GameStop Plans to Raise $1.3 Billion to Purchase Bitcoin

Video game retailer GameStop announced on Wednesday that it plans to offer investors convertible senior notes worth up to $1.3 billion, adopting a strategy directly from Strategy regarding the purchase of Bitcoin. The Texas-based company stated in a press release that the proceeds from the sale will be used for general corporate purposes, including the acquisition of Bitcoin. This announcement comes a day after GameStop indicated that it might buy Bitcoin as a treasury asset following an update to the company’s investment policy.

GameStop expects its offering of convertible senior notes to yield zero percent dividends, according to the press release. The debt can be converted into GameStop Class A common stock, with the conversion date and price to be determined later. Strategy has issued billions of dollars in convertible senior notes, raising capital to purchase more Bitcoin than it otherwise could. The company introduced its latest convertible debt offering in February, raising $2 billion through convertible notes maturing in March 2030.

GameStop’s expected offering has a similar maturity date. The bonds are expected to mature in April 2030, unless they have already been converted or redeemed by GameStop. GameStop stated that holders of the convertible senior notes may receive a combination of cash and stock when the notes are converted at their discretion.

GameStop shares rose 11 percent on Wednesday during regular trading hours to $28.38, according to Nasdaq. In after-hours trading, GameStop’s stock price fell to $26.30. While GameStop may soon purchase Bitcoin using debt, the company already has a substantial amount of cash. According to the latest earnings report, the Texas-based company held $4.7 billion in cash and cash equivalents. This is a significant increase from $921 million a year earlier.