On Monday Coinbase announced that it will issue an extra 1.25B by selling convertible notes. They allow the investors to receive interest or to convert the notes into shares.
The idea came alive just 1 month after the crypto exchange went public via a direct listing. However, this type of listing did not involve creating and selling new shares so the company needs to raise extra capital.
“This capital raise represents an opportunity to bolster Coinbase’s already strong balance sheet with low-cost capital that maintains operating freedom and minimizes dilution for Coinbase’s stockholders,” said the company in a press release announcing the decision.
For now, there is no information if the company will use the money to buy crypto and store it in its balance sheet. The release stated that the company would use the loan for “general corporate purposes, which may include working capital and capital expenditures”.
Earlier this year MicroStrategy issued a loan of convertible notes in order to finance its next crypto purchase. Yesterday Square said that it is thinking about issuing convertible notes as well.
Let’s go back to Coinbase. The bonds will be sold in private transactions to institutional investors. They will have the opportunity to convert them to class A stocks if they wish to do so.
The announcement came while the whole crypto market is red. Today the shares of the crypto exchanges are trading at $249 – this is 45% lower than the $429 high the share hit on its first day of trading.
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