After Tesla’s recent $ 1.5 billion investment to buy Bitcoin (BTC), all eyes are on the smallest moves by large US companies. Twitter drew attention by announcing that it was considering offering $ 1.25 billion in senior convertible bonds with the year 2026 as its maturity date. If such an operation raises speculation in the cryptosphere, it is because MicroStrategy used it to increase its exposure to bitcoin. The connection between the two cases is all the more obvious when we know that the CEO of Twitter is none other than Jack Dorsey.
Bonds convertible into cash or Twitter ordinary shares or both
The transaction is expected to take place with the participation of institutional buyers qualified under the Securities Act of 1933. They will also be able to benefit froma 13-day extension to acquire up to $ 187.5 million in additional tickets. Depending on the choice made by Twitter, the bonds thus sold may be converted into cash, ordinary shares of the company or both. In addition, part of the proceeds from the sale of the bonds will be used by Twitter to pay the cost of the convertible note hedging transactions.
While the company plans to allocate the remainder of the income to the amounts due upon conversion or at the end of its 1.00% Convertible Senior Notes due 2021, Anthony Pompliano thinks she’s up to something else. The strong man of Morgan Creek Digital suspects the CEO of Twitter to want to add bitcoin to the balance sheet of his company. Assuming that “Few people understand the power of Bitcoin like Jack did [Dorsey] »., He took the bet that his forecast would come true while leaving time to do its work. While it is true that the man is a staunch supporter of bitcoin and stocks that values it, another fact seems to corroborate his view. *Validate
A method already used by MicroStragtegy
A prominent figure in the intrusion of institutions into the bitcoin market, MicroStrategy has continued to increase its exposure to Bitcoin. To finance this large-scale transaction, the company recently launched a senior convertible bond offering. The products of the offer were thus used by MicroStrategy to buy more bitcoin.
However, some observers believe that it is totally unnecessary for Twitter to take this path especially since it holds billions of dollars as liquidity on its balance sheet. Another element that pleads for this version, Mr. Dorsey has already invested in Bitcoin through another of his companies namely Square. A double investment would therefore seem superfluous in the eyes of some analysts.
Either way, American companies are more interested in crypto assets including bitcoin to diversify their cash flow. Aware of this reality, Coinbase has offered to help them. by taking his own example as an argument in his new FAQ.
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The comments and opinions expressed in this article are those of the author alone, and should not be considered as investment advice. Do your own research before making any investment decisions.