According to the cryptocurrency exchange, the instruments might be redeemed for as little as $45.5 million in cash.
Coinbase has disclosed a deal to redeem $64.5 million in convertible senior notes due in 2026. However, the business anticipates only needing $45.5 million in cash to complete the deal because of the notes’ discount to par value.
The redemption was referred to as a “opportunistic repurchase” by Alesia Haas, CFO of Coinbase, who also stated that the business intended to look into similar chances in the future. Many of Coinbase’s debt instruments are currently trading at reduced prices as a result of the bear market in cryptocurrencies.
“The Repurchases are expected to close on or about June 20, 2023, subject to the satisfaction of customary closing conditions. Following such closings, approximately $1.373 billion principal amount of the Notes will remain outstanding.”
A May 2022 admission that users’ digital assets housed on the platform might be subject to bankruptcy procedures and considered as unsecured creditors in the event that Coinbase filed for bankruptcy added fuel to investor concerns.
As an illustration, the price of the September 2021-issued Coinbase DL-Notes 2021 is currently 54 cents on the dollar. This loan has a face value of almost $1 billion, a 3.625% coupon rate, and it will mature in October 2023. The bond currently has a 15.2% yield.
Investors have not been persuaded to buy Coinbase’s debt products despite the discounts offered. On June 6, Coinbase was accused of running an unregistered securities exchange and selling unregistered securities through its staking-as-a-service program by the U.S. Securities and Exchange Commission (SEC). The case is still in court.
A difficult climate for Coinbase is created by the combination of discounted debt, investor worries about asset classification in bankruptcy, and continuous legal battles from the SEC. The company’s initiatives to buy debt at advantageous terms and investigate potential prospects in the future indicate its strategic approach to overcoming these difficulties.