Fintech giant Block, formerly known as Square, has unveiled plans to raise $1.5 billion through senior notes offered to institutional investors.
Block disclosed that the specifics of the notes, such as interest rates and maturity dates, will be determined through negotiations with initial purchasers. Qualified participants for this round include pension funds, banks, mutual funds, and high-net-worth individuals. The announcement saw Block’s shares surge over 4%, reaching $72.40 at the time of the declaration.
Private Placement Dynamics
This private placement strategy involves selling securities to a limited number of investors, rather than through a public offering. Block intends to utilize the funds for various purposes, including debt repayment, potential acquisitions, investments, and working capital.
Fitch Ratings highlighted Block’s strong positioning in payment and consumer financial services sectors. It also noted Block’s reliance on convertible debt and its plans to leverage the announced debt raise for refinancing and strengthening its balance sheet.
Block’s Bitcoin Involvement
Block made headlines as one of the first public companies to integrate Bitcoin into its balance sheet. Co-founder Jack Dorsey outlined plans to allocate 10% of Bitcoin product gross profit each month for BTC purchases. The company had previously acquired $220 million worth of Bitcoin.
Block exceeded market expectations with its first-quarter earnings for 2024. Notably, its Bitcoin gross profit reached $80 million, accounting for 3% of its total Bitcoin revenue. Cash App, Block’s mobile payments and crypto platform, generated $1.26 billion in gross profits, marking a 25% increase from the previous year.
Total gross profit for Q1 soared by 22%, reaching $2.09 billion, while total revenue stood at $5.96 billion. Block also reported per-share earnings of $0.85, surpassing analyst forecasts.
