Key Points
- MicroStrategy is planning to raise $500 million through a convertible senior note offering to buy more bitcoin.
- The company also declared the redemption of its 2025 convertible senior notes worth $650 million.
MicroStrategy, a corporate holder of bitcoin and a business intelligence company, has announced its intentions to raise $500 million. This will be done through a convertible senior note offering, with the option of an additional $75 million.
Intended Use of Funds
The notes, which are due in 2032, will be issued privately to qualified institutional investors. They are unsecured, bear interest semi-annually, and can be converted into cash, MicroStrategy class A common stock, or both.
The company plans to use the raised funds to purchase more bitcoin and for other corporate purposes.
The convertible notes offer MicroStrategy a way to manage its debt while potentially benefiting from equity appreciation. The company has been investing heavily in bitcoin since 2020, using debt financing to expand its bitcoin holdings.
Past Acquisitions and Future Plans
MicroStrategy had previously proposed a $600 million convertible note offering in March, following a surge in its share price. The company then bought an additional 9,245 BTC that month for $623 million in cash.
After two smaller acquisitions in March and April, the company now holds 214,400 BTC, costing a total of $7.54 billion, or $35,180 per bitcoin. The current value of MicroStrategy’s bitcoin holdings is $14.5 billion.
In a separate statement, MicroStrategy also announced the redemption of $650 million worth of its 2025 convertible senior notes. The redemption will be completed on July 15 at 100% of the principal amount plus accrued interest.
Holders of these notes can convert them into MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount, reflecting a conversion price of $397.99 per share. The company will settle these conversions entirely in shares of its class A common stock.
This move was part of MicroStrategy’s strategy to acquire bitcoin and adopt the cryptocurrency as its primary reserve asset, which began in December 2020 when it issued $650 million of 0.75% convertible senior notes due in 2025.
