Video game retailer GameStop Corporation (GME) has completed a convertible debt offering that raised $1.5 billion.
Part of the mentioned funds will be used to purchase Bitcoin. Initially, it was assumed that at least $1.3 billion would be raised as part of the offering. At the same time, purchasers opted for an additional $200 million aggregate principal amount of notes. GameStop said this in an April 1 filing with the United States Securities and Exchange Commission (SEC).
The company intends to use the net proceeds from the offering for general corporate purposes, including the acquisition of Bitcoin, following the investment policy of the firm.
The convertible notes are debt, which can later be converted into equity, and are scheduled to mature on April 1, 2030, unless they are earlier converted, redeemed, or repurchased.
The conversion rate for the notes will initially be 33 shares of Common Stock per $1,000 principal amount of notes. This was mentioned in the filling.
GameStop shares did not show significant growth after the close of the convertible debt offering. GME closed the trading day on April 1 with an increase of 1.34% to $22.61. After the bell, the corresponding indicator rose by only 0.5%.
It is worth noting that last week, positive shareholder sentiment contributed to the fact that the day after GameStop announced its Bitcoin plan, the value of GME shares jumped by almost 12%, to $28.36. At the same time, as soon as possible, the dynamic changed its growth vector to a downward trajectory. This caused the value of GME shares to fall by almost 24%, to $21.68. Against the background of the mentioned drop, as reported by the media, analysts suggested that the chilly reception reflected shareholders’ concerns about GameStop’s more serious problems with its business model.
Last month, the mentioned company reported that it had received board approval to invest in Bitcoin and US-dollar-pegged stablecoins using the notes and its cash reserves. As of February 1, the specified reserves stood at $4.77 billion. It is worth noting that a year earlier this figure was $921.7 million.
GameStop relatively late became one of the public companies creating Bitcoin treasuries. Many other firms have already added Bitcoin to their balance sheets in a playbook popularized by Micheal Saylor’s Strategy.
It is worth noting separately that the video game retailer has already committed forays into the crypto space with a crypto wallet for its users. In November 2023, the company decided to shut down the mentioned wallet. Uncertainty about regulation was cited as the reason for this decision. Since then, the mentioned situation has become more favorable.
Moreover, GameStop is considered as the first example of meme stock success after a brief squeeze in 2021 that sent stocks to surge by more than 1,000% in a month. The corresponding rapid upward dynamic is because traders have changed their position regarding hedge funds that are making money shorting on the company.
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