Coinbase Global Inc. has put forward a proposition to repurchase a segment of its $1 billion bonds, supported by a premium from its investors. The operator of the cryptocurrency exchange has formally declared its intent to repurchase a maximum value of $150 million from its $1 billion bond issuance, which is slated to mature in the year 2031.
Firms engage in bond buybacks, which involve repurchasing their own shares or bonds from the market or existing investors. This practice has demonstrated advantages for both the companies and the investors involved.
According to a recent announcement, Coinbase is presenting an offer to redeem up to $150 million of its 3.625% notes that are scheduled to mature in Oct. 2031. Investors who choose to participate in this tender will have the opportunity to receive an amount ranging between $615 and $645 for every $1,000 of principal. This translates to 64.5 cents out of every dollar. Additionally, the amount includes a special early-tender premium of $30.
The offer is open until Sept. 1, at 11:59 p.m. New York time. Just before the offer reaches its deadline, Coinbase will provide $615 for each $1,000 of the bond’s face value. This is further equivalent to 61.5 cents on the dollar.
Furthermore, Coinbase has enlisted the services of Citigroup Global Markets to oversee the management of the buyback proposal. The bonds included in this offer are only one of three outstanding debts. In addition, the exchange also possesses two other bonds set to mature in 2026 and 2028. These are collectively valued at over $1 billion.
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Why is this bond buyback offer at a premium?
The repurchase offer is being presented at a higher cost, as the proposed purchase prices for both bonds surpass the initial bond recent data, this figure was around 60 cents on the dollar. The debt that Coinbase intends to settle had a value of 62 cents per dollar as evaluated by the bond market. This marks a rise from its previous lowest point of 52 cents, a record set in November 2022.
The dainty premium arises because Coinbase exceeded the predictions of financial experts in the second quarter. The firm reported earnings of $708 million and an adjusted loss of $0.42 per share. This outperformed analyst forecasts of earnings totaling $628 million and a loss of $0.76 per share. Additionally, Bitcoin is currently inching closer to its 2023 highs. All of the above reasons could have further pushed the firm towards this buyback proposal.
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