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NEW YORK - GameStop Corp. (NYSE: GME), currently valued at $12.74 billion, announced Wednesday its intention to offer $1.75 billion in convertible senior notes due 2032 to qualified institutional buyers in a private offering, according to a press release statement. InvestingPro data shows the company maintains a strong balance sheet, with cash holdings exceeding its current debt obligations.
The zero-interest notes will be general unsecured obligations with no regular interest payments. Upon conversion, GameStop will pay in cash, shares of its Class A common stock, or a combination of both, at the company’s discretion. The company’s strong liquidity position is reflected in its impressive current ratio of 8.05, indicating substantial coverage of short-term obligations.
The video game retailer also plans to grant initial purchasers an option to buy up to an additional $250 million in notes within a 13-day period after the notes are first issued.
The initial conversion rate and other terms will be determined at pricing, with the reference price calculated using the weighted average price of GameStop’s Class A common stock from 1:00 p.m. to 4:00 p.m. Eastern Daylight Time on the pricing date.
GameStop intends to use the proceeds for general corporate purposes, including investments and potential acquisitions. According to InvestingPro, the company’s financial health score is rated as GOOD, with 12 additional exclusive insights available to subscribers.
The notes have not been registered under the Securities Act of 1933 and cannot be offered or sold in the United States without registration or an applicable exemption.
The company noted that the offering’s completion is subject to market conditions and other factors, with no guarantee that the transaction will be completed as described.
In other recent news, GameStop Corp. has made headlines with its strategic investment in bitcoin, acquiring 4,710 bitcoins valued at approximately $513 million. This move is part of the company’s broader strategy to diversify its assets and enhance its financial standing. The investment aligns with a growing trend among businesses exploring digital currencies as a potential asset class. Meanwhile, GameStop Canada is undergoing a significant rebranding, reverting to its EB Games identity under new ownership by Stephan Tetrault. This change aims to revitalize the brand in Canada with an emphasis on enhancing customer experience and embracing the gaming community. Additionally, GameStop’s CEO, Ryan Cohen, is facing a lawsuit related to $47.2 million in profits from trading Bed Bath & Beyond stocks, which were sold before the company declared bankruptcy. The lawsuit alleges that Cohen’s trades violated regulations concerning "short-swing" profits. Although GameStop itself is not a defendant in the case, the legal proceedings have drawn attention to Cohen’s financial activities. These developments reflect GameStop’s ongoing efforts to navigate and adapt to the rapidly changing retail and digital landscapes.
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