MicroStrategy has decided to increase its convertible note offering from the initial $500 million to a whopping $700 million. This move comes as the company aims to raise funds for its strategic initiatives, particularly to purchase more Bitcoin for its treasury.
The convertible notes will bear an interest rate of 2.25% per year and are set to mature in 2032. Investors will have the option to convert these notes into shares of MicroStrategy’s stock, with an initial conversion rate of 0.4894 shares per $1,000 of notes. This conversion rate translates to a price of around $2,043.32 per share, representing a 35% premium over the average trading price of the company’s stock on June 13, 2024.
Interest payments on the notes will be made biannually, starting from December 15, 2024. If not converted earlier, MicroStrategy will be required to repay the loan by June 15, 2032. However, the company has the option to buy back the notes for cash starting from June 20, 2029, provided that its stock price exceeds 130% of the conversion price.
By increasing the convertible note offering, MicroStrategy aims to raise approximately $687.8 million, or potentially up to $786 million if all additional notes are purchased. This influx of funds will enable the company to further bolster its Bitcoin holdings, adding to its already substantial cryptocurrency reserves.
Overall, this strategic move by MicroStrategy not only provides the company with additional capital for its future endeavors but also demonstrates its continued confidence in the long-term potential of Bitcoin as a valuable asset. As the company continues to navigate the evolving landscape of digital currencies, its proactive approach to financial planning and investment sets a strong foundation for sustained growth and innovation in the years to come.