Coinbase Pursues $2 Billion Convertible Bond Issuance… To Be Used for Operating Funds, Debt Repayment, Etc.

Coinbase is moving to issue convertible bonds worth $2 billion. The funds will be used for general operating purposes, as well as existing debt repayment and share buybacks.

On the 5th (local time), according to Business Wire, Coinbase announced that it plans to privately place a total of $2 billion in convertible bonds. The issuance consists of $1 billion maturing in 2029 and $1 billion maturing in 2032, and an additional issuance option of up to $700 million may be included depending on market demand.

These bonds are senior unsecured notes, with interest paid semiannually. Upon conversion, they can be exchanged for Coinbase Class A common stock, cash, or a combination of both, and the specific conversion rate and interest rate will be determined at a later date.

The capped call is a type of derivative transaction designed to reduce dilution when bonds are converted, capping the conversion profit above a certain stock price.

Coinbase said, “The partner institutions entering into the capped call agreement may carry out stock purchases and derivative transactions,” adding, “Such hedge transactions could have a certain impact on future stock prices or convertible bond prices.”

Coinbase plans to use part of the raised funds for capped call agreement costs, while the remaining funds will go toward operating funds, M&A, technology investment, stock or existing debt repayment. The debts eligible for repayment include the 0.5% convertible bonds maturing in 2026, 3.375% bonds maturing in 2028, and 0.25% convertible bonds maturing in 2030.

Meanwhile, Coinbase added that this bond issuance is being done as a private placement and is not subject to registration with the U.S. Securities and Exchange Commission (SEC).