- Smarter Web closes $21M convertible bonds through Bitcoin
- Bond is providing a conversion of equity at 5% premium with a downside protection
- Strategic growth of Bitcoin treasury
Convertible bonds worth $21 million and denominated in Bitcoin have been issued by the Smarter Web Company PLC, which is a bold move. The breakthrough is a way of generating capital and increasing its Bitcoin treasury.
The interest-free bond has attracted the interest of institutional investors, who include TOBAM, a leading asset management company that has extensive Bitcoin knowledge. Announcement is a landmark in the UK capital markets and announces the birth of a new age of corporate finance.
Bitcoin Meets Convertible Bonds – What’s Smarter Convert?
This special relationship is labeled Smarter Convert that allows investors turn bonds into equity with a slight premium. In comparison to the reference share price, the conversion price is set at a premium of five percent. The investors further enjoy downside protection- in case the shares do not perform, they will receive 98 percent repayment depending on the value of Bitcoin.
The principal of the bond will move with the price of Bitcoin and it can be potentially profitable or unprofitable depending on the crypto market. TOBAM, which has been trading in Bitcoin since 2016, has committed all of the three funds it had in this currency, which is an example of the high level of trust institutions have.
According to Yves Choueifaty, the Chief Executive Officer of TOBAM, the structure strikes a balance between long-term incentives and protecting investors. He pointed out the combination of innovativeness and wisdom that characterizes the deal.
The point of Smarter Convert is to increase the amount of Bitcoin in The Smarter Web Company treasury to approximately 30 percent of its present unencumbered treasury-a tactical move to solidify the crypto backbone.
What Could This Mean for Investors and The Market?
In case share prices increase, then investors can convert bonds, thus resulting in less dilution than a conventional equity issuance. Within six months, which is 10 days, the company may force conversion at a gain in case there is a 50 percent rise in prices over the conversion price.
On the negative side, in the event of conversion being unattractive, the company repays almost full principal at a cost of a 2 per cent fee to the investors. This flexibility creates a win-win scenario among stakeholders.
The Smarter Web Company has led Bitcoin Treasury Policy in the UK since accepting Bitcoin payments in 2023. CEO Andrew Webley said that he hoped this initiative would open up new capital pools. He added: it is another first in UK capital markets and TOBAM has done an impressive job in the collaboration.
Being one of the few publicly traded companies that combine cryptocurrency and conventional financing, The Smarter Web Company raises a curious precedent. The combination of crypto exposure and equity upside of the bond would attract the traditional investor and crypto bulls.
