The cryptocurrency exchange estimates it will only need $45.5 million in cash to redeem the instruments.
According to a June 15 announcement, cryptocurrency exchange Coinbase has entered into an agreement for the redemption of $64.5 million in 0.50% Convertible Senior Notes due 2026. However, the company estimates it will only need $45.5 million in cash to consummate the agreement due to the notes’ 29% discount to par value. Coinbase wrote:
Alesia Haas, Coinbase’s chief financial officer, described the transaction as an “opportunistic repurchase” and said the firm would continue to look for such opportunities in the future. Many of Coinbase’s debt instruments have been trading at discounts since the onset of the cryptocurrency bear market.
Investor fears were exacerbated by a May 2022 disclosure that if the company were to go bankrupt, users’ digital assets held on the platform may “be subject to bankruptcy proceedings” and could see them treated as “unsecured creditors.”
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In one instance, the Coinbase Global Inc. DL-Notes 2021(21/31) issued in September 2021 is currently trading for 54 cents on the dollar. Over $1 billion of this debt was issued with a coupon rate of 3.625% and a maturity date of October 2023. The bond’s current yield is 15.2%.
It appears that investors haven’t been enticed by the discounts, however. On June 6, the U.S. Securities and Exchange Commission charged Coinbase for operating an unregistered securities exchange and the sale of unregistered securities from its staking-as-a-service program. The litigation is ongoing.
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Read More The cryptocurrency exchange estimates it will only need $45.5 million in cash to redeem the instruments.