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Coinbase Announces Pricing of Upsized Offering of $1.1 Billion of 0.25% Convertible Senior Notes Due 2030

Coinbase Announces Pricing of Upsized Offering of $1.1 Billion of 0.25% Convertible Senior Notes Due 2030

Coinbase granted the initial purchasers of the notes a 30-day option to purchase up to an additional $165.0 million principal amount of notes, solely to cover over-allotments.

Coinbase Global, Inc. announced the pricing of $1.1 billion aggregate principal amount of Convertible Senior Notes due 2030 in a private offering to persons reasonably believed to be qualified institutional buyers under Rule 144A promulgated under the Securities Act of 1933, as amended. The aggregate principal amount of the offering was increased from the previously announced offering size of $1.0 billion. Coinbase also granted the initial purchasers of the notes a 30-day option to purchase up to an additional $165.0 million principal amount of notes, solely to cover over-allotments. The sale of the notes to the initial purchasers is expected to settle on March 18, 2024, subject to customary closing conditions, and is expected to result in approximately $1.08 billion (or approximately $1.24 billion if the initial purchasers exercise their option to purchase additional notes in full) in net proceeds to Coinbase after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Coinbase.

Coinbase intends to use the net proceeds from the offering to repay at maturity or repurchase or redeem before maturity, from time to time and subject to market conditions, its outstanding 0.50% Convertible Senior Notes due 2026, 3.375% Senior Notes due 2028, and 3.625% Senior Notes due 2031 and for other general corporate purposes, which may include working capital and capital expenditures, and to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, Coinbase expects to use a portion of the net proceeds from the sale of such additional notes to enter into additional capped call transactions. Coinbase may also use a portion of the net proceeds to make investments in and acquisitions of other companies, products, or technologies that Coinbase may identify from time to time.

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The notes will be senior, unsecured obligations of Coinbase. The notes will bear interest of 0.25% per year payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024. The notes will mature on April 1, 2030, unless earlier repurchased, redeemed, or converted. Coinbase may not redeem the notes before April 1, 2027. Coinbase may redeem all or any portion of the notes (subject to certain limitations), at its option, on or after April 1, 2027, and on or before the 20th scheduled trading day immediately before the maturity date, if the last reported sale price of Coinbase’s Class A common stock exceeds 130% of the conversion price then in effect on- 

  •  Each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date Coinbase sends the related redemption notice
  • The trading day immediately before the date Coinbase sends such notice, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the notes, which means that Coinbase is not required to redeem or retire the notes periodically. Subject to a limited exception, holders of the notes will have the right to require Coinbase to repurchase for cash all or a portion of their notes upon the occurrence of a fundamental change (as defined in the indenture governing the notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest.

The notes will be convertible at an initial conversion rate of 2.9981 shares of Coinbase’s Class A common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $333.54 per share of Class A common stock, which represents a conversion premium of approximately 32.5% to the last reported sale price of $251.73 per share of Coinbase’s Class A common stock on The Nasdaq Global Select Market on March 13, 2024).

Before the close of business on the business day immediately preceding October 1, 2029, the notes will be convertible at the option of the noteholders only upon the satisfaction of specified conditions and during certain periods. On or after October 1, 2029, until the close of business on the second scheduled trading day preceding the maturity date, the notes will be convertible at the option of the noteholders at any time regardless of these conditions. Conversions of the notes will be settled in cash, shares of Coinbase’s Class A common stock, or a combination thereof, at Coinbase’s election.

In connection with the pricing of the notes, Coinbase entered into privately negotiated capped call transactions with certain of the initial purchasers or their affiliates and/or other financial institutions (the “option counterparties”). The capped call transactions cover, subject to customary adjustments, the number of shares of Coinbase’s Class A common stock that will initially underlie the notes. The capped call transactions are expected generally to reduce the potential dilution to Coinbase’s Class A common stock upon any conversion of the notes and/or offset any potential cash payments Coinbase is required to make more than the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call transactions is initially approximately $503.46 per share, which represents a premium of 100% over the last reported sale price of Coinbase’s Class A common stock of $251.73 per share on March 13, 2024, and is subject to certain adjustments under the terms of the capped call transactions.

The notes were only offered and sold to persons reasonably believed to be qualified institutional buyers under Rule 144A promulgated under the Securities Act using a private offering memorandum. Neither the notes nor the shares of Coinbase’s Class A common stock potentially issuable upon conversion of the notes, if any, have been or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States, except under an applicable exemption from such registration requirements.

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