GameStop Announces Private Offering for Corporate Purposes and Bitcoin Purchases
GameStop has revealed plans for a private offering of $1.3 billion in convertible senior notes to fund general corporate purposes and Bitcoin purchases for its treasury, according to a recent announcement on March 26.
Updated Treasury Strategy
The announcement comes on the heels of GameStop’s disclosure on March 25 of an updated treasury strategy that includes digital assets.
- GameStop did not specify the amount of Bitcoin it intends to acquire.
- Part of the funds raised will support the integration of Bitcoin into its balance sheet.
Strategic Diversification
GameStop’s decision to allocate funds towards Bitcoin signals a strategic diversification to manage its over $4.5 billion in cash reserves.
- Companies are increasingly incorporating Bitcoin into their treasury reserves.
- This trend has been more prevalent among technology and fintech firms.
Strategy, for instance, has popularized the issuance of debt to purchase Bitcoin, with plans to acquire more Bitcoin until 2027.
Convertible Notes Offering
The zero-coupon convertible senior notes will mature on April 1, 2030, and will be issued through a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
- The securities will be GameStop’s unsecured obligations.
- They will not bear regular interest or accrue in principal.
- Upon conversion, GameStop may settle obligations in cash, Class A common stock, or a combination of both at its discretion.
Initial terms, including the conversion rate, redemption rights, and repurchase features, will be established at the time of pricing. The pricing reference will be based on the US composite volume-weighted average price (VWAP) of GameStop’s Class A shares on the pricing date.
The company has also granted initial purchasers a 13-day option to buy up to an additional $200 million in notes, potentially bringing the total amount raised to $1.5 billion.
