GameStop has announced the placement of $1.75 billion in senior convertible bonds maturing in 2032. The offering is being conducted among qualified institutional investors through a private placement under Rule 144A.
This is reported by Business • Media
Issuance Terms and Conversion Opportunities
According to the press release, the coupon rate on these bonds is 0%, meaning investors will not receive interest income. GameStop also reserves the right to increase the offering size by an additional $250 million. The bonds can be converted into cash, Class A shares, or a combination thereof at the company’s discretion.
The funds raised from the offering are intended for general corporate purposes, investments, and potential acquisitions. Some experts suggest that part of the capital may be used to purchase Bitcoin, considering the company’s previous actions in the cryptocurrency market.
“Part of the funds raised through previous bond issuances has already been used for investments in the first cryptocurrency. GameStop acquired 4,710 BTC for approximately $513 million and currently ranks 13th among public companies in terms of cryptocurrency reserves.”
Investor Reaction and Market Dynamics
The announcement of the new bond issuance triggered a sharp decline in GameStop’s stock. Over the course of a few days, the company’s stock price fell by more than 17%. Immediately after the announcement, shares dropped nearly 12%, coinciding with weak quarterly results: GameStop’s revenue decreased by 17% to $732 million. Prior to this, during a regular trading session, the stock had already fallen by 5.3%.
Convertible bonds are increasingly being used by corporations to raise funding without immediately diluting the stakes of current shareholders. However, the potential for further conversion into shares creates speculative pressure on the market price, especially if the company’s fundamentals remain weak.
GameStop has not officially stated whether it plans to use the new funds for further investments in cryptocurrency. The company emphasizes that it will act according to its own investment policy.
Previously, Strive CEO Matt Cole urged GameStop to convert nearly $5 billion in cash reserves into Bitcoin.
Hourly chart of GME stock on the Nasdaq exchange. Data: TradingView.