BTCS Inc., a blockchain technology-focused company, announced a significant financing agreement to raise up to $57.8 million through convertible notes. The funds are earmarked for purchasing Ethereum (ETH) to expand the company’s validator node operations and staking activities. They also plan to give a boost to the blockchain infrastructure.
As per the official announcement, the company issued the first tranche of notes with a total principal value of $7.8 million, with an additional capacity of up to $50 million, subject to a mutual agreement between the company and investors.
These notes are convertible into common stock at a set conversion price of $5.85 per share, which is a 194% premium to the stock price of $1.99 on May 13, 2015. With a two-year maturity date of May 13, 2027, the issued notes include a 5% issue discount and a 6% annual interest rate.
In line with the note issuing, the investors also received five-year rights to buy 1,901,516 common stock at an exercise price of $2.75 per share, therefore providing a 38% premium to the closing stock price of the company.
BTCS CEO Allen said, “Similar to how MicroStrategy used its balance sheet to accumulate bitcoin, we are executing a disciplined strategy to increase our Ethereum exposure and drive recurring revenue through staking and our block building operations-while positioning BTCS for meaningful appreciation should ETH continue to rise in value.”
While a trust connected to CEO Charles Allen invested $200,000, he personally committed $95,000 in the offering. Allen’s participation was approved by an independent board committee.
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