MicroStrategy recently made an exciting announcement regarding its convertible senior notes offering. Initially set at $500 million, the company has decided to increase the offering to $700 million. The offering is expected to close on June 17, 2024. The notes will be unsecured, senior obligations of MicroStrategy, with an interest rate of 2.25% per annum, payable semi-annually.
These notes are set to mature on June 15, 2032, unless there are specific circumstances that trigger an early repurchase, redemption, or conversion. The conversion rate for the notes is 0.4894 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes. This conversion rate represents a 35% premium over the U.S. composite volume-weighted average price (VWAP) of the company’s stock on a specific date.
In addition to the $700 million raise, qualified institutional buyers have the option to purchase an additional $100 million. This offering follows the redemption of $650 million of convertible notes due in 2025, with all conversion requests settled in shares by July 15, 2024. Overall, MicroStrategy anticipates a total raise of $687.8 million, potentially reaching up to $786.0 million if initial buyers fully exercise the option to acquire additional notes.
One key detail worth noting is MicroStrategy’s plan to use the proceeds from this offering to purchase more Bitcoin (BTC). The company already holds a significant amount of BTC, with 214,400 in its possession. This makes MicroStrategy the corporate entity with the largest Bitcoin holdings outside of BlackRock’s spot ETF reserves.
The decision to increase the convertible offering to acquire more Bitcoin highlights MicroStrategy’s commitment to cryptocurrency investments. By leveraging this fundraising strategy, the company aims to further strengthen its position in the digital asset space. As the cryptocurrency market continues to evolve and expand, MicroStrategy’s bold moves demonstrate a proactive approach to capitalizing on the potential of digital currencies.
Overall, MicroStrategy’s latest financial endeavors showcase a strategic vision that aligns with the growing trend of institutional interest in cryptocurrency. With a focus on expanding its Bitcoin holdings, the company is poised to navigate the dynamic landscape of digital assets while maximizing value for its stakeholders.