The offering consists of two separate tranches: $1 billion in notes due 2029 and $1 billion in notes due 2032. These will be sold privately to institutional investors who meet specific qualification criteria.
Coinbase stated that the initial purchasers of the notes will have a 13-day option to buy up to an additional $150 million of the 2029 and 2032 notes.
These notes are unsecured senior obligations that will accrue interest paid semi-annually. The 2029 notes will mature on Oct. 1, 2029, and the 2032 notes on Oct. 1, 2032, unless they are repurchased, converted, or redeemed before these dates.
The notes will be convertible into a mix of cash and Coinbase’s Class A common stock, at the company’s discretion. The specific terms, including the interest and initial conversion rates, will be determined when the offering is priced.
Coinbase has also structured capped call transactions for both series of notes, which are designed to minimize any dilution to its Class A shares when the notes are converted. These transactions aim to offset any additional cash payments the company may need to make beyond the converted note’s principal amount, subject to certain limits.
A portion of the net proceeds from the offering will be used to fund the capped call transactions. If the purchasers exercise their options to buy additional notes, Coinbase plans to use some of the additional proceeds to enter into further capped call agreements.
The remainder of the funds raised will be used for general corporate purposes, which may include working capital, capital expenditures, and investments in other companies or technologies.
Additionally, Coinbase may use part of the proceeds to repurchase its Class A common stock shares or repay its outstanding notes as market conditions allow.
Compass Point analysts downgraded Coinbase’s stock from “Neutral” to “Sell,” citing growing competition from stablecoins and investor fatigue as key challenges for the company.
Additionally, they lowered their price target for Coinbase from $330 to $248 following a weaker-than-expected revenue performance in Q2.
