GameStop Announces Pricing of Private Offering of $1.3 Billion of Convertible Senior Notes

Rhea-AI Summary

GameStop (NYSE: GME) has announced the pricing of $1.3 billion of 0.00% Convertible Senior Notes due 2030 in a private offering to qualified institutional buyers. The notes, set to close on April 1, 2025, will be unsecured obligations with no regular interest. The company expects net proceeds of approximately $1.28 billion, which will be used for general corporate purposes, including Bitcoin acquisition.

The notes' initial conversion rate is 33.4970 shares of Class A common stock per $1,000 principal amount, equivalent to a conversion price of $29.85 per share - a 37.5% premium over the current stock price. GameStop may redeem the notes after April 6, 2028, under specific conditions. Noteholders can require GameStop to repurchase their notes on April 3, 2028, at 100% of the principal amount.

Positive

• Zero-interest rate on the convertible notes, reducing debt service costs
• Substantial capital raise of $1.28 billion strengthens balance sheet
• 37.5% conversion premium protects against immediate dilution
• Option for additional $200 million note issuance provides financial flexibility

Negative

• Potential future dilution if notes are converted to common stock
• Significant debt addition to balance sheet
• Plan to invest in volatile Bitcoin creates investment risk
• Unsecured nature of notes increases risk for noteholders

Insights

Financial Markets Strategist

GameStop's $1.3 billion zero-interest convertible note offering represents a strategically significant financial maneuver that dramatically strengthens the company's balance sheet without immediate cash flow burden. The 0.00% interest rate is notably favorable in the current market environment, effectively allowing GameStop to access substantial capital at minimal borrowing cost.

The conversion terms include a 37.5% premium above current share price levels (conversion price of $29.85), which helps protect existing shareholders from immediate dilution concerns. If fully converted, these notes would represent approximately 43.5 million potential new shares - meaningful but not overwhelming dilution relative to GameStop's float.

What stands out most is the stated intention to direct proceeds toward Bitcoin acquisition. This represents a significant strategic pivot for a traditional retailer, aligning GameStop with companies like MicroStrategy that have adopted Bitcoin as a treasury strategy. While this introduces cryptocurrency market volatility to GameStop's financial profile, it also creates potential upside exposure should Bitcoin appreciate substantially.

The notes' structure provides GameStop considerable flexibility - no conversion pressure until 2030, no redemption possibility before April 2028, and various protective provisions. This gives management a long runway to execute their strategy while maintaining control over potential dilution.

This transaction fundamentally transforms GameStop's financial position, creating significant strategic optionality beyond its core retail operations while avoiding immediate interest expense or shareholder dilution.

GRAPEVINE, Texas, March 27, 2025 (GLOBE NEWSWIRE) -- GameStop Corp. (NYSE: GME) (“GameStop”), today announced the pricing of $1.3 billion aggregate principal amount of 0.00% Convertible Senior Notes due 2030 (the “notes”) in a private offering (the “offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). GameStop also granted the initial purchaser of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $200 million aggregate principal amount of notes. The sale of the notes is expected to close on April 1, 2025, subject to customary closing conditions.

The notes will be general unsecured obligations of GameStop, will not bear regular interest and the principal amount of the notes will not accrete. The notes will mature on April 1, 2030, unless earlier converted, redeemed or repurchased.

GameStop estimates that the net proceeds from the offering will be approximately $1.28 billion (or approximately $1.48 billion if the initial purchaser exercises its option to purchase additional notes in full), after deducting the initial purchaser’s discount and commissions and estimated offering expenses payable by GameStop.

GameStop expects to use the net proceeds from the offering for general corporate purposes, including the acquisition of Bitcoin in a manner consistent with GameStop’s Investment Policy.

Before January 1, 2030, holders will have the right to convert their notes only upon the satisfaction of specified conditions and during certain periods. On or after January 1, 2030, until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes at any time. Upon conversion, GameStop will pay or deliver, as the case may be, cash, shares of GameStop’s Class A common stock, par value $.001 per share (“Class A common stock”), or a combination of cash and shares of Class A common stock, at its election. The conversion rate for the notes will initially be 33.4970 shares of Class A common stock per $1,000 principal amount of such notes (equivalent to an initial conversion price of approximately $29.85 per share of Class A common stock). The initial conversion price of the notes represents a premium of approximately 37.5% over the U.S. composite volume weighted average price of the Class A common stock from 1:00 p.m. through 4:00 p.m. Eastern Daylight Time on The New York Stock Exchange on March 27, 2025. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid special interest. In addition, following certain corporate events that occur prior to the maturity date of the notes or if GameStop delivers a notice of redemption in respect of the notes, GameStop will, in certain circumstances, increase the conversion rate of the notes for a holder who elects to convert its notes in connection with such a corporate event or convert its notes called (or deemed called) for redemption during the related redemption period, as the case may be.

GameStop may not redeem the notes prior to April 6, 2028. GameStop may redeem for cash all or any portion of the notes (subject to the partial redemption limitation described below), at its option, on or after April 6, 2028, if the last reported sale price of the Class A common stock has been at least 130% of the conversion price for the notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which GameStop provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid special interest to, but excluding, the redemption date. If GameStop redeems less than all of the outstanding notes, at least $100 million aggregate principal amount of notes must be outstanding and not subject to redemption as of the relevant redemption notice date. No sinking fund is provided for the notes.

Noteholders will have the right to require GameStop to repurchase their notes on April 3, 2028, at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid special and additional interest, if any, to, but excluding, the repurchase date. In addition, if GameStop undergoes a “fundamental change” (as defined in the indenture that will govern the notes), then, subject to certain conditions and limited exceptions, holders of the notes may require GameStop to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

Neither the notes, nor any shares of Class A common stock issuable upon conversion of the notes, if any, have been, or will be, registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States, or to, or for the account or benefit of, U.S. Persons, absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. There can be no assurances that the offering of the notes will be completed as described herein or at all.

About GameStop

GameStop, a Fortune 500 company headquartered in Grapevine, Texas, is a leading specialty retailer offering games and entertainment products through its ecommerce platforms and thousands of stores across multiple geographic segments.

Cautionary Statement Regarding Forward-Looking Statements – Safe Harbor

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning the anticipated completion of the offering and the anticipated use of proceeds from the offering. These forward-looking statements are based on GameStop’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause GameStop’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement. These risks include, but are not limited to market risks, trends and conditions. These and other risks are more fully described in GameStop’s filings with the Securities and Exchange Commission (“SEC”), including in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended February 1, 2025 and other filings and reports that GameStop may file from time to time with the SEC. Forward-looking statements represent GameStop’s beliefs and assumptions only as of the date of this press release. GameStop disclaims any obligation to update forward-looking statements.

Contact

GameStop Corp. Investor Relations
(817) 424-2001
ir@gamestop.com

FAQ

What is the size and purpose of GameStop's (GME) convertible note offering?

GameStop is offering $1.3 billion in Convertible Senior Notes due 2030, with net proceeds of approximately $1.28 billion to be used for general corporate purposes, including Bitcoin acquisition.

What is the conversion price for GME's 2030 convertible notes?

The initial conversion price is $29.85 per share, representing a 37.5% premium over GME's stock price on March 27, 2025.

When can holders convert GME's 2030 convertible notes?

Before January 1, 2030, conversion is allowed under specific conditions. After January 1, 2030, holders can convert at any time until maturity.

What are the redemption terms for GME's 2030 convertible notes?

GameStop can redeem the notes after April 6, 2028, if the stock price is at least 130% of conversion price for 20 trading days within a 30-day period.