Sokipiriye Dokubo
MicroStrategy Incorporated has revealed plans to issue $700 million in convertible senior notes, reinforcing its aggressive Bitcoin acquisition strategy. According to a press release from September 16, 2024, this initiative underscores the company’s dedication to accumulating more Bitcoin as part of its financial strategy.
Additionally, there is a possibility for investors to purchase another $105 million in notes within 13 days after the initial issuance. The primary use of the raised funds will be to redeem $500 million of the company’s existing senior secured notes due in 2028, while any surplus could go towards further Bitcoin purchases.
Offering Details
The new notes, which are unsecured, are set to mature on September 15, 2028, and will begin collecting interest in March 2025, with payments made every six months. MicroStrategy has the option to redeem these notes starting in December 2027, although certain conditions may impose restrictions on this redemption.
Investors acquiring these notes can choose to convert them into cash, MicroStrategy’s class A common stock, or a mix of both. It is important to note that this offering won’t be registered under U.S. securities regulations and will be accessible only to qualified institutional buyers as per Rule 144A.
As part of its financing approach, MicroStrategy has announced the redemption of its outstanding senior secured notes, scheduled for September 26, 2024, pending the successful completion of the new offering. Following this redemption, 69,080 Bitcoin that serves as collateral for the secured notes will be released.
Strategic Overview
This issuance is a continuation of MicroStrategy’s broader strategy to finance its Bitcoin acquisitions. Since 2020, the company has successfully raised billions through similar debt instruments, utilizing a mix of debt and equity to enhance its Bitcoin portfolio. The $700 million convertible note offering is the fourth significant bond issuance targeted at acquiring Bitcoin since the company embraced this crypto-oriented strategy.
Earlier in 2024, MicroStrategy conducted a $603.75 million offering of convertible senior notes, featuring a 0.875% interest rate and set to mature in 2031. These funds were also allocated towards obtaining more Bitcoin and strengthening the company’s financial framework around the asset.
Furthermore, the company generated $800 million through another convertible note offering earlier this year, which carried a 0.625% interest rate and matures in 2032. These actions align with MicroStrategy’s commitment to incorporating Bitcoin into its corporate treasury.
MicroStrategy’s Bitcoin Leadership
By adopting Bitcoin, MicroStrategy has established itself as the largest corporate holder of the cryptocurrency. With more than 244,800 BTC, valued at approximately $14.2 billion at the time of this announcement, MicroStrategy is not only managing its existing debt but also actively expanding its Bitcoin reserves, thus solidifying its role as a significant player in the cryptocurrency market.