Coinbase, the US-based cryptocurrency exchange, Seeks to raise $ 1.25 billion in funding through a proposed private offer to institutional buyers.TO
According to an announcement made on May 17th The offer is in the form of senior convertible bonds due in 2026, Only available to institutional investors who manage other company securities worth at least $ 100 millionThese investors are defined as such under Rule 144A of the US Securities Act.
A senior convertible is a debt security that entitles its holder to a series of interest paymentsCoinbase outlined the specific terms of its offering:
“Coinbase also expects to provide first-time bond buyers with a 30-day option to purchase bonds up to an additional principal amount of $ 187.5 million solely to cover over-allotments. The bonds are senior unsecured notes issued by Coinbase every six months after maturity and expires on June 1, 2026, unless repurchased, exchanged or converted earlier. The promissory note loans can be converted into cash, Class A shares of Coinbase, or a combination thereof at Coinbase’s option. “
Depending on the ad, the interest and initial conversion will be based on the offer priceSince the news of the offering, markets have continued to react poorly to Coinbase (COIN) stocks. which had already fallen to $ 245, along with a 35% drop in Bitcoin (BTC) price.
COIN’s underperformance continues despite the exchange’s exceptional first quarter resultswhich were released a week before the company’s direct listing on the Nasdaq in mid-April. Trading volume increased 276% and quarterly sales reached $ 1.8 billion.TO
However, Some analysts believe Coinbase’s share price is likely to drop to $ 100“The company is unlikely to meet future earnings expectations included in the share price.”The analysis is based on the expectation that competitors and potential future IPOs of other cryptocurrency companies are likely to reduce their future earnings despite impressive first quarter earnings..