MicroStrategy Upsizes Convertible Note Offering to $700M for Bitcoin Acquisition

MicroStrategy Upsizes Convertible Note Offering to $700M for Bitcoin Acquisition

MicroStrategy has announced an upsized convertible senior notes offering, increasing the aggregate principal amount to $700 million. This follows an initial announcement of a $500 million offering. The company expects the offering to close on June 17, 2024.

“The notes will be unsecured, senior obligations of MicroStrategy, and will bear interest at a rate of 2.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024,” the company stated.

These notes are scheduled to mature on June 15, 2032, unless they are repurchased, redeemed, or converted earlier.

Details of the Convertible Notes Offering

According to MicroStrategy’s June 14 statement, the conversion rate for the notes is set at 0.4894 shares of MicroStrategy’s Class A common stock per $1,000 principal amount of notes. This translates to approximately $2,043.32 per share, representing a 35% premium over the U.S. composite volume-weighted average price (VWAP) of the company’s stock on June 13, 2024, which stood at $1,513.46.

The company also mentioned that the $700 million offering includes an option for qualified institutional buyers to purchase an additional $100 million in notes. The initial offer on June 13 had highlighted an additional $75 million of the aggregate principal amount.

On Thursday, MicroStrategy announced it was redeeming $650 million of convertible notes due in 2025, with all conversion requests settled in shares. The redemption date is set for July 15, 2024.

Plans to Purchase Bitcoin

MicroStrategy anticipates raising a total of $687.8 million from this offering, which could increase to $786.0 million if the initial buyers fully exercise their option to acquire additional notes. As previously noted, the company plans to use the proceeds from the notes offering to purchase more Bitcoin (BTC). Currently, MicroStrategy holds 214,400 BTC, the largest amount held by a corporate entity outside of the substantial reserves supporting BlackRock’s spot ETF.

This strategic move underscores MicroStrategy’s ongoing commitment to Bitcoin acquisition, further solidifying its position as a major institutional player in the cryptocurrency market.

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