US-based cryptocurrency exchange Coinbase is seeking to raise $ 1.25 billion in funds through a private offering offered to institutional buyers.
According to an announcement on Monday, the offer will be in the form of senior convertible bonds due 2026, available only to institutional investors who manage a minimum of $ 100 million in securities issued by other companies. These investors are defined as such under Rule 144A of the US Securities Act.
A senior convertible note is a debt instrument that entitles its holder to a flow of interest payments. Coinbase described the specific terms of its offer:
Coinbase also plans to give initial buyers of the notes a 30-day option to purchase up to an additional $ 187.5 million in principal of notes just to cover over-allotments. The notes will be senior and unsecured obligations. of Coinbase, will accrue interest payable semi-annually in arrears and will mature on June 1, 2026, unless redeemed, redeemed or converted earlier. The Notes will be convertible into cash, Class A common shares of Coinbase. , or a combination thereof, at Coinbase’s option. “
Depending on the announcement, the interest and the initial conversion will be set based on the offer price. Since the offer was announced, markets have continued to react poorly to Coinbase shares, which had already fallen to $ 245 in conjunction with a 35% drop in the price of Bitcoin (BTC).
COIN’s underperformance continues despite the stock market’s exceptional first quarter results, which were released a week before the company’s direct listing on the Nasdaq in mid-April. Trading volume increased 276%, with quarterly revenue reaching $ 1.8 billion.
However, some analysts believe Coinbase’s share price should drop as low as $ 100, saying “the company is unlikely to meet future earnings expectations embedded in the share price.” The analysis rests on the hope that even with impressive profits in the first quarter, competitors and potential future public listings of other crypto companies will likely reduce its future earnings.