies. The offering is aimed at strengthening its financial flexibility while managing capital structure effectively. The strategy aligns with Coinbase’s broader growth and liquidity objectives.
