On March 12, 2024, Coinbase announced plans to raise additional funds by issuing $1 billion in notes, designated senior convertible notes due 2030.
“The bonds will bear interest, payable semi-annually. They will mature on April 1, 2030, unless purchased, redeemed or converted earlier,” the firm said in a statement.
Note that senior preferred notes are debt securities whose holders have some advantage in the liquidation of a company.
In addition, the offering includes options to purchase an additional $150 million of notes with a maturity of 30 days. They will be used to cover costs associated with the redistribution of assets.
According to the press release, Coinbase intends to use the proceeds to pay down debt, pay for potential capped transactions, and acquire other firms.
Thus, the company decided to avoid selling shares of Coinbase and preserve its shareholder value. By using the debt market for financing, Coinbase follows the strategy of MicroStrategy founder Michael Saylor.
To recap, Microstrategy acquired about 200,000 BTC, which is valued at almost $15 billion at the time of writing. Much of it is financed by selling more than $2 billion in convertible bonds.
In March 2024, MicroStrategy announced the issuance of $600 million in bonds maturing in 2030. Initial purchasers will have the opportunity to purchase up to $90 million of securities within 13 days of issue.
