GameStop to Exchange and Cancel Approximately US$1.4 Billion in Convertible Notes
The transaction will reduce GameStop’s long-term debt but issue approximately 55.5 million shares to noteholders, diluting existing shareholders.
GameStop has amended agreements with certain noteholders to exchange and cancel approximately US$1.4 billion of convertible notes due in 2030 and 2032, according to Yahoo Finance.
Under the amended terms, noteholders will receive approximately 55.5 million GameStop shares and US$358.4 million in cash, funded from the company’s existing cash balance. The exchange reduces the retailer’s long-term debt while increasing the number of shares outstanding.
GameStop shares rose 2.8% intraday on 31 August, according to the source. The precise execution date, conversion price and final legal terms of the amended agreements were not provided.
GameStop, a video-game and consumer-electronics retailer known for the 2021 short squeeze, reported revenue of approximately US$835.3 million for the quarter ended 2 May, up 14% year on year. Collectibles revenue rose 65% to approximately US$348.9 million, while hardware and accessories revenue declined 3.4% and software revenue fell 13%.
The company also held approximately 43.4 million eBay shares, valued at approximately US$4.95 billion, as at 1 August, according to the source. The eBay position has prompted questions about how GameStop could finance a takeover and the limited overlap between the companies’ core businesses.
