Block Announces $1.5B Senior Notes Offering to Institutions


Fintech firm Block (formerly Square) revealed plans on May 6 to issue $1.5 billion in senior notes through a private placement to qualified institutional investors.

In a statement, Block noted that the terms of the notes, including interest rates and maturity dates, are subject to negotiation with the initial purchasers. Investors eligible to participate in the round include pension funds, banks, mutual funds, and high-net-worth individuals.

Block to Raise $1.5B

Following the announcement, Block’s shares surged more than 5%, trading at $73.53 pre-market.

A private placement is a method used to raise capital by selling securities, such as stocks or notes, to a limited number of investors rather than through a public offering. According to Block, proceeds from the sale may be allocated for various purposes, including the repayment of existing debt, potential acquisitions, strategic transactions, capital expenditures, investments, and working capital.

Capitalization on Secular Growth Areas  

Fitch Ratings stated that Block is “well positioned to capitalize on secular growth areas in payments and consumer financial services.”

Regarding Block’s debt structure, Fitch highlighted that the company has mainly relied on the convertible debt market for most of its external capital needs since its initial public offering. As of March 2024, Block had around $2.15 billion in outstanding convertible notes, a revolving credit facility of $775 million available until June 2028, and $2 billion in senior unsecured notes due in 2026 and 2031. Fitch stated:

“The announced debt raise would bring additional debt onto its balance sheet that is expected to ultimately help refinance 2025-2026 maturities, while also providing further cash support to its already strong balance sheet.”

Block and Bitcoin

Block was one of the first public companies to integrate Bitcoin into its balance sheet, a move noted by the firm’s co-founder, Jack Dorsey, in a recent letter to shareholders.

Notably, the company is currently being investigated by US prosecutors after a whistleblower surfaced documents alleging ongoing and widespread compliance violations at the firm’s payment arms, Square and Cash App.

Dorsey revealed that Block plans to allocate 10% of its gross profit from Bitcoin products every month for BTC purchases. Between the fourth quarter of 2020 and the first quarter of 2021, Block purchased $220 million worth of Bitcoin.

“Going forward, each month we will be investing 10% of our gross profit from Bitcoin products into Bitcoin purchases.”

Surpassing Market Expectations

In the first quarter of 2024, Block’s earnings surpassed market expectations. The firm’s Bitcoin gross profit stood at $80 million, representing 3% of its $2.73 billion in Bitcoin revenue. Additionally, its mobile payments and crypto platform, Cash App, generated $1.26 billion in gross profits for Q1—a 25% increase from the previous year.

Total gross profit for the first quarter reached $2.09 billion, up 22% from the year-ago quarter, with total revenue hitting $5.96 billion and per-share earnings reaching $0.85, exceeding analysts’ predictions.

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